Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Oct. 30, 2016 | Dec. 02, 2016 | Apr. 24, 2016 | |
Entity Registrant Name | HORMEL FOODS CORP /DE/ | ||
Entity Central Index Key | 48,465 | ||
Document Type | 10-K | ||
Document Period End Date | Oct. 30, 2016 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --10-30 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 10,164,070,958 | ||
Document Fiscal Year Focus | 2,016 | ||
Document Fiscal Period Focus | FY | ||
Common Stock | |||
Entity Common Stock, Shares Outstanding | 528,801,691 | ||
Common stock, non-voting | |||
Entity Common Stock, Shares Outstanding | 0 |
Consolidated Statements of Fina
Consolidated Statements of Financial Position - USD ($) $ in Thousands | Oct. 30, 2016 | Oct. 25, 2015 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 415,143 | $ 347,239 |
Accounts receivable | 591,310 | 605,689 |
Inventories | 985,683 | 993,265 |
Income taxes receivable | 18,282 | 6,132 |
Deferred income taxes | 86,902 | |
Prepaid expenses | 13,775 | 14,383 |
Other current assets | 5,719 | 9,422 |
TOTAL CURRENT ASSETS | 2,029,912 | 2,063,032 |
DEFERRED INCOME TAXES | 6,223 | |
GOODWILL | 1,834,497 | 1,699,484 |
OTHER INTANGIBLES | 903,258 | 827,219 |
PENSION ASSETS | 68,901 | 132,861 |
INVESTMENTS IN AND RECEIVABLES FROM AFFILIATES | 239,590 | 258,998 |
OTHER ASSETS | 182,237 | 146,498 |
PROPERTY, PLANT AND EQUIPMENT | ||
Land | 67,557 | 71,192 |
Buildings | 805,858 | 815,643 |
Equipment | 1,675,549 | 1,679,100 |
Construction in progress | 218,351 | 79,964 |
Property, Plant and Equipment, Gross | 2,767,315 | 2,645,899 |
Less allowance for depreciation | (1,661,866) | (1,634,160) |
Property, Plant and Equipment, Net | 1,105,449 | 1,011,739 |
TOTAL ASSETS | 6,370,067 | 6,139,831 |
CURRENT LIABILITIES | ||
Accounts payable | 481,826 | 495,317 |
Short-term debt | 185,000 | |
Accrued expenses | 82,145 | 71,777 |
Accrued workers compensation | 36,612 | 37,009 |
Accrued marketing expenses | 119,583 | 119,153 |
Employee related expenses | 251,433 | 232,309 |
Taxes payable | 4,331 | 6,764 |
Interest and dividends payable | 77,266 | 66,696 |
TOTAL CURRENT LIABILITIES | 1,053,196 | 1,214,025 |
LONG-TERM DEBT-less current maturities | 250,000 | 250,000 |
PENSION AND POST-RETIREMENT BENEFITS | 522,356 | 509,261 |
OTHER LONG-TERM LIABILITIES | 93,109 | 101,056 |
DEFERRED INCOME TAXES | 64,096 | |
SHAREHOLDERS' INVESTMENT | ||
Preferred stock, par value $.01 a share - authorized 160,000,000 shares; issued - none | ||
Accumulated other comprehensive loss | (296,303) | (225,668) |
Retained earnings | 4,736,567 | 4,216,125 |
HORMEL FOODS CORPORATION SHAREHOLDERS' INVESTMENT | 4,448,006 | 3,998,198 |
NONCONTROLLING INTEREST | 3,400 | 3,195 |
TOTAL SHAREHOLDERS' INVESTMENT | 4,451,406 | 4,001,393 |
TOTAL LIABILITIES AND SHAREHOLDERS' INVESTMENT | 6,370,067 | 6,139,831 |
Common stock, non-voting | ||
SHAREHOLDERS' INVESTMENT | ||
Common stock | ||
Common Stock | ||
SHAREHOLDERS' INVESTMENT | ||
Common stock | $ 7,742 | $ 7,741 |
Consolidated Statements of Fin3
Consolidated Statements of Financial Position (Parenthetical) $ in Thousands | Oct. 30, 2016USD ($)$ / sharesshares | Oct. 25, 2015USD ($)$ / sharesshares | |
Accounts receivable, allowance for doubtful accounts (in dollars) | $ | $ 4,045 | $ 4,086 | |
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.01 | $ 0.01 | |
Preferred stock, authorized shares | 160,000,000 | 160,000,000 | |
Preferred stock, issued shares | 0 | 0 | |
Common stock, non-voting | |||
Common stock, par value (in dollars per share) | $ / shares | $ 0.01 | $ 0.01 | |
Common stock, authorized shares | 400,000,000 | 400,000,000 | |
Common stock, issued shares | 0 | 0 | |
Common Stock | |||
Common stock, par value (in dollars per share) | $ / shares | $ 0.01465 | $ 0.01465 | [1] |
Common stock, authorized shares | 1,600,000,000 | 1,600,000,000 | [1] |
Common stock, issued shares | 528,483,868 | 528,411,628 | [1] |
[1] | Shares and par values have been restated, as appropriate, to reflect the two-for-one stock split distributed on February 9, 2016. |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||||
Oct. 30, 2016 | Oct. 25, 2015 | Oct. 26, 2014 | |||
Consolidated Statements of Operations | |||||
Net sales | $ 9,523,224 | $ 9,263,863 | $ 9,316,256 | ||
Cost of products sold | 7,365,049 | 7,455,282 | 7,751,273 | ||
GROSS PROFIT | 2,158,175 | 1,808,581 | 1,564,983 | ||
Selling, general and administrative | 871,974 | 743,611 | 650,948 | ||
Goodwill impairment charge | 991 | 21,537 | 0 | ||
Equity in earnings of affiliates | 38,685 | 23,887 | 17,585 | ||
OPERATING INCOME | 1,323,895 | 1,067,320 | 931,620 | ||
Other income and expense: | |||||
Interest and investment income | 6,191 | 2,934 | 3,236 | ||
Interest expense | (12,871) | (13,111) | (12,704) | ||
EARNINGS BEFORE INCOME TAXES | 1,317,215 | 1,057,143 | 922,152 | ||
Provision for income taxes | 426,698 | 369,879 | 316,126 | ||
NET EARNINGS | 890,517 | 687,264 | 606,026 | ||
Less: Net earnings attributable to noncontrolling interest | 465 | 1,176 | 3,349 | ||
NET EARNINGS ATTRIBUTABLE TO HORMEL FOODS CORPORATION | $ 890,052 | $ 686,088 | $ 602,677 | ||
NET EARNINGS PER SHARE: | |||||
BASIC (in dollars per share) | $ 1.68 | $ 1.30 | [1] | $ 1.14 | [1] |
DILUTED (in dollars per share) | $ 1.64 | $ 1.27 | [1] | $ 1.12 | [1] |
WEIGHTED-AVERAGE SHARES OUTSTANDING: | |||||
BASIC (in shares) | 529,290 | 528,143 | [1] | 527,624 | [1] |
DILUTED (in shares) | 542,473 | 541,002 | [1] | 540,431 | [1] |
[1] | Shares and par values have been restated, as appropriate, to reflect the two-for-one stock split distributed on February 9, 2016. |
Consolidated Statements of Ope5
Consolidated Statements of Operations (Parenthetical) | Feb. 09, 2016 |
Common Stock | |
Authorized stock split ratio | 2 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 30, 2016 | Oct. 25, 2015 | Oct. 26, 2014 | |
Consolidated Statements of Comprehensive Income | |||
Net earnings | $ 890,517 | $ 687,264 | $ 606,026 |
Other comprehensive income (loss), net of tax: | |||
Foreign currency translation | (6,718) | (7,135) | (1,921) |
Pension and other benefits | (69,286) | (21,280) | (52,985) |
Deferred hedging | 5,109 | 9,823 | (3,590) |
Total Other Comprehensive Loss | (70,895) | (18,592) | (58,496) |
Comprehensive income | 819,622 | 668,672 | 547,530 |
Less: Comprehensive income attributable to noncontrolling interest | 205 | 947 | 3,339 |
Comprehensive Income Attributable to Hormel Foods Corporation | $ 819,417 | $ 667,725 | $ 544,191 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Shareholders' Investment - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Oct. 30, 2016 | Jan. 24, 2016 | Oct. 25, 2015 | Jan. 25, 2015 | Oct. 30, 2016 | Oct. 25, 2015 | Oct. 26, 2014 | |||||
Increase (Decrease) in Shareholders' Investment | |||||||||||
Balance | $ 4,001,393 | $ 3,612,056 | $ 4,001,393 | $ 3,612,056 | $ 3,316,579 | ||||||
Net earnings | $ 244,190 | 235,167 | $ 187,443 | 172,430 | 890,517 | 687,264 | 606,026 | ||||
Other comprehensive income (loss) | (70,895) | (18,592) | (58,496) | ||||||||
Purchases of common stock | (87,885) | (24,928) | (58,937) | ||||||||
Stock-based compensation expense | 17,829 | 15,717 | 14,393 | ||||||||
Exercise of stock options/nonvested shares | 7,511 | 9,555 | 6,103 | ||||||||
Purchase of additional ownership from noncontrolling interest | (14,035) | ||||||||||
Distribution to noncontrolling interest | (1,581) | (2,500) | |||||||||
Declared cash dividends - $0.40 per share, $0.50 per share and $0.58 per share for the years ended October 30, 2016, October 25, 2015 and October 26, 2014, respectively | (307,064) | (264,063) | (211,112) | ||||||||
Balance | 4,451,406 | 4,001,393 | 4,451,406 | 4,001,393 | 3,612,056 | ||||||
Common Stock | |||||||||||
Increase (Decrease) in Shareholders' Investment | |||||||||||
Balance | $ 7,741 | $ 7,724 | $ 7,741 | $ 7,724 | $ 7,725 | ||||||
Balance (in shares) | [1] | 528,412 | 527,226 | 528,412 | 527,226 | 527,316 | |||||
Stock-based compensation expense | $ 1 | $ 1 | $ 1 | ||||||||
Exercise of stock options/nonvested shares | $ 35 | $ 28 | $ 35 | ||||||||
Exercise of stock options/nonvested shares, shares | 2,458 | 1,986 | [1] | 2,424 | [1] | ||||||
Shares retired | $ (35) | $ (12) | $ (37) | ||||||||
Shares retired, shares | (2,386) | (800) | [1] | (2,514) | [1] | ||||||
Balance | $ 7,742 | $ 7,741 | $ 7,742 | $ 7,741 | $ 7,724 | ||||||
Balance (in shares) | 528,484 | 528,412 | [1] | 528,484 | 528,412 | [1] | 527,226 | [1] | |||
Treasury Stock | |||||||||||
Increase (Decrease) in Shareholders' Investment | |||||||||||
Purchases of common stock | $ (87,885) | $ (24,928) | $ (58,937) | ||||||||
Purchases of common stock, shares | (2,386) | (800) | [1] | (2,514) | [1] | ||||||
Shares retired | $ 87,885 | $ 24,928 | $ 58,937 | ||||||||
Shares retired, shares | 2,386 | 800 | [1] | 2,514 | [1] | ||||||
Additional Paid-in Capital | |||||||||||
Increase (Decrease) in Shareholders' Investment | |||||||||||
Stock-based compensation expense | $ 17,828 | $ 15,716 | $ 14,392 | ||||||||
Exercise of stock options/nonvested shares | 7,476 | 9,527 | 6,068 | ||||||||
Shares retired | (25,304) | (13,362) | (20,460) | ||||||||
Purchase of additional ownership from noncontrolling interest | (11,881) | ||||||||||
Retained Earnings | |||||||||||
Increase (Decrease) in Shareholders' Investment | |||||||||||
Balance | $ 4,216,125 | $ 3,805,654 | 4,216,125 | 3,805,654 | 3,452,529 | ||||||
Net earnings | 890,052 | 686,088 | 602,677 | ||||||||
Shares retired | (62,546) | (11,554) | (38,440) | ||||||||
Declared cash dividends - $0.40 per share, $0.50 per share and $0.58 per share for the years ended October 30, 2016, October 25, 2015 and October 26, 2014, respectively | (307,064) | (264,063) | (211,112) | ||||||||
Balance | $ 4,736,567 | $ 4,216,125 | 4,736,567 | 4,216,125 | 3,805,654 | ||||||
Accumulated Other Comprehensive Income (Loss) | |||||||||||
Increase (Decrease) in Shareholders' Investment | |||||||||||
Balance | (225,668) | (207,700) | (225,668) | (207,700) | (149,214) | ||||||
Other comprehensive income (loss) | (70,635) | (18,363) | (58,486) | ||||||||
Purchase of additional ownership from noncontrolling interest | 395 | ||||||||||
Balance | (296,303) | (225,668) | (296,303) | (225,668) | (207,700) | ||||||
Non-controlling Interest | |||||||||||
Increase (Decrease) in Shareholders' Investment | |||||||||||
Balance | $ 3,195 | $ 6,378 | 3,195 | 6,378 | 5,539 | ||||||
Net earnings | 465 | 1,176 | 3,349 | ||||||||
Other comprehensive income (loss) | (260) | (229) | (10) | ||||||||
Purchase of additional ownership from noncontrolling interest | (2,549) | ||||||||||
Distribution to noncontrolling interest | (1,581) | (2,500) | |||||||||
Balance | $ 3,400 | $ 3,195 | $ 3,400 | $ 3,195 | $ 6,378 | ||||||
[1] | Shares and par values have been restated, as appropriate, to reflect the two-for-one stock split distributed on February 9, 2016. |
Consolidated Statements of Cha8
Consolidated Statements of Changes in Shareholders' Investment (Parenthetical) | 12 Months Ended | ||||
Oct. 30, 2016$ / shares | Oct. 25, 2015$ / shares | Oct. 26, 2014$ / shares | |||
Declared cash dividends (in dollars per share) | $ 0.58 | $ 0.50 | [1] | $ 0.40 | [1] |
[1] | Shares and par values have been restated, as appropriate, to reflect the two-for-one stock split distributed on February 9, 2016. |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 30, 2016 | Oct. 25, 2015 | Oct. 26, 2014 | |
OPERATING ACTIVITIES | |||
Net earnings | $ 890,517 | $ 687,264 | $ 606,026 |
Adjustments to reconcile to net cash provided by operating activities: | |||
Depreciation | 123,581 | 125,292 | 120,692 |
Amortization of intangibles | 8,387 | 8,142 | 9,352 |
Goodwill impairment charge | 991 | 21,537 | 0 |
Equity in earnings of affiliates, net of dividends | 7,505 | 13,438 | 5,246 |
Provision for deferred income taxes | 44,327 | 19,979 | 9,800 |
Loss (gain) on property/equipment sales and plant facilities | 80 | (5,240) | (1,667) |
Non-cash investment activities | (1,287) | (847) | (1,387) |
Stock-based compensation expense | 17,829 | 15,717 | 14,393 |
Excess tax benefit from stock-based compensation | (47,657) | (22,950) | (24,700) |
Changes in operating assets and liabilities, net of acquisitions: | |||
Decrease (increase) in accounts receivable | 21,389 | 22,451 | (20,486) |
(Increase) decrease in inventories | (12,281) | 82,437 | (21,645) |
Decrease (increase) in prepaid expenses and other current assets | 48,656 | 62,635 | 11,592 |
(Decrease) increase in pension and post-retirement benefits | (34,510) | (28,999) | (32,644) |
(Decrease) increase in accounts payable and accrued expenses | (74,679) | (7,429) | 72,307 |
Other | (1,435) | ||
NET CASH PROVIDED BY OPERATING ACTIVITIES | 992,848 | 991,992 | 746,879 |
INVESTING ACTIVITIES | |||
Sale of business | 110,149 | ||
Acquisitions of businesses/intangibles | (280,889) | (770,587) | (466,204) |
Purchases of property/equipment | (255,524) | (144,063) | (159,138) |
Proceeds from sales of property/equipment | 6,227 | 18,501 | 10,285 |
Decrease (increase) in investments, equity in affiliates, and other assets | 11,078 | (4,798) | (1,718) |
NET CASH USED IN INVESTING ACTIVITIES | (408,959) | (900,947) | (616,775) |
FINANCING ACTIVITIES | |||
Proceeds from short-term debt | 245,000 | 350,000 | 115,000 |
Principal payments on short-term debt | (430,000) | (165,000) | (115,000) |
Dividends paid on common stock | (296,493) | (250,834) | (203,156) |
Share repurchase | (87,885) | (24,928) | (58,937) |
Proceeds from exercise of stock options | 12,075 | 10,468 | 10,523 |
Excess tax benefit from stock-based compensation | 47,657 | 22,950 | 24,700 |
Distribution to noncontrolling interest | (1,581) | (2,500) | |
Payment to noncontrolling interest | (11,702) | ||
NET CASH USED IN FINANCING ACTIVITIES | (509,646) | (70,627) | (229,370) |
EFFECT OF EXCHANGE RATE CHANGES ON CASH | (6,339) | (7,353) | (574) |
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 67,904 | 13,065 | (99,840) |
Cash and cash equivalents at beginning of year | 347,239 | 334,174 | 434,014 |
CASH AND CASH EQUIVALENTS AT END OF YEAR | $ 415,143 | $ 347,239 | $ 334,174 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Oct. 30, 2016 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | Note A Summary of Significant Accounting Policies Principles of Consolidation: The consolidated financial statements include the accounts of Hormel Foods Corporation (the Company) and all of its majority-owned subsidiaries after elimination of intercompany accounts, transactions, and profits. Stock Split: On November 23, 2015, the Company’s Board of Directors authorized a two-for-one split of the Company’s voting common stock, which was subsequently approved by shareholders at the Company’s Annual Meeting on January 26, 2016, and effected on January 27, 2016. The Company’s voting common stock was reclassified by reducing the par value from $.0293 per share to $.01465 per share and the number of authorized shares was increased from 800 million to 1.6 billion shares, in order to effect the two-for-one stock split. The Company distributed the additional shares of $.01465 par value common stock on February 9, 2016, and the shares began trading at the post-split price on February 10, 2016. Unless otherwise noted, all prior year share amounts and per share calculations throughout this Annual Report have been restated to reflect the impact of this split and to provide data on a comparable basis. Such restatements include calculations regarding the Company’s weighted-average shares, earnings per share, and dividends per share, as well as disclosures regarding the Company’s stock-based compensation plans and share repurchase activity. Use of Estimates: The preparation of financial statements in conformity with U.S. generally accepted accounting principles (U.S. GAAP) requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Fiscal Year: The Company’s fiscal year ends on the last Sunday in October. Fiscal year 2016 consisted of 53 weeks and fiscal years 2015 and 2014 consisted of 52 weeks. Cash and Cash Equivalents: The Company considers all investments with an original maturity of three months or less on their acquisition date to be cash equivalents. The Company’s cash equivalents as of October 30, 2016, and October 25, 2015, consisted primarily of bank deposits, money market funds rated AAA, or other highly liquid investment accounts. The Net Asset Value (NAV) of the Company’s money market funds is based on the market value of the securities in their portfolio. Fair Value Measurements: Pursuant to the provisions of Accounting Standards Codification (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. See additional discussion regarding the Company’s fair value measurements in Notes G, H, and M. Investments: The Company maintains a rabbi trust to fund certain supplemental executive retirement plans and deferred income plans, which is included in other assets on the Consolidated Statements of Financial Position. The securities held by the trust are classified as trading securities and consist mainly of fixed return investments. Therefore, unrealized gains and losses associated with these investments are included in the Company’s earnings. Securities held by the trust generated gains of $2.6 million, $2.4 million, and $2.9 million for fiscal years 2016, 2015, and 2014, respectively. Inventories: Inventories are stated at the lower of cost or market. Cost is determined principally under the average cost method. Adjustments to the Company’s lower of cost or market inventory reserve are reflected in cost of products sold in the Consolidated Statements of Operations. Property, Plant and Equipment: Property, plant and equipment are stated at cost. The Company uses the straight-line method in computing depreciation. The annual provisions for depreciation have been computed principally using the following ranges of asset lives: buildings 20 to 40 years, machinery and equipment 5 to 10 years. Internal-use software development and implementation costs are expensed until the Company has determined that the software will result in probable future economic benefits, and management has committed to funding the project. Thereafter, all material development and implementation costs, and purchased software costs, are capitalized as part of machinery and equipment and amortized using the straight-line method over the remaining estimated useful lives. Goodwill and Other Indefinite-Lived Intangibles: Indefinite-lived intangible assets are originally recorded at their estimated fair values at date of acquisition and the residual of the purchase price is recorded to goodwill. Goodwill and other indefinite-lived intangible assets are allocated to reporting units that will receive the related sales and income. Goodwill and indefinite-lived intangible assets are tested annually for impairment, or more frequently if impairment indicators arise. In conducting the annual impairment test for goodwill, the Company first performs a qualitative assessment to determine whether it is more likely than not (> 50% likelihood) that the fair value of any reporting unit is less than its carrying amount. If the Company concludes this is the case, then a two-step quantitative test for goodwill impairment is performed for the appropriate reporting units. Otherwise, the Company concludes no impairment is indicated and does not perform the two-step test. In conducting the initial qualitative assessment, the Company analyzes actual and projected growth trends for net sales, gross margin, and segment profit for each reporting unit, as well as historical performance versus plan and the results of prior quantitative tests performed. Additionally, the Company assesses critical areas that may impact its business, including macroeconomic conditions and the related impact, market-related exposures, any plans to market all or a portion of their business, competitive changes, new or discontinued product lines, changes in key personnel, or any other potential risks to their projected financial results. If performed, the quantitative goodwill impairment test is a two-step process performed at the reporting unit level. First, the fair value of each reporting unit is compared to its corresponding carrying value, including goodwill. The fair value of each reporting unit is estimated using discounted cash flow valuations (Level 3), which incorporate assumptions regarding future growth rates, terminal values, and discount rates. The estimates and assumptions used consider historical performance and are consistent with the assumptions used in determining future profit plans for each reporting unit, which are approved by the Company’s Board of Directors. If the first step results in the carrying value exceeding the fair value of any reporting unit, then a second step must be completed in order to determine the amount of goodwill impairment that should be recorded. In the second step, the implied fair value of the reporting unit’s goodwill is determined by allocating the reporting unit’s fair value to all of its assets and liabilities other than goodwill in a manner similar to a purchase price allocation. The implied fair value of the goodwill that results from the application of this second step is then compared to the carrying amount of the goodwill and an impairment charge is recorded for the difference. During fiscal years 2016, 2015, and 2014, as a result of the qualitative testing performed, no impairment charges were recorded other than for the Company’s Diamond Crystal Brands (DCB) assets held for sale. See additional discussion regarding the Company’s assets held for sale in Note E. In conducting the annual impairment test for its indefinite-lived intangible assets, the Company first performs a qualitative assessment to determine whether it is more likely than not (> 50% likelihood) that an indefinite-lived intangible asset is impaired. If the Company concludes that this is the case, then a quantitative test for impairment must be performed. Otherwise, the Company does not need to perform a quantitative test. In conducting the initial qualitative assessment, the Company analyzes growth rates for historical and projected net sales and the results of prior quantitative tests performed. Additionally, each reporting unit assesses critical areas that may impact their intangible assets or the applicable royalty rates to determine if there are factors that could indicate impairment of the asset. If performed, the quantitative impairment test compares the fair value and carrying value of the indefinite-lived intangible asset. The fair value of indefinite-lived intangible assets is primarily determined on the basis of estimated discounted value, using the relief from royalty method (Level 3), which incorporates assumptions regarding future sales projections and discount rates. If the carrying value exceeds fair value, the indefinite-lived intangible asset is considered impaired and an impairment charge is recorded for the difference. Even if not required, the Company periodically elects to perform the quantitative test in order to confirm the qualitative assessment. Based on the qualitative assessment conducted in fiscal year 2016, performance of the quantitative test was not required for any of the Company’s indefinite-lived intangible assets. No impairment charges were recorded for indefinite-lived intangible assets for fiscal years 2016, 2015, or 2014. Impairment of Long-Lived Assets and Definite-Lived Intangible Assets: Definite-lived intangible assets are amortized over their estimated useful lives. The Company reviews long-lived assets and definite-lived intangible assets for impairment annually, or more frequently when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If impairment indicators are present and the estimated future undiscounted cash flows are less than the carrying value of the assets and any related goodwill, the carrying value is reduced to the estimated fair value. No material write-downs were recorded in fiscal years 2016, 2015, or 2014. Assets Held For Sale: The Company classifies assets as held for sale when management approves and commits to a formal plan of sale with the expectation the sale will be completed within one year. The net assets of the business held for sale are then recorded at the lower of their current carrying value or the fair market value, less costs to sell. See additional discussion regarding the Company’s assets held for sale in Note E. Employee Benefit Plans: The Company has elected to use the corridor approach to recognize expenses related to its defined benefit pension and other post-retirement benefit plans. Under the corridor approach, actuarial gains or losses resulting from experience different from that assumed and from changes in assumptions are deferred and amortized over future periods. For the defined benefit pension plans, the unrecognized gains and losses are amortized when the net gain or loss exceeds 10.0% of the greater of the projected benefit obligation or the fair value of plan assets at the beginning of the year. For the other post-retirement plans, the unrecognized gains and losses are amortized when the net gain or loss exceeds 10.0% of the accumulated pension benefit obligation at the beginning of the year. For plans with active employees, net gains or losses in excess of the corridor are amortized over the average remaining service period of participating employees expected to receive benefits under those plans. For plans with only retiree participants, net gains or losses in excess of the corridor are amortized over the average remaining life of the retirees receiving benefits under those plans. Contingent Liabilities: The Company may be subject to investigations, legal proceedings, or claims related to the on-going operation of its business, including claims both by and against the Company. Such proceedings typically involve claims related to product liability, contract disputes, wage and hour laws, employment practices, or other actions brought by employees, consumers, competitors, or suppliers. The Company establishes accruals for its potential exposure, as appropriate, for claims against the Company when losses become probable and reasonably estimable. Where the Company is able to reasonably estimate a range of potential losses, the Company records the amount within that range which constitutes the Company’s best estimate. The Company also discloses the nature of and range of loss for claims against the Company when losses are reasonably possible and material. Foreign Currency Translation: Assets and liabilities denominated in foreign currency are translated at the current exchange rate as of the statement of financial position date, and amounts in the statement of operations are translated at the average monthly exchange rate. Translation adjustments resulting from fluctuations in exchange rates are recorded as a component of accumulated other comprehensive loss in shareholders’ investment. When calculating foreign currency translation, the Company deemed its foreign investments to be permanent in nature and has not provided for taxes on currency translation adjustments arising from converting the investment in a foreign currency to U.S. dollars. Derivatives and Hedging Activity: The Company uses commodity and currency positions to manage its exposure to price fluctuations in those markets. The contracts are recorded at fair value on the Consolidated Statements of Financial Position within other current assets or accounts payable. Additional information on hedging activities is presented in Note H. Equity Method Investments: The Company has a number of investments in joint ventures where its voting interests are in excess of 20 percent but not greater than 50 percent and for which there are no other indicators of control. The Company accounts for such investments under the equity method of accounting, and its underlying share of each investee’s equity is reported in the Consolidated Statements of Financial Position as part of investments in and receivables from affiliates. The Company regularly monitors and evaluates the fair value of our equity investments. If events and circumstances indicate that a decline in the fair value of these assets has occurred and is other than temporary, the Company will record a charge in equity in earnings of affiliates in the Consolidated Statements of Operations. The Company’s equity investments do not have a readily determinable fair value as none of them are publicly traded. The fair values of the Company’s private equity investments are determined by discounting the estimated future cash flows of each entity. These cash flow estimates include assumptions on growth rates and future currency exchange rates (Level 3). Excluding charges related to the exit from international joint venture businesses in fiscal year 2015, there were no other charges on any of the Company’s equity investments in fiscal years 2016, 2015, or 2014. See additional discussion regarding the Company’s equity method investments in Note I. Revenue Recognition: The Company recognizes sales when title passes upon delivery of its products to customers, net of applicable provisions for discounts, returns, and allowances. Products are delivered upon receipt of customer purchase orders with acceptable terms, including price and reasonably assured collectability. The Company offers various sales incentives to customers and consumers. Incentives that are offered off-invoice include prompt pay allowances, will call allowances, spoilage allowances, and temporary price reductions. These incentives are recognized as reductions of revenue at the time title passes. Coupons are used as an incentive for consumers to purchase various products. The coupons reduce revenues at the time they are offered, based on estimated redemption rates. Promotional contracts are performed by customers to promote the Company’s products to consumers. These incentives reduce revenues at the time of performance through direct payments and accrued promotional funds. Accrued promotional funds are unpaid liabilities for promotional contracts in process or completed at the end of a quarter or fiscal year. Promotional contract accruals are based on a review of the unpaid outstanding contracts on which performance has taken place. Estimates used to determine the revenue reduction include the level of customer performance and the historical spend rate versus contracted rates. Allowance for Doubtful Accounts: The Company estimates the allowance for doubtful accounts based on a combination of factors, including the age of its accounts receivable balances, customer history, collection experience, and current market factors. Additionally, a specific reserve may be established if the Company becomes aware of a customer’s inability to meet its financial obligations. Advertising Expenses: Advertising costs are expensed when incurred. Advertising expenses include all media advertising but exclude the costs associated with samples, demonstrations, and market research. Advertising costs for fiscal years 2016, 2015, and 2014 were $204.1 million, $145.3 million, and $114.4 million, respectively. Shipping and Handling Costs: The Company’s shipping and handling expenses are included in cost of products sold. Research and Development Expenses: Research and development costs are expensed as incurred and are included in selling, general and administrative expenses. Research and development expenses incurred for fiscal years 2016, 2015, and 2014 were $34.7 million, $32.0 million, and $29.9 million, respectively. Income Taxes: The Company records income taxes in accordance with the liability method of accounting. Deferred taxes are recognized for the estimated taxes ultimately payable or recoverable based on enacted tax law. Changes in enacted tax rates are reflected in the tax provision as they occur. In accordance with ASC 740, Income Taxes , the Company recognizes a tax position in its financial statements when it is more likely than not that the position will be sustained upon examination based on the technical merits of the position. That position is then measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. Employee Stock Options: The Company records stock-based compensation expense in accordance with ASC 718, Compensation - Stock Compensation . For options subject to graded vesting, the Company recognizes stock-based compensation expense ratably over the shorter of the vesting period or requisite service period. Stock-based compensation expense for grants made to retirement-eligible employees is recognized on the date of grant. Share Repurchases: On January 29, 2013, the Company’s Board of Directors authorized the repurchase of 10.0 million shares of its common stock with no expiration date. On a pre-split basis, 0.4 million shares were purchased from The Hormel Foundation under this authorization at the average closing price for the three days of September 15, September 16, and September 17, 2015, or $62.32. The Company purchased 1.3 million shares at an average price of $46.87 during fiscal year 2014 on a pre-split basis. On November 23, 2015, the Company’s Board of Directors authorized a two-for-one split of the Company’s voting common stock. As part of the Board’s approval of that stock split, the number of shares remaining to be repurchased was adjusted proportionately. On a post-split basis, 2.4 million shares at an average price of $36.84 were purchased during fiscal year 2016 under the current authorization in place. Supplemental Cash Flow Information: Non-cash investment activities presented on the Consolidated Statements of Cash Flows generally consist of unrealized gains or losses on the Company’s rabbi trust. The noted investments are included in other assets or short-term marketable securities on the Consolidated Statements of Financial Position. Changes in the value of these investments are included in the Company’s net earnings and are presented in the Consolidated Statements of Operations as either interest and investment income or interest expense, as appropriate. On March 16, 2015, the Company purchased the remaining 19.29% ownership interest in its Shanghai Hormel Foods Corporation joint venture from the minority partner Shanghai Shangshi Meat Products Co. Ltd., resulting in 100.0% ownership of that business. The interest was purchased with $11.7 million in cash, along with the transfer of land use rights and buildings held by the joint venture. The difference between the fair value of the consideration given and the reduction in the noncontrolling interest was recognized as an $11.9 million reduction in additional paid-in capital attributable to the Company. The Company will continue to manufacture at the Shanghai facility by leasing the land use rights and buildings from the previous minority partner. Accounting Changes and Recent Accounting Pronouncements: In January 2014, the Financial Accounting Standards Board (FASB) updated the guidance within ASC 323, Investments-Equity Method and Joint Ventures . The update provides guidance on accounting for investments by a reporting entity in flow-through limited liability entities that manage or invest in affordable housing projects qualifying for the low-income housing tax credit. The amendments modify the conditions a reporting entity must meet to be eligible to use a method other than the equity or cost methods to account for qualified affordable housing project investments. If the modified conditions are met, the amendments permit an entity to make an accounting policy election to amortize the initial cost of the investment in proportion to the amount of tax credits and other tax benefits received and recognize the net investment performance in the income statement as a component of income tax expense (benefit). Additionally, the amendments introduce new recurring disclosures about all investments in qualified affordable housing projects irrespective of the method used to account for the investments. The updated guidance is to be applied retrospectively and is effective for fiscal years, and interim periods within those years, beginning after December 15, 2014, with early adoption permitted. The Company adopted the new provisions of this accounting standard at the beginning of fiscal year 2016, and adoption did not have a material impact on its consolidated financial statements. In May 2014, the FASB issued ASC 606, Revenue from Contracts with Customers . This topic converges the guidance within U.S. GAAP and international financial reporting standards and supersedes ASC 605, Revenue Recognition . The new standard requires companies to recognize revenue to depict the transfer of goods or services to customers in amounts that reflect the consideration to which the company expects to be entitled in exchange for those goods or services. The new standard will also result in enhanced disclosures about revenue, provide guidance for transactions which were not previously addressed comprehensively, and improve guidance for multiple-element arrangements. On July 8, 2015, the FASB approved a one-year deferral of the effective date. The new guidance is effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period, and early adoption is permitted for annual reporting periods beginning after December 15, 2016. Accordingly, the Company expects to adopt the provisions of this new accounting standard at the beginning of fiscal year 2019, and is currently assessing the impact on its consolidated financial statements with a focus on arrangements with customers. In April 2015, the FASB updated the guidance within ASC 835, Interest . The update provides guidance on simplifying the presentation of debt issuance costs. The amendments require debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. The updated guidance is effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years, with early adoption permitted. The Company expects to adopt the new provisions of this accounting standard at the beginning of fiscal year 2017, and adoption will not have a material impact on its consolidated financial statements. In April 2015, the FASB updated the guidance within ASC 715, Compensation-Retirement Benefits . The update provides guidance on simplifying the measurement date for defined benefit plan assets and obligations. The amendments allow employers with fiscal year ends that do not coincide with a calendar month end to make an accounting policy election to measure defined benefit plan assets and obligations as of the end of the month closest to their fiscal year ends. The updated guidance is effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years, with early adoption permitted. The Company adopted the new provisions of this accounting standard at the beginning of fiscal year 2016, with no accounting policy change elected. In May 2015, the FASB updated the guidance within ASC 820, Fair Value Measurements and Disclosures . The update provides guidance on the disclosures for investments in certain entities that calculate NAV per share (or its equivalent). The amendments remove the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the NAV per share (or its equivalent) as a practical expedient. The updated guidance is to be applied retrospectively and is effective for annual reporting periods beginning after December 15, 2015, and interim periods within those fiscal years, with early adoption permitted. The Company expects to adopt the new provisions of this accounting standard at the beginning of fiscal year 2017, and adoption is not expected to have a material impact on its consolidated financial statements as it will impact year-end disclosures only. In November 2015, the FASB updated the guidance within ASC 740, Balance Sheet Classification of Deferred Taxes . The update requires all deferred tax assets and liabilities, along with any related valuation allowance, be classified as noncurrent on the balance sheet. The updated guidance is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years, with early adoption permitted. The Company adopted the new provisions of this accounting standard prospectively at the beginning of fiscal year 2016, and adoption did not have a material impact on its consolidated financial statements. In February 2016, the FASB updated the guidance within ASC 842, Leases . The update requires lessees to put most leases on their balance sheets while recognizing expenses on their income statements in a manner similar to current U.S. GAAP. The guidance also eliminates current real estate-specific provisions for all entities. For lessors, the guidance modifies the classification criteria and the accounting for sales-type and direct financing leases. The updated guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company is currently assessing the timing and impact of adopting the updated provisions. In March 2016, the FASB updated the guidance within ASC 718, Compensation-Stock Compensation . The update simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The updated guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. Early adoption is permitted in any interim or annual period, with adjustments reflected as of the beginning of the fiscal year. The Company is currently assessing the timing and impact of adopting the updated provisions. In June 2016, the FASB updated the guidance within ASC 326, Financial Instruments - Credit Losses . 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 amendments replace the current incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The updated guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted for all entities for fiscal years beginning after December 15, 2018, and interim periods therein. The Company is currently assessing the timing and impact of adopting the updated provisions. In August 2016, the FASB updated the guidance within ASC 230, Statement of Cash Flows . The update makes eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. The updated guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted provided all amendments are adopted in the same period. The guidance requires application using a retrospective transition method. The Company is currently assessing the timing and impact of adopting the updated provisions. In October 2016, the FASB updated the guidance within ASC 740, Income Taxes . The updated guidance requires the recognition of the income tax consequences of an intra-entity asset transfer, other than transfers of inventory, when the transfer occurs. For intra-entity transfers of inventory, the income tax effects will continue to be deferred until the inventory has been sold to a third party. The updated guidance is effective for reporting periods beginning after December 15, 2017, with early adoption permitted only within the first interim period of a fiscal year. The guidance is required to be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The Company is currently assessing the timing and impact of adopting the updated provisions. |
Acquisitions
Acquisitions | 12 Months Ended |
Oct. 30, 2016 | |
Acquisitions | |
Acquisitions | Note B Acquisitions On May 26, 2016, the Company acquired Justin’s, LLC (Justin’s) of Boulder, Colorado, for a preliminary purchase price of $280.9 million. The transaction provides a cash flow benefit resulting from the amortization of the tax basis of assets, the net present value of which is approximately $70.0 million. The purchase price is preliminary pending final purchase accounting adjustments, and was funded by the Company with cash on hand and by utilizing short-term financing. Primary assets acquired include goodwill of $186.4 million and intangibles of $89.9 million. Justin’s is a pioneer in nut butter-based snacking and this acquisition allows the Company to enhance its presence in the specialty natural and organic nut butter category, complementing SKIPPY ® peanut butter products. Operating results for this acquisition have been included in the Company’s Consolidated Statements of Operations from the date of acquisition and are reflected in the Grocery Products segment. On July 13, 2015, the Company acquired Applegate Farms, LLC (Applegate) of Bridgewater, New Jersey, for a final purchase price of $774.1 million in cash. The purchase price was funded by the Company with cash on hand and by utilizing short-term financing. Applegate ® is the No. 1 brand in natural and organic value-added prepared meats and this acquisition will allow the Company to expand the breadth of its protein offerings to provide consumers more choice in this fast growing category. The acquisition was accounted for as a business combination using the acquisition method. The Company obtained an independent appraisal. A final allocation of the purchase price to the acquired assets, liabilities, and goodwill is presented in the table below. (in thousands) Accounts receivable $ 25,574 Inventory Prepaid and other assets Property, plant and equipment Intangible assets Goodwill Current liabilities ) Deferred taxes ) Purchase price $ Goodwill is calculated as the excess of the purchase price over the fair value of the net assets recognized. The goodwill recorded as part of the acquisition primarily reflects the value of the potential to expand product distribution. A portion of the goodwill balance is expected to be deductible for income tax purposes. The goodwill and intangible assets have been allocated to the Refrigerated Foods segment. The Company recognized approximately $9.0 million of transaction costs in fiscal year 2015 related to the acquisition and the charges were reported in selling, general and administrative expense in the Company’s Consolidated Statements of Operations. Operating results for this acquisition have been included in the Company’s Consolidated Statements of Operations from the date of acquisition and are reflected in the Refrigerated Foods segment. On August 11, 2014, the Company acquired CytoSport Holdings, Inc. (CytoSport) of Benicia, California, for a final purchase price of $420.9 million in cash. The purchase price was funded by the Company with cash on hand and by utilizing funds from its revolving line of credit. The agreement provides for a potential additional payment of up to $20.0 million subject to meeting specific financial performance criteria over the two years subsequent to the year of acquisition. The Company recorded adjustments to income to recognize the liability at its fair value as of October 30, 2016, and October 25, 2015, of $1.4 million in fiscal year 2016 and $8.9 million in fiscal year 2015. CytoSport is the maker of Muscle Milk ® products and is a leading provider of premium protein products in the sports nutrition category. CytoSport’s brands align with the Company’s focus on protein while further diversifying the Company’s portfolio. The acquisition was accounted for as a business combination using the acquisition method. The Company has estimated the acquisition date fair values of the assets acquired and liabilities assumed, using independent appraisals and other analyses, and determined final working capital adjustments. The final allocation of the purchase price to the acquired assets, liabilities, and goodwill is presented in the table below. (in thousands) Accounts receivable $ 30,580 Inventory Prepaid and other assets Property, plant and equipment Intangible assets Goodwill Current liabilities ) Long-term liabilities ) Deferred taxes ) Purchase price $ The liabilities shown above include $15.0 million representing potential payments owed under a supplier agreement, which are contingent on future production levels through fiscal year 2018. Goodwill is calculated as the excess of the purchase price over the fair value of the net assets recognized. The goodwill recorded as part of the acquisition primarily reflects the value of the assembled workforce, manufacturing synergies, and the potential to expand presence in alternate channels. The goodwill balance is not expected to be deductible for income tax purposes. The goodwill and intangible assets have been allocated to the Specialty Foods and International & Other segments. The Company recognized approximately $4.8 million of transaction costs in fiscal year 2014 related to the acquisition and the charges were reported in selling, general and administrative expense in the Consolidated Statement of Operations. Operating results for this acquisition have been included in the Company’s Consolidated Statements of Operations from the date of acquisition and are reflected in the Specialty Foods and International & Other segments. On November 26, 2013, the Company acquired the China-based SKIPPY ® peanut butter business, for a final purchase price of $41.9 million in cash. This acquisition included the Weifang, China, manufacturing facility and all sales in Mainland China. The purchase price was funded by the Company with cash on hand. Operating results for this acquisition have been included in the Company’s Consolidated Statements of Operations from the date of acquisition and are reflected in the International & Other reporting segment. SKIPPY ® is a well-established brand that allows the Company to expand its presence in the center of the store with a non-meat protein product and reinforces the Company’s balanced product portfolio. The acquisition also provides the opportunity to strengthen the Company’s global presence and complements the international sales strategy for the SPAM ® family of products. Pro forma results of operations are not presented, as no acquisitions in fiscal years 2016, 2015, or 2014 were considered material, individually or in the aggregate, to the consolidated Company. |
Inventories
Inventories | 12 Months Ended |
Oct. 30, 2016 | |
Inventories | |
Inventories | Note C Inventories Principal components of inventories are: October 30, October 25, (in thousands) 2016 2015 Finished products $ $ Raw materials and work-in-process Materials and supplies Total $ $ |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 12 Months Ended |
Oct. 30, 2016 | |
Goodwill and Intangible Assets | |
Goodwill and Intangible Assets | Note D Goodwill and Intangible Assets The changes in the carrying amount of goodwill for the fiscal years ended October 30, 2016, and October 25, 2015, are presented in the table below. Additions during the fiscal year ended October 30, 2016, relate to the acquisition of Justin’s on May 26, 2016, and are preliminary pending final purchase accounting adjustments. Purchase adjustments are related to the Applegate and CytoSport acquisitions. Other reductions during the fiscal year ended October 30, 2016, are due to the sale of DCB on May 9, 2016. See additional discussion regarding the Company’s assets held for sale in Note E. Grocery Refrigerated Specialty International (in thousands) Products Foods JOTS Foods & Other Total Balance as of October 26, 2014 $ $ 96,643 $ $ $ $ Goodwill acquired – – – – Purchase adjustments – – – – Impairment charge – – – – Product line disposal – – Balance as of October 25, 2015 $ $ $ $ $ $ Goodwill acquired – – – – Purchase adjustments – – – – Goodwill sold – – – – Impairment charge – – – – Balance as of October 30, 2016 $ $ $ $ $ $ The gross carrying amount and accumulated amortization for definite-lived intangible assets are presented in the table below. In fiscal year 2016, customer relationships of $5.8 million and non-compete agreements of $1.4 million were acquired related to Justin’s. In fiscal year 2015, customer relationships of $25.1 million and non-compete agreements of $1.2 million were acquired related to Applegate. Through the final purchase accounting valuation of CytoSport in fiscal year 2015, the value of the customer relationships was raised to $23.3 million. Once fully amortized, the definite-lived intangible assets are removed from the table. October 30, 2016 October 25, 2015 Gross Weighted- Gross Weighted- Carrying Accumulated Avg Life Carrying Accumulated Avg Life (in thousands) Amount Amortization (in Years) Amount Amortization (in Years) Customer lists/relationships $ $ $ 83,190 $ Formulas and recipes Proprietary software and technology – – N/A Other intangibles Total $ $ $ $ Amortization expense for the last three fiscal years was as follows: (in millions) 2016 $ 2015 2014 Estimated annual amortization expense for the five fiscal years after October 30, 2016, is as follows: (in millions) 2017 $ 2018 2019 2020 2021 The carrying amounts for indefinite-lived intangible assets are in the following table. The increases represent the fair value of the tradenames acquired with Justin’s in fiscal year 2016 and Applegate in fiscal year 2015. October 30, October 25, (in thousands) Brands/tradenames/trademarks $ $ Other intangibles Total $ $ During the fourth quarter of fiscal years 2016, 2015, and 2014, the Company completed the required annual impairment tests of indefinite-lived intangible assets and goodwill. No impairment charges were recorded as a result of this test. Upon disposition of the Company’s DCB assets held for sale, the Company recorded a $1.0 million impairment in the second quarter of fiscal 2016. See additional discussion regarding the Company’s assets held for sale in Note E. Useful lives of intangible assets were also reviewed during this process, with no changes identified. |
Assets Held for Sale
Assets Held for Sale | 12 Months Ended |
Oct. 30, 2016 | |
Assets Held for Sale | |
Assets Held for Sale | Note E Assets Held for Sale At the end of fiscal year 2016, the Company was actively marketing Clougherty Packing, LLC, parent company of Farmer John and Saag’s Specialty Meats, along with PFFJ, LLC farm operations in California, Arizona, and Wyoming. Through this process, the Company identified the specific assets and liabilities to be sold and allocated goodwill based on the relative fair values of the assets held for sale and the assets that will be retained by the Company. In November 2016, subsequent to the end of the fiscal year, the Company entered into an agreement for the sale. The assets held for sale are reported within the Company’s Refrigerated Foods segment. The assets held for sale are not material to the Company’s annual net sales, net earnings, or earnings per share. Amounts classified as assets and liabilities held for sale on October 30, 2016, are presented on the Company’s Consolidated Statement of Financial Position within their respective accounts, and include the following: Assets held for sale (in thousands) Current assets $ 80,861 Goodwill Intangibles Property, plant and equipment Total assets held for sale $ Liabilities held for sale (in thousands) Total current liabilities held for sale $ 44,066 In fiscal year 2015, the Company began actively marketing a portion of DCB. Through this process, the Company identified the specific assets and liabilities to be sold and allocated goodwill based on the relative fair values of the assets held for sale and the assets that will be retained by the Company. In the second quarter of fiscal year 2016, the Company entered into an agreement for the sale and recorded a $1.0 million impairment charge based on the valuation of the assets as implied by the agreed-upon sales price. During the fourth quarter of fiscal year 2015, a $21.5 million goodwill impairment charge was recorded for the portion of DCB held for sale. The fair value of the net assets to be sold was determined using Level 2 inputs utilizing a market participant bid along with internal valuations of the business. Impairment charge was recorded on the Company’s Consolidated Statements of Operations on the line item “Goodwill impairment charge.” The transaction closed on May 9, 2016, resulting in proceeds, net of selling costs, of a preliminary closing price of $110.1 million, pending working capital adjustments. DCB was reported within the Company’s Specialty Foods segment. DCB provided approximately $256 million of net sales in fiscal year 2015. Net earnings and earnings per share were not material to the consolidated Company. Amounts classified as assets and liabilities held for sale on October 25, 2015, were presented on the Company’s Consolidated Statement of Financial Position within their respective accounts, and include the following: Assets held for sale (in thousands) Current assets $ 26,057 Goodwill Intangibles Property, plant and equipment Total assets held for sale $ Liabilities held for sale (in thousands) Total current liabilities held for sale $ 3,191 |
Long-term Debt and Other Borrow
Long-term Debt and Other Borrowing Arrangements | 12 Months Ended |
Oct. 30, 2016 | |
Long-term Debt and Other Borrowing Arrangements | |
Long-term Debt and Other Borrowing Arrangements | Note F Long-term Debt and Other Borrowing Arrangements Long-term debt consists of: October 30, October 25, (in thousands) Senior unsecured notes, with interest at 4.125%, interest due semi-annually through April 2021 maturity date $ $ Less current maturities – – Total $ $ The Company has a $400.0 million unsecured revolving line of credit which was extended by one year during fiscal year 2016 at the Company’s discretion and matures in June 2021. The Company retains an option in 2017 to extend the facility for an additional year. The unsecured revolving line of credit bears interest at a variable rate based on LIBOR, and a fixed fee is paid for the availability of this credit line. As of October 30, 2016, and October 25, 2015, the Company had no outstanding draws from this line of credit. The Company also has a $300.0 million term loan facility expiring in December 2016. As of October 30, 2016, the Company had no outstanding draws from this line of credit. As of October 25, 2015, the Company had $185.0 million outstanding on the term loan facility. The Company is required by certain covenants in its debt agreements to maintain specified levels of financial ratios and financial position. At the end of the current fiscal year, the Company was in compliance with all of these covenants. Total interest paid in the last three fiscal years is as follows: (in millions) 2016 $ 2015 2014 |
Pension and Other Post-retireme
Pension and Other Post-retirement Benefits | 12 Months Ended |
Oct. 30, 2016 | |
Pension and Other Post-retirement Benefits | |
Pension and Other Post-retirement Benefits | Note G Pension and Other Post-retirement Benefits The Company has several defined benefit plans and defined contribution plans covering most employees. Total costs associated with the Company’s defined contribution benefit plans in fiscal years 2016, 2015, and 2014 were $33.5 million, $31.7 million, and $30.1 million, respectively. Benefits for defined benefit pension plans covering hourly employees are provided based on stated amounts for each year of service, while plan benefits covering salaried employees are based on final average compensation. The Company’s funding policy is to make annual contributions of not less than the minimum required by applicable regulations. Actuarial gains and losses and any adjustments resulting from plan amendments are deferred and amortized to expense over periods ranging from 9-23 years. Certain groups of employees are eligible for post-retirement health or welfare benefits. Benefits for retired employees vary for each group depending on respective retirement dates and applicable plan coverage in effect. Contribution requirements for retired employees are governed by the Retiree Health Care Payment Program and may change each year as the cost to provide coverage is determined. Eligible employees hired after January 1, 1990, may receive post-retirement medical coverage but must pay the full cost of the coverage. On October 17, 2012, the plan was amended, effective April 1, 2013, to terminate coverage for certain nonunion retirees who retired on or after August 1, 2002, and who are or will be Medicare eligible. If the cost of the nonunion retiree coverage is currently subsidized by the Company for the affected retirees, credits will be established in a health reimbursement account to help reimburse the retiree for the cost of purchasing coverage in the individual market. Actuarial gains and losses and any adjustments resulting from plan amendments are deferred and amortized to expense over periods ranging from 5-24 years. In fiscal year 2011, an amendment was enacted for a defined benefit plan which included a change in the pension formula effective January 1, 2017. The amended formula remains a defined benefit formula, but will base the accrued benefit credit on age and service and define the benefit as a lump sum. Effective October 31, 2016, the 401(k) match for these participants was increased. Net periodic cost of defined benefit plans included the following: Pension Benefits Post-retirement Benefits (in thousands) 2016 2015 2014 2016 2015 2014 Service cost $ 26,951 $ 28,795 $ 25,935 $ 1,297 $ 1,795 $ 1,963 Interest cost Expected return on plan assets ) ) ) – – – Amortization of prior service cost ) ) ) ) ) ) Recognized actuarial loss (gain) ) ) Curtailment (gain) charge ) – – – – – Net periodic cost $ 5,758 $ 6,123 $ 2,989 $ $ $ The following amounts have not been recognized in net periodic pension cost and are included in accumulated other comprehensive loss: Pension Benefits Post-retirement Benefits (in thousands) 2016 2015 2016 2015 Unrecognized prior service credit $ 17,049 $ 32,490 $ 13,845 $ 2,844 Unrecognized actuarial losses ) ) ) ) The following amounts are expected to be recognized in net periodic benefit expense in fiscal year 2017: Post- Pension retirement (in thousands) Benefits Benefits Amortized prior service credit $ $ Recognized actuarial losses The following is a reconciliation of the beginning and ending balances of the benefit obligation, the fair value of plan assets, and the funded status of the plans as of the October 30, 2016, and the October 25, 2015, measurement dates: Pension Benefits Post-retirement Benefits (in thousands) 2016 2015 2016 2015 Change in benefit obligation: Benefit obligation at beginning of year $ $ $ $ Service cost Interest cost Actuarial loss (gain) ) Plan amendments – ) – Curtailment (gain) loss ) – – – Participant contributions – – Medicare Part D subsidy – – Benefits paid ) ) ) Benefit obligation at end of year $ $ $ $ Pension Benefits Post-retirement Benefits (in thousands) 2016 2015 2016 2015 Change in plan assets: Fair value of plan assets at beginning of year $ $ $ – $ – Actual return on plan assets – – Participant contributions – – Employer contributions Benefits paid ) ) ) Fair value of plan assets at end of year $ $ $ – $ – Funded status at end of year $ (162,244 ) $ (68,432 ) $ ) $ Amounts recognized in the Consolidated Statements of Financial Position as of October 30, 2016, and October 25, 2015, are as follows: Pension Benefits Post-retirement Benefits (in thousands) 2016 2015 2016 2015 Pension assets $ 68,901 $ 132,861 $ – $ – Employee related expenses ) ) ) Pension and post-retirement benefits ) ) ) Net amount recognized $ ) $ (68,432 ) $ ) $ The following table provides information for pension plans with accumulated benefit obligations in excess of plan assets: (in thousands) 2016 2015 Projected benefit obligation $ $ Accumulated benefit obligation Fair value of plan assets – – Weighted-average assumptions used to determine benefit obligations are as follows: 2016 2015 Discount rate Rate of future compensation increase (for plans that base benefits on final compensation level) Weighted-average assumptions used to determine net periodic benefit costs are as follows: 2016 2015 2014 Discount rate Rate of future compensation increase (for plans that base benefits on final compensation level) Expected long-term return on plan assets The expected long-term rate of return on plan assets is based on fair value and is developed in consultation with outside advisors. A range is determined based on the composition of the asset portfolio, historical long-term rates of return, and estimates of future performance. For measurement purposes, an 8.0% annual rate of increase in the per capita cost of covered health care benefits for pre-Medicare and post-Medicare retirees’ coverage is assumed for 2017. The pre-Medicare and post-Medicare rate is assumed to decrease to 5.0% for 2022, and remain at that level thereafter. The assumed discount rate, expected long-term rate of return on plan assets, rate of future compensation increase, and health care cost trend rate have a significant impact on the amounts reported for the benefit plans. A one-percentage-point change in these rates would have the following effects: 1-Percentage-Point Expense Benefit Obligation (in thousands) Increase Decrease Increase Decrease Pension Benefits: Discount rate $ $ $ $ Expected long-term rate of return on plan assets – – Rate of future compensation increase Post-retirement Benefits: Discount rate $ (1,011) $ 4,710 $ (31,075) $ 37,551 Health care cost trend rate Based on the October 30, 2016, measurement date, the Company anticipates making contributions of $17.2 million to fund the pension plans during fiscal year 2017. The Company also expects to make contributions of $26.8 million during fiscal year 2017 that represent benefit payments for unfunded plans. Benefits expected to be paid over the next ten fiscal years are as follows: Post- Pension retirement (in thousands) Benefits Benefits 2017 $ 56,099 $ 21,227 2018 2019 2020 2021 2022-2026 Post-retirement benefits are net of expected federal subsidy receipts related to prescription drug benefits granted under the Medicare Prescription Drug, Improvement and Modernization Act of 2003, which are estimated to be $0.8 million per year through 2026. The actual and target weighted-average asset allocations for the Company’s pension plan assets as of the plan measurement date are as follows: 2016 2015 Asset Category Actual Target Range Actual Target Range Large Capitalization Equity 12-22% 15-35% Small Capitalization Equity 3-13% 5-15% International Equity 10-20% 15-25% Global Equity 5-20% – – Private Equity 0-15% 0-15% Total Equity Securities 50-75% 50-75% Fixed Income 25-45% 25-45% Real Estate 0-10% – 0-10% Cash and Cash Equivalents – – Target allocations are established in consultation with outside advisors through the use of asset-liability modeling to attempt to match the duration of the plan assets with the duration of the Company’s projected benefit liability. The asset allocation strategy attempts to minimize the long-term cost of pension benefits, reduce the volatility of pension expense, and achieve a healthy funded status for the plans. The fair values of the defined benefit pension plan investments as of October 30, 2016, and October 25, 2015, by asset category and fair value hierarchy level, are as follows: Fair Value Measurements at October 30, 2016 Quoted Prices in Active Significant Other Significant Markets for Observable Unobservable Total Identical Assets Inputs Inputs (in thousands) Fair Value (Level 1) (Level 2) (Level 3) Investments at Fair Value: Cash Equivalents (1) $ $ $ – $ – Large Capitalization Equity (2) Domestic $ $ $ $ – Foreign – – Total Large Capitalization Equity $ $ $ $ – Small Capitalization Equity (3) Domestic $ $ $ – $ – Foreign – – Total Small Capitalization Equity $ 63,772 $ $ – $ – International Equity (4) Mutual fund $ $ – $ $ – Collective trust – – Total International Equity $ $ – $ $ – Global Equity – Mutual Fund (5) $ 129,014 $ – $ $ – Private Equity (6) Domestic $ $ – $ – $ International – – Total Private Equity $ $ – $ – $ Total Equity $ $ $ $ 68,102 Fixed Income (7) US government issues $ $ $ $ – Municipal issues – – Corporate issues – domestic – – Corporate issues – foreign – – Total Fixed Income $ $ $ $ – Real Estate – Domestic (8) $ $ – $ – $ 63,004 Total Investments at Fair Value $ $ $ $ Fair Value Measurements at October 25, 2015 Quoted Prices in Active Significant Other Significant Markets for Observable Unobservable Total Identical Assets Inputs Inputs) (in thousands) Fair Value (Level 1) (Level 2) (Level 3) Investments at Fair Value: Cash Equivalents (1) $ $ $ – $ – Large Capitalization Equity (2) Domestic $ $ $ $ – Foreign – – World – – Total Large Capitalization Equity $ $ $ $ – Small Capitalization Equity (3) Domestic $ $ $ – $ – Foreign – – Total Small Capitalization Equity $ $ $ – $ – International Equity (4) Mutual fund $ $ – $ $ – Collective trust – – Total International Equity $ $ – $ $ – Private Equity (6) Domestic $ $ – $ – $ International – – Total Private Equity $ 71,775 $ – $ – $ Total Equity $ $ $ $ Fixed Income (7) US government issues $ $ $ $ – Municipal issues – – Corporate issues – domestic – – Corporate issues – foreign – – Total Fixed Income $ 405,191 $ $ $ – Total Investments at Fair Value $ $ $ $ The following is a description of the valuation methodologies used for instruments measured at fair value, including the general classification of such instruments pursuant to the valuation hierarchy: (1) Cash Equivalents: These Level 1 investments consist primarily of money market mutual funds that are highly liquid and traded in active markets. (2) Large Capitalization Equity: The Level 1 investments include a mix of predominately U.S. common stocks and foreign common stocks, which are valued at the closing price reported on the active market in which the individual securities are traded. The Level 2 investment includes mutual funds consisting of a mix of U.S. and foreign common stocks that are valued at the publicly NAV of shares held by the pension plans at year end. (3) Small Capitalization Equity: The Level 1 investments include a mix of predominately U.S. common stocks and foreign common stocks, which are valued at the closing price reported on the active market in which the individual securities are traded. (4) International Equity: These Level 2 investments include a mix of collective investment funds and mutual funds. The mutual funds are valued at the publicly available NAV of shares held by the pension plans at year end. The value of the collective investment funds is based on the fair value of the underlying investments and the NAV can be calculated for these funds. (5) Global Equity: The Level 2 investment includes an open-ended mutual fund consisting of a mix of U.S. common stocks and foreign common stocks, which is valued at the publicly available NAV of shares held by the pension plans at year end. (6) Private Equity: These Level 3 investments consist of various collective investment funds, which are managed by a third party, that invest in a well-diversified portfolio of equity investments from top performing, high quality firms that focus on U.S. and foreign small to mid-markets, venture capitalists, and entrepreneurs with a concentration in areas of innovation. Investment strategies include buyouts, growth capital, buildups, and distressed, as well as early stages of company development mainly in the U.S. The fair value of the units for these investments is based on the fair value of the underlying investments, and the NAV can be calculated for these funds. (7) Fixed Income: The Level 1 investments include U.S. Treasury bonds and notes, which are valued at the closing price reported on the active market in which the individual securities are traded. The Level 2 investments consist principally of U.S. government securities, which are valued daily using institutional bond quote sources and mortgage-backed securities pricing sources; municipal, domestic, and foreign securities, which are valued daily using institutional bond quote sources; and mutual funds invested in long-duration corporate bonds that are valued at the publicly available NAV of shares held by the pension plans at year-end. (8) Real Estate: These Level 3 investments include ownership in open-ended real estate funds, which manage diversified portfolios of commercial properties within the office, residential, retail, and industrial property sectors. Investment strategies aim to acquire, own, hold, or dispose of investments with the goal of achieving current income and/or capital appreciation. The real estate investments are valued at the NAV of shares held by the pension plans. Requests to redeem shares are granted on a quarterly basis with either 45 or 90 days advance notice, subject to availability of cash. A reconciliation of the beginning and ending balance of the investments measured at fair value using significant unobservable inputs (Level 3) is as follows: (in thousands) 2016 2015 Beginning Balance $ 71,775 $ Purchases, issuances, and settlements (net) Unrealized (losses) gains Realized gains Interest and dividend income Ending Balance $ $ The Company has commitments totaling $85.0 million for the private equity investments within the pension plans. The unfunded private equity commitment balance for each investment category as of October 30, 2016, and October 25, 2015, is as follows: (in thousands) 2016 2015 Domestic equity $ 4,696 $ 9,264 International equity Unfunded commitment balance $ $ Funding for future private equity capital calls will come from existing pension plan asset investments and not from additional cash contributions into the Company’s pension plans. |
Derivatives and Hedging
Derivatives and Hedging | 12 Months Ended |
Oct. 30, 2016 | |
Derivatives and Hedging | |
Derivatives and Hedging | Note H Derivatives and Hedging The Company uses hedging programs to manage price risk associated with commodity purchases. These programs utilize futures contracts, options, and swaps to manage the Company’s exposure to price fluctuations in the commodities markets. The Company has determined its programs which are designated as hedges are highly effective in offsetting the changes in fair value or cash flows generated by the items hedged. Cash Flow Hedges: The Company utilizes corn futures to offset price fluctuations in the Company’s future direct grain purchases. The financial instruments are designated and accounted for as cash flow hedges, and the Company measures the effectiveness of the hedges at least quarterly. 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. Any gains or losses related to hedge ineffectiveness are recognized in the current period cost of products sold. The Company typically does not hedge its grain exposure beyond the next two upcoming fiscal years. As of October 30, 2016, and October 25, 2015, the Company had the following outstanding commodity futures contracts that were entered into to hedge forecasted purchases: Volume Commodity October 30, 2016 October 25, 2015 Corn 22.4 million bushels 20.1 million bushels As of October 30, 2016, the Company has included in AOCL hedging gains of $9.2 million (before tax) relating to its positions, compared to gains of $1.0 million (before tax) as of October 25, 2015. The Company expects to recognize the majority of these gains over the next 12 months. Fair Value Hedges: The Company utilizes futures to minimize the price risk assumed when fixed forward priced contracts are offered to the Company’s commodity suppliers. 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. The futures contracts are designated and accounted for as fair value hedges, and the Company measures the effectiveness of the hedges at least quarterly. 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 are recorded on the Consolidated Statement 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. Any gains or losses related to hedge ineffectiveness are recognized in the current period cost of products sold. As of October 30, 2016, and October 25, 2015, the Company had the following outstanding commodity futures contracts designated as fair value hedges: Volume Commodity October 30, 2016 October 25, 2015 Corn 3.6 million bushels 5.3 million bushels Lean hogs 0.2 million cwt 0.4 million cwt 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. As of October 30, 2016, and October 25, 2015, the Company had the following outstanding futures and options contracts related to these programs: Volume Commodity October 30, 2016 October 25, 2015 Corn 4.0 million bushels 2.6 million bushels Soybean meal 11,000 tons 11,500 tons Fair Values: The fair values of the Company’s derivative instruments as of October 30, 2016, and October 25, 2015, were as follows: Fair Value (1) Location on Consolidated October 30, October 25, (in thousands) Statements of Financial Position 2016 2015 Asset Derivatives: Derivatives Designated as Hedges: Commodity contracts Other current assets $ $ Derivatives Not Designated as Hedges: Commodity contracts Other current assets Total Asset Derivatives $ (50) $ (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 Statement of Financial Position. See Note M for a discussion of these net amounts as reported in the Consolidated Statements of Financial Position. Derivative Gains and Losses: Gains or losses (before tax, in thousands) related to the Company’s derivative instruments for the fiscal years ended October 30, 2016, and October 25, 2015, were as follows: Gain/(Loss) Recognized Gain/(Loss) Reclassified Gain/(Loss) Recognized in AOCL from AOCL into Earnings in Earnings (Effective Portion) (1) (Effective Portion) (1) (Ineffective Portion) (2)(4) Fiscal Year Ended Fiscal Year Ended Fiscal Year Ended October 30, October 25, Location on Consolidated October 30, October 25, October 30, October 25, Cash Flow Hedges: 2016 2015 Statements of Operations 2016 2015 2016 2015 Commodity contracts $ $ Cost of products sold $ $ $ $ Gain/(Loss) Gain/(Loss) Recognized in Earnings Recognized in Earnings (Effective Portion) (3) (Ineffective Portion) (2)(5) Fiscal Year Ended Fiscal Year Ended Location on Consolidated October 30, October 25, October 30, October 25, Fair Value Hedges: Statements of Operations 2016 2015 2016 2015 Commodity contracts Cost of products sold $ $ $ $ Gain/(Loss) Recognized in Earnings Fiscal Year Ended Derivatives Not Location on Consolidated October 30, October 25, Designated as Hedges: Statements of Operations 2016 2015 Commodity contracts Cost of products sold $ $ (1) Amounts represent gains or losses in AOCL before tax. See Note J for the after tax impact of these gains or losses on net earnings. (2) There were no gains or losses excluded from the assessment of hedge effectiveness during the fiscal year. Fiscal years 2016 and 2015 include the mark-to-market impact on certain corn futures contracts which resulted from a temporary suspension of hedge accounting due to market volatility. (3) Amounts represent losses on commodity contracts designated as fair value hedges that were closed during the fiscal year, 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. (4) There were no gains or losses resulting from the discontinuance of cash flow hedges during the fiscal year. (5) There were no gains or losses recognized as a result of a hedged firm commitment no longer qualifying as a fair value hedge during the fiscal year. |
Investments In and Receivables
Investments In and Receivables from Affiliates | 12 Months Ended |
Oct. 30, 2016 | |
Investments In and Receivables from Affiliates | |
Investments In and Receivables from Affiliates | Note I 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 consists of the following: October 30, October 25, (in thousands) Segment % Owned 2016 2015 MegaMex Foods, LLC Grocery Products 50% $ 180,437 $ 200,110 Foreign Joint Ventures International & Other Various (26 – 40%) Total $ $ 258,998 Equity in earnings of affiliates consists of the following: (in thousands) Segment 2016 2015 2014 MegaMex Foods, LLC Grocery Products $ 30,651 $ $ 14,415 Foreign Joint Ventures International & Other Total $ 38,685 $ $ 17,585 Equity in earnings of affiliates in fiscal year 2015 included charges related to the exit from international joint venture businesses. Dividends received from affiliates for the fiscal years ended October 30, 2016, October 25, 2015, and October 26, 2014, were $46.2 million, $37.3 million, and $22.8 million, respectively. The Company recognized a basis difference of $21.3 million associated with the formation of MegaMex Foods, LLC, of which $15.3 million is remaining as of October 30, 2016. This difference is being amortized through equity in earnings of affiliates. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 12 Months Ended |
Oct. 30, 2016 | |
Accumulated Other Comprehensive Loss | |
Accumulated Other Comprehensive Loss | Note J Accumulated Other Comprehensive Loss Components of accumulated other comprehensive loss are as follows: Accumulated Foreign Deferred Other Currency Pension & Gain (Loss) Comprehensive (in thousands) Translation Other Benefits – Hedging Loss Balance at October 27, 2013 $ 9,391 $ $ (5,604) $ Unrecognized gains (losses): Gross Tax effect – Reclassification into net earnings: Gross – 6,387 (1) 10,925 (2) Tax effect – Net of tax amount Balance at October 26, 2014 $ $ $ (9,194) $ Unrecognized gains (losses): Gross Tax effect – Reclassification into net earnings: Gross – 12,259 (1) 12,369 (2) Tax effect – Net of tax amount Purchase of additional ownership of noncontrolling interest – – Balance at October 25, 2015 $ 969 $ $ $ Unrecognized gains (losses): Gross Tax effect – Reclassification into net earnings: Gross – 13,533 (1) 1,310 (2) Tax effect – Net of tax amount Balance at October 30, 2016 $ (5,489) $ $ 5,738 $ (1) Included in computation of net periodic cost (see Note G for additional details). (2) Included in cost of products sold in the Consolidated Statements of Operations. |
Income Taxes
Income Taxes | 12 Months Ended |
Oct. 30, 2016 | |
Income Taxes | |
Income Taxes | Note K Income Taxes The components of the provision for income taxes are as follows: (in thousands) 2016 2015 2014 Current: U.S. Federal $ $ $ State Foreign Total current Deferred: U.S. Federal State Foreign Total deferred Total provision for income taxes $ $ $ Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Company believes that, based upon its lengthy and consistent history of profitable operations, it is more likely than not the net deferred tax assets of $6.2 million will be realized on future tax returns, primarily from the generation of future taxable income. Significant components of the deferred income tax liabilities and assets are as follows: O ctober 30, O ctober 25, ( in thousands ) 2016 2015 D eferred tax liabilities: G oodwill and intangible assets $ $ Tax over book depreciation and basis differences O ther, net D eferred tax assets: P ension and post-retirement benefits Employee compensation related liabilities M arketing and promotional accruals O ther, net N et deferred tax assets $ 6,223 $ Reconciliation of the statutory federal income tax rate to the Company’s effective tax rate is as follows: 2016 2015 2014 U.S. statutory rate 35.0% 35.0% 35.0% State taxes on income, net of federal tax benefit 2.1 2.7 2.8 Domestic production activities deduction (2.8) (2.6) (2.7) Foreign tax credit (0.9) – – All other, net (1.0) (0.1) (0.8) Effective tax rate 32.4% 35.0% 34.3% In fiscal year 2016, the Company approved a repatriation of $38.0 million of foreign earnings related to an international entity restructuring which generated a U.S. tax benefit of $12.1 million. The Company recorded a favorable discrete tax event related to this transaction. Undistributed earnings of the Company’s foreign subsidiaries and joint ventures, aggregating to approximately $62.5 million at October 30, 2016, are considered to be permanently reinvested, and accordingly, no provision for U.S. income taxes has been provided thereon. It is not practicable to determine the deferred tax liability for temporary differences related to these foreign earnings. Total income taxes paid during fiscal years 2016, 2015, and 2014 were $372.0 million, $296.5 million, and $285.8 million, respectively. The following table sets forth changes in the unrecognized tax benefits, excluding interest and penalties, for fiscal years 2015 and 2016. (in thousands) Balance as of October 26, 2014 $ Tax positions related to the current period: Increases Tax positions related to prior periods: Increases Decreases Settlements Decreases related to a lapse of applicable statute of limitations Balance as of October 25, 2015 $ Tax positions related to the current period: Increases Tax positions related to prior periods: Increases Decreases Settlements Decreases related to a lapse of applicable statute of limitations Balance as of October 30, 2016 $ The amount of unrecognized tax benefits, including interest and penalties is recorded in other long-term liabilities. If recognized as of October 30, 2016, and October 25, 2015, $19.5 million and $16.0 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, with gains of $0.5 million included in expense for fiscal year 2016. The amount of accrued interest and penalties at October 30, 2016, and October 25, 2015, associated with unrecognized tax benefits was $2.6 million and $3.2 million, respectively. The Company is regularly audited by federal and state taxing authorities. The United States Internal Revenue Service (I.R.S.) concluded their examination of fiscal years 2013 and 2014 in the third quarter of fiscal year 2016. The Company has elected to participate in the Compliance Assurance Process (CAP) for fiscal years 2015 and 2016. The objective of CAP is to contemporaneously work with the I.R.S. to achieve federal tax compliance and resolve all or most of the issues prior to filing of the tax return. The Company may elect to continue participating in CAP for future tax years; the Company may withdraw from the program at any time. The Company is in various stages of audit by several state taxing authorities on a variety of fiscal years, as far back as 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 | 12 Months Ended |
Oct. 30, 2016 | |
Stock-Based Compensation | |
Stock-Based Compensation | Note L Stock-Based Compensation The Company issues stock options and nonvested shares as part of its stock incentive plans for employees and non-employee directors. The Company’s policy is to grant options with the exercise price equal to the market price of the common stock on the date of grant. Options typically vest over four years and expire ten years after the date of the grant. The Company recognizes stock-based compensation expense ratably over the shorter of the requisite service period or vesting period. The fair value of stock-based compensation granted to retirement-eligible individuals is expensed at the time of grant. A reconciliation of the number of options outstanding and exercisable (in thousands) as of October 30, 2016, and changes during the fiscal year then ended, is as follows: Weighted- Weighted- Average Average Remaining Aggregate Exercise Contractual Intrinsic Shares Price Term Value Outstanding at October 25, 2015 $ Granted Exercised Forfeited Outstanding at October 30, 2016 $ 4.8 yrs $ Exercisable at October 30, 2016 $ 3.9 yrs $ The weighted-average grant date fair value of stock options granted and the total intrinsic value of options exercised (in thousands) during each of the past three fiscal years is as follows: Fiscal Year Ended October 30, October 25, October 26, 2016 2015 2014 Weighted-average grant date fair value $ 7.82 $ 4.92 $ 4.85 Intrinsic value of exercised options $ $ $ 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: Fiscal Year Ended October 30, October 25, October 26, 2016 2015 2014 Risk-free interest rate Dividend yield Stock price volatility Expected option life 8 years 8 years 8 years As part of the annual valuation process, the Company reassesses the appropriateness of the inputs used in the valuation models. The Company establishes the risk-free interest rate using stripped U.S. Treasury yields as of the grant date where the remaining term is approximately the expected life of the option. The dividend yield is set based on the dividend rate approved by the Company’s Board of Directors and the stock price on the grant date. The expected volatility assumption is set based primarily on historical volatility. As a reasonableness test, implied volatility from exchange traded options is also examined to validate the volatility range obtained from the historical analysis. The expected life assumption is set based on an analysis of past exercise behavior by option holders. In performing the valuations for option grants, the Company has not stratified option holders as exercise behavior has historically been consistent across all employee and non-employee director groups. Nonvested shares vest on the earlier of the day before the Company’s next annual meeting date or one year. A reconciliation of the nonvested shares (in thousands) as of October 30, 2016, and changes during the fiscal year then ended, is as follows: Weighted- Average Grant Date Shares Fair Value Nonvested at October 25, 2015 74 $ Granted 47 Vested 74 Nonvested at October 30, 2016 47 $ The weighted-average grant date fair value of nonvested shares granted, the total fair value (in thousands) of nonvested shares granted, and the fair value (in thousands) of shares that have vested during each of the past three fiscal years is as follows: Fiscal Year Ended October 30, October 25, October 26, 2016 2015 2014 Weighted-average grant date fair value $ $ $ Fair value of nonvested shares granted $ $ $ Fair value of shares vested $ $ $ Stock-based compensation expense, along with the related income tax benefit, for each of the past three fiscal years is presented in the table below: Fiscal Year Ended October 30, October 25, October 26, (in thousands) 2016 2015 2014 Stock-based compensation expense recognized $ $ 15,717 $ Income tax benefit recognized After-tax stock-based compensation expense $ $ 9,750 $ 8,924 At October 30, 2016, there was $9.9 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 2.5 years. During fiscal years 2016, 2015, and 2014, cash received from stock option exercises was $12.1 million, $10.5 million, and $10.5 million, respectively. The total tax benefit to be realized for tax deductions from these option exercises was $51.6 million, $25.6 million, and $28.4 million, respectively. Shares issued for option exercises and nonvested shares may be either authorized but unissued shares, or shares of treasury stock acquired in the open market or otherwise. The number of shares available for future grants was 48.1 million at October 30, 2016, 50.1 million at October 25, 2015, and 53.2 million at October 26, 2014. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Oct. 30, 2016 | |
Fair Value Measurements | |
Fair Value Measurements | Note M Fair Value Measurements Pursuant to the provisions of ASC 820, the Company’s financial assets and liabilities carried at fair value on a recurring basis in the consolidated financial statements as of October 30, 2016, and October 25, 2015, and their level within the fair value hierarchy, are presented in the table below. Fair Value Measurements at October 30, 2016 Quoted Prices in Fair Value at Active Markets Significant Other Significant October 30, for Identical Observable Unobservable (in thousands) 2016 Assets (Level 1) Inputs (Level 2) Inputs (Level 3) Assets at Fair Value: Cash and cash equivalents (1) $ $ $ – $ – Other trading securities (2) – Commodity derivatives (3) – – Total Assets at Fair Value $ $ $ $ – Liabilities at Fair Value: Deferred compensation (2) $ 60,949 $ 28,768 $ $ – Total Liabilities at Fair Value $ 60,949 $ 28,768 $ $ – Fair Value Measurements at October 25, 2015 Quoted Prices in Fair Value at Active Markets Significant Other Significant October 25, for Identical Observable Unobservable (in thousands) 2015 Assets (Level 1) Inputs (Level 2) Inputs (Level 3) Assets at Fair Value: Cash and cash equivalents (1) $ 347,239 $ 347,239 $ – $ – Other trading securities (2) – Commodity derivatives (3) – – Total Assets at Fair Value $ 473,392 $ 393,053 $ $ – Liabilities at Fair Value: Deferred compensation (2) $ 57,869 $ 25,272 $ $ – Total Liabilities at Fair Value $ 57,869 $ 25,272 $ $ – 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 consist primarily of bank deposits, money market funds rated AAA, or other highly liquid investment accounts. As these investments have a maturity date of three months or less, the carrying value approximates fair value. (2) The Company holds trading securities as part of a rabbi trust to fund certain supplemental executive retirement plans and deferred income plans. The rabbi trust is included in other assets on the Consolidated Statements of Financial Position and is valued based on the underlying fair value of each fund held by the trust. A majority of the funds held related to the supplemental executive retirement plans 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 that supports 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, and include equity securities, money market accounts, bond funds, or other portfolios for which there is an active quoted market. Therefore, these securities are classified as Level 1. The related deferred compensation liabilities are included in other long-term liabilities on the Consolidated Statements of Financial Position and are valued based on the underlying investment selections held in each participant’s account. Investment options generally mirror those funds held by the rabbi trust, for which there is an active quoted market. Therefore, these investment balances are classified as Level 1. 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. (3) The Company’s commodity derivatives represent futures contracts used in its hedging or other programs to offset price fluctuations associated with purchases of corn and soybean meal, 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 and soybean meal are traded on the Chicago Board of Trade, while futures contracts for lean hogs are traded on the Chicago Mercantile Exchange. These are active markets with quoted prices available and therefore these contracts are classified as Level 1. All derivatives are reviewed for potential credit risk and risk of nonperformance. The Company nets the derivative assets and liabilities for each of its hedging programs, including cash collateral, when a master netting arrangement exists between the Company and the counterparty to the derivative contract. The net balance for each program is included in other current assets or accounts payable, as appropriate, in the Consolidated Statements of Financial Position. As of October 30, 2016, the Company has recognized the right to reclaim net cash collateral of $3.1 million from various counterparties (including $7.1 million of realized gains offset by cash owed of $4.0 million on closed positions). As of October 25, 2015, the Company had recognized the right to reclaim net cash collateral of $2.3 million from various counterparties (including $13.7 million of cash less $11.4 million of realized losses on closed positions). The Company’s financial assets and liabilities also 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 $274.9 million as of October 30, 2016, and $268.4 million as of October 25, 2015. In accordance with the provisions of ASC 820, the Company also measures certain nonfinancial assets and liabilities at fair value that are recognized or disclosed on a nonrecurring basis (e.g. goodwill, intangible assets, and property, plant and equipment). In the second quarter of fiscal year 2016, the Company entered into an agreement for the sale of DCB and recorded a $1.0 million impairment charge based on the valuation of the assets as implied by the agreed-upon sales price. During the fourth quarter of fiscal year 2015, a $21.5 million goodwill impairment charge was recorded for the portion of DCB held for sale. The fair value of the net assets to be sold was determined using Level 2 inputs utilizing a market participant bid along with internal valuations of the business. See additional discussion regarding the Company’s assets held for sale in Note E. During fiscal years 2016, 2015, and 2014, there were no other material remeasurements of assets or liabilities at fair value on a nonrecurring basis subsequent to their initial recognition. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Oct. 30, 2016 | |
Commitments and Contingencies | |
Commitments and Contingencies | Note N Commitments and Contingencies In order to ensure a steady supply of hogs and turkeys, and to keep the cost of products stable, the Company has entered into contracts with producers for the purchase of hogs and turkeys at formula-based prices over periods up to 10 years. The Company has also entered into grow-out contracts with independent farmers to raise turkeys for the Company for periods up to 25 years. Under these arrangements, the Company owns the livestock, feed, and other supplies while the independent farmers provide facilities and labor. The Company has also contracted for the purchase of corn, soybean meal, and other feed ingredients from independent suppliers for periods up to three years. Under these contracts, the Company is committed at October 30, 2016, to make purchases, assuming current price levels, as follows: (in thousands) 2017 $ 2018 2019 2020 2021 Later Years Total $ Purchases under these contracts for fiscal years 2016, 2015, and 2014 were $1.6 billion, $1.6 billion, and $2.2 billion, respectively. The Company has noncancelable operating lease commitments on facilities and equipment at October 30, 2016, as follows: (in thousands) 2017 $ 2018 2019 2020 2021 Later Years Total $ The Company expensed $21.6 million, $22.4 million, and $21.1 million for rent in fiscal years 2016, 2015, and 2014, respectively. The Company has commitments to expend approximately $165.4 million to complete construction in progress at various locations as of October 30, 2016. The Company also has purchase obligations not reflected in the consolidated statements of financial position, representing open purchase orders and contracts related to the procurement of raw materials, supplies, and various services. As of October 30, 2016, commitments related to those purchase orders, and all known contracts exceeding $1.0 million, are shown below. The Company primarily purchases goods and services on an as-needed basis and therefore, amounts in the table represent only a portion of expected future cash expenditures. (in thousands) 2017 $ 2018 2019 2020 2021 Later Years Total $ As of October 30, 2016, the Company has $44.4 million of standby letters of credit issued on its behalf. The standby letters of credit are primarily related to the Company’s self-insured workers compensation programs. However, that amount also includes revocable standby letters of credit totaling $4.0 million for obligations of an affiliated party that may arise under workers compensation claims. Letters of credit are not reflected in the Company’s Consolidated Statements of Financial Position. The Company is involved in litigation on an ongoing basis arising in the ordinary course of business. In the opinion of management, the outcome of litigation currently pending will not materially affect the Company’s results of operations, financial condition, or liquidity. |
Earnings Per Share Data
Earnings Per Share Data | 12 Months Ended |
Oct. 30, 2016 | |
Earnings Per Share Data | |
Earnings Per Share Data | Note O Earnings Per Share Data The reported net earnings attributable to the Company were used when computing basic and diluted earnings per share for all years presented. A reconciliation of the shares used in the computation is as follows: (in thousands) 2016 2015 2014 Basic weighted-average shares outstanding Dilutive potential common shares Diluted weighted-average shares outstanding For fiscal years 2016, 2015, and 2014, a total of 1.1 million, 0.9 million, and 0.8 million weighted-average outstanding stock options, respectively, were not included in the computation of dilutive potential common shares since their inclusion would have had an antidilutive effect on earnings per share. |
Segment Reporting
Segment Reporting | 12 Months Ended |
Oct. 30, 2016 | |
Segment Reporting | |
Segment Reporting | Note P 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 five segments: Grocery Products, Refrigerated Foods, Jennie-O Turkey Store, Specialty Foods, 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. This segment also includes the results from the Company’s MegaMex Foods, LLC joint venture. The Refrigerated Foods segment consists primarily of the processing, marketing, and sale of branded and unbranded pork, beef, chicken, and turkey products for retail, foodservice, and fresh product 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 Specialty Foods segment consists of the processing, marketing, and sale of nutritional and private label shelf-stable products to retail, foodservice, and industrial 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. Intersegment sales are recorded at prices that approximate cost and are eliminated in the Consolidated Statements of Operations. The Company does not allocate investment income, interest expense, and interest income to its segments when measuring performance. The Company also retains various other income and unallocated expenses at corporate. Equity in earnings of affiliates is included in segment operating profit; however, earnings attributable to the Company’s noncontrolling interests are excluded. These items are included below as net interest and investment expense (income), general corporate 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 that these segments, if operated independently, would report the operating profit and other financial information shown below. (in thousands) 2016 2015 2014 Net Sales (to unaffiliated customers) Grocery Products $ $ $ Refrigerated Foods Jennie-O Turkey Store Specialty Foods International & Other Total $ $ $ Intersegment Sales Grocery Products $ – $ – $ – Refrigerated Foods Jennie-O Turkey Store Specialty Foods International & Other – – – Total Intersegment elimination Total $ – $ – $ – Segment Net Sales Grocery Products $ $ $ Refrigerated Foods Jennie-O Turkey Store Specialty Foods International & Other Intersegment elimination Total $ $ $ Segment Operating Profit Grocery Products $ 268,461 $ 228,582 $ 195,064 Refrigerated Foods Jennie-O Turkey Store Specialty Foods International & Other Total segment operating profit $ $ $ 961,705 Net interest and investment expense (income) General corporate expense Noncontrolling interest Earnings Before Income Taxes $ $ $ 922,152 (in thousands) Assets Grocery Products $ $ $ Refrigerated Foods Jennie-O Turkey Store Specialty Foods International & Other Corporate Total $ $ $ Additions to Property, Plant and Equipment Grocery Products $ 15,830 $ 18,104 $ 31,741 Refrigerated Foods Jennie-O Turkey Store Specialty Foods International & Other Corporate Total $ 255,524 $ 144,063 $ 159,138 Depreciation and Amortization Grocery Products $ 29,725 $ 26,972 $ 25,883 Refrigerated Foods Jennie-O Turkey Store Specialty Foods International & Other Corporate Total $ 131,968 $ 133,434 $ 130,044 The Company’s products primarily consist of meat and other food products. The Perishable category includes fresh meats, frozen items, refrigerated meal solutions, sausages, hams, guacamole, and bacon (excluding JOTS products). The Poultry category is composed primarily of JOTS products. Shelf-stable includes canned luncheon meats, peanut butter, chilies, shelf-stable microwaveable meals, hash, stews, salsas, flour and corn tortillas, tortilla chips, and other items that do not require refrigeration. The Miscellaneous category primarily consists of nutritional food products and supplements, sugar and sugar substitutes, dessert and drink mixes, and industrial gelatin products. The percentages of total revenues contributed by classes of similar products for the last three fiscal years are as follows: Fiscal Year Ended October 30, October 25, October 26, 2016 2015 2014 Perishable Poultry Shelf-stable Miscellaneous Revenues from external customers are classified as domestic or foreign based on the destination where title passes. No individual foreign country is material to the consolidated results. Additionally, the Company’s long-lived assets located in foreign countries are not significant. Total revenues attributed to the U.S. and all foreign countries in total for the last three fiscal years are as follows: Fiscal Year Ended October 30, October 25, October 26, (in thousands) 2016 2015 2014 United States $ $ $ Foreign $ $ $ In fiscal year 2016, sales to Wal-Mart Stores, Inc. (Wal-Mart) represented $1.45 billion or 13.7 percent of the Company’s consolidated revenues (measured as gross sales less returns and allowances). In fiscal year 2015, sales to Wal-Mart represented $1.43 billion or 13.9 percent of the Company’s consolidated revenues. Wal-Mart is a customer for all five segments of the Company. |
Quarterly Results of Operations
Quarterly Results of Operations (Unaudited) | 12 Months Ended |
Oct. 30, 2016 | |
Quarterly Results of Operations (Unaudited) | |
Quarterly Results of Operations (Unaudited) | Note Q Quarterly Results of Operations (Unaudited) The following tabulations reflect the unaudited quarterly results of operations for the years ended October 30, 2016, and October 25, 2015. Net Earnings Attributable to Basic Diluted Gross Net Hormel Foods Earnings Earnings (in thousands, except per share data) Net Sales Profit Earnings Corporation (1) Per Share Per Share 2016 First quarter $ $ $ $ $ $ Second quarter Third quarter Fourth quarter 2015 First quarter $ $ $ $ $ $ Second quarter Third quarter Fourth quarter (1) Excludes net earnings attributable to the Company’s noncontrolling interests. |
SCHEDULE II - VALUATION AND QUA
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES | 12 Months Ended |
Oct. 30, 2016 | |
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES | |
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES | SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES HORMEL FOODS CORPORATION (In Thousands) Additions/(Benefits) Balance at Charged to Charged to Balance at Beginning Costs and Other Accounts- Deductions- End of Classification of Period Expenses Describe Describe Period Valuation reserve Fiscal year ended October 30, 2016 Allowance for doubtful accounts $ 652 (2) receivable $ 4,086 $ 611 $ - - (3) $ 4,045 Fiscal year ended October 25, 2015 Allowance for doubtful accounts $ 52 (2) receivable $ 4,050 $ (24) $ 36 (1) (77) (3) $ 4,086 Fiscal year ended October 26, 2014 Allowance for doubtful accounts $ 4,152 (2) receivable $ 4,000 $ 4,076 $ 50 (4) (76) (3) $ 4,050 Note (1) – Increase in the reserve due to the inclusion of Applegate Farms accounts receivable. Note (2) – Uncollectible accounts written off. Note (3) – Recoveries on accounts previously written off. Note (4) – Increase in the reserve due to the inclusion of CytoSport accounts receivable. |
Summary of Significant Accoun28
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Oct. 30, 2016 | |
Summary of Significant Accounting Policies | |
Principles of Consolidation | Principles of Consolidation: The consolidated financial statements include the accounts of Hormel Foods Corporation (the Company) and all of its majority-owned subsidiaries after elimination of intercompany accounts, transactions, and profits. |
Stock Split | Stock Split: On November 23, 2015, the Company’s Board of Directors authorized a two-for-one split of the Company’s voting common stock, which was subsequently approved by shareholders at the Company’s Annual Meeting on January 26, 2016, and effected on January 27, 2016. The Company’s voting common stock was reclassified by reducing the par value from $.0293 per share to $.01465 per share and the number of authorized shares was increased from 800 million to 1.6 billion shares, in order to effect the two-for-one stock split. The Company distributed the additional shares of $.01465 par value common stock on February 9, 2016, and the shares began trading at the post-split price on February 10, 2016. Unless otherwise noted, all prior year share amounts and per share calculations throughout this Annual Report have been restated to reflect the impact of this split and to provide data on a comparable basis. Such restatements include calculations regarding the Company’s weighted-average shares, earnings per share, and dividends per share, as well as disclosures regarding the Company’s stock-based compensation plans and share repurchase activity. |
Use of Estimates | U se of Estimates: The preparation of financial statements in conformity with U.S. generally accepted accounting principles (U.S. GAAP) requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. |
Fiscal Year | F iscal Year: The Company’s fiscal year ends on the last Sunday in October. Fiscal year 2016 consisted of 53 weeks and fiscal years 2015 and 2014 consisted of 52 weeks. |
Cash and Cash Equivalents | C ash and Cash Equivalents: The Company considers all investments with an original maturity of three months or less on their acquisition date to be cash equivalents. The Company’s cash equivalents as of October 30, 2016, and October 25, 2015, consisted primarily of bank deposits, money market funds rated AAA, or other highly liquid investment accounts. The Net Asset Value (NAV) of the Company’s money market funds is based on the market value of the securities in their portfolio. |
Fair Value Measurements | F air Value Measurements: Pursuant to the provisions of Accounting Standards Codification (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. See additional discussion regarding the Company’s fair value measurements in Notes G, H, and M. |
Investments | I nvestments: The Company maintains a rabbi trust to fund certain supplemental executive retirement plans and deferred income plans, which is included in other assets on the Consolidated Statements of Financial Position. The securities held by the trust are classified as trading securities and consist mainly of fixed return investments. Therefore, unrealized gains and losses associated with these investments are included in the Company’s earnings. Securities held by the trust generated gains of $2.6 million, $2.4 million, and $2.9 million for fiscal years 2016, 2015, and 2014, respectively. |
Inventories | I nventories: Inventories are stated at the lower of cost or market. Cost is determined principally under the average cost method. Adjustments to the Company’s lower of cost or market inventory reserve are reflected in cost of products sold in the Consolidated Statements of Operations. |
Property, Plant and Equipment | P roperty, Plant and Equipment: Property, plant and equipment are stated at cost. The Company uses the straight-line method in computing depreciation. The annual provisions for depreciation have been computed principally using the following ranges of asset lives: buildings 20 to 40 years, machinery and equipment 5 to 10 years. Internal-use software development and implementation costs are expensed until the Company has determined that the software will result in probable future economic benefits, and management has committed to funding the project. Thereafter, all material development and implementation costs, and purchased software costs, are capitalized as part of machinery and equipment and amortized using the straight-line method over the remaining estimated useful lives. |
Goodwill and Other Indefinite-Lived Intangibles | G oodwill and Other Indefinite-Lived Intangibles: Indefinite-lived intangible assets are originally recorded at their estimated fair values at date of acquisition and the residual of the purchase price is recorded to goodwill. Goodwill and other indefinite-lived intangible assets are allocated to reporting units that will receive the related sales and income. Goodwill and indefinite-lived intangible assets are tested annually for impairment, or more frequently if impairment indicators arise. In conducting the annual impairment test for goodwill, the Company first performs a qualitative assessment to determine whether it is more likely than not (> 50% likelihood) that the fair value of any reporting unit is less than its carrying amount. If the Company concludes this is the case, then a two-step quantitative test for goodwill impairment is performed for the appropriate reporting units. Otherwise, the Company concludes no impairment is indicated and does not perform the two-step test. In conducting the initial qualitative assessment, the Company analyzes actual and projected growth trends for net sales, gross margin, and segment profit for each reporting unit, as well as historical performance versus plan and the results of prior quantitative tests performed. Additionally, the Company assesses critical areas that may impact its business, including macroeconomic conditions and the related impact, market-related exposures, any plans to market all or a portion of their business, competitive changes, new or discontinued product lines, changes in key personnel, or any other potential risks to their projected financial results. If performed, the quantitative goodwill impairment test is a two-step process performed at the reporting unit level. First, the fair value of each reporting unit is compared to its corresponding carrying value, including goodwill. The fair value of each reporting unit is estimated using discounted cash flow valuations (Level 3), which incorporate assumptions regarding future growth rates, terminal values, and discount rates. The estimates and assumptions used consider historical performance and are consistent with the assumptions used in determining future profit plans for each reporting unit, which are approved by the Company’s Board of Directors. If the first step results in the carrying value exceeding the fair value of any reporting unit, then a second step must be completed in order to determine the amount of goodwill impairment that should be recorded. In the second step, the implied fair value of the reporting unit’s goodwill is determined by allocating the reporting unit’s fair value to all of its assets and liabilities other than goodwill in a manner similar to a purchase price allocation. The implied fair value of the goodwill that results from the application of this second step is then compared to the carrying amount of the goodwill and an impairment charge is recorded for the difference. During fiscal years 2016, 2015, and 2014, as a result of the qualitative testing performed, no impairment charges were recorded other than for the Company’s Diamond Crystal Brands (DCB) assets held for sale. See additional discussion regarding the Company’s assets held for sale in Note E. In conducting the annual impairment test for its indefinite-lived intangible assets, the Company first performs a qualitative assessment to determine whether it is more likely than not (> 50% likelihood) that an indefinite-lived intangible asset is impaired. If the Company concludes that this is the case, then a quantitative test for impairment must be performed. Otherwise, the Company does not need to perform a quantitative test. In conducting the initial qualitative assessment, the Company analyzes growth rates for historical and projected net sales and the results of prior quantitative tests performed. Additionally, each reporting unit assesses critical areas that may impact their intangible assets or the applicable royalty rates to determine if there are factors that could indicate impairment of the asset. If performed, the quantitative impairment test compares the fair value and carrying value of the indefinite-lived intangible asset. The fair value of indefinite-lived intangible assets is primarily determined on the basis of estimated discounted value, using the relief from royalty method (Level 3), which incorporates assumptions regarding future sales projections and discount rates. If the carrying value exceeds fair value, the indefinite-lived intangible asset is considered impaired and an impairment charge is recorded for the difference. Even if not required, the Company periodically elects to perform the quantitative test in order to confirm the qualitative assessment. Based on the qualitative assessment conducted in fiscal year 2016, performance of the quantitative test was not required for any of the Company’s indefinite-lived intangible assets. No impairment charges were recorded for indefinite-lived intangible assets for fiscal years 2016, 2015, or 2014. |
Impairment of Long-lived and Definite-Lived Intangible Assets | I mpairment of Long-Lived Assets and Definite-Lived Intangible Assets: Definite-lived intangible assets are amortized over their estimated useful lives. The Company reviews long-lived assets and definite-lived intangible assets for impairment annually, or more frequently when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If impairment indicators are present and the estimated future undiscounted cash flows are less than the carrying value of the assets and any related goodwill, the carrying value is reduced to the estimated fair value. No material write-downs were recorded in fiscal years 2016, 2015, or 2014. |
Assets Held For Sale | A ssets Held For Sale: The Company classifies assets as held for sale when management approves and commits to a formal plan of sale with the expectation the sale will be completed within one year. The net assets of the business held for sale are then recorded at the lower of their current carrying value or the fair market value, less costs to sell. See additional discussion regarding the Company’s assets held for sale in Note E. |
Employee Benefit Plans | E mployee Benefit Plans: The Company has elected to use the corridor approach to recognize expenses related to its defined benefit pension and other post-retirement benefit plans. Under the corridor approach, actuarial gains or losses resulting from experience different from that assumed and from changes in assumptions are deferred and amortized over future periods. For the defined benefit pension plans, the unrecognized gains and losses are amortized when the net gain or loss exceeds 10.0% of the greater of the projected benefit obligation or the fair value of plan assets at the beginning of the year. For the other post-retirement plans, the unrecognized gains and losses are amortized when the net gain or loss exceeds 10.0% of the accumulated pension benefit obligation at the beginning of the year. For plans with active employees, net gains or losses in excess of the corridor are amortized over the average remaining service period of participating employees expected to receive benefits under those plans. For plans with only retiree participants, net gains or losses in excess of the corridor are amortized over the average remaining life of the retirees receiving benefits under those plans. |
Contingent Liabilities | C ontingent Liabilities: The Company may be subject to investigations, legal proceedings, or claims related to the on-going operation of its business, including claims both by and against the Company. Such proceedings typically involve claims related to product liability, contract disputes, wage and hour laws, employment practices, or other actions brought by employees, consumers, competitors, or suppliers. The Company establishes accruals for its potential exposure, as appropriate, for claims against the Company when losses become probable and reasonably estimable. Where the Company is able to reasonably estimate a range of potential losses, the Company records the amount within that range which constitutes the Company’s best estimate. The Company also discloses the nature of and range of loss for claims against the Company when losses are reasonably possible and material. |
Foreign Currency Translation | F oreign Currency Translation: Assets and liabilities denominated in foreign currency are translated at the current exchange rate as of the statement of financial position date, and amounts in the statement of operations are translated at the average monthly exchange rate. Translation adjustments resulting from fluctuations in exchange rates are recorded as a component of accumulated other comprehensive loss in shareholders’ investment. When calculating foreign currency translation, the Company deemed its foreign investments to be permanent in nature and has not provided for taxes on currency translation adjustments arising from converting the investment in a foreign currency to U.S. dollars. |
Derivatives and Hedging Activity | D erivatives and Hedging Activity: The Company uses commodity and currency positions to manage its exposure to price fluctuations in those markets. The contracts are recorded at fair value on the Consolidated Statements of Financial Position within other current assets or accounts payable. Additional information on hedging activities is presented in Note H. |
Equity Method Investments | E quity Method Investments: The Company has a number of investments in joint ventures where its voting interests are in excess of 20 percent but not greater than 50 percent and for which there are no other indicators of control. The Company accounts for such investments under the equity method of accounting, and its underlying share of each investee’s equity is reported in the Consolidated Statements of Financial Position as part of investments in and receivables from affiliates. The Company regularly monitors and evaluates the fair value of our equity investments. If events and circumstances indicate that a decline in the fair value of these assets has occurred and is other than temporary, the Company will record a charge in equity in earnings of affiliates in the Consolidated Statements of Operations. The Company’s equity investments do not have a readily determinable fair value as none of them are publicly traded. The fair values of the Company’s private equity investments are determined by discounting the estimated future cash flows of each entity. These cash flow estimates include assumptions on growth rates and future currency exchange rates (Level 3). Excluding charges related to the exit from international joint venture businesses in fiscal year 2015, there were no other charges on any of the Company’s equity investments in fiscal years 2016, 2015, or 2014. See additional discussion regarding the Company’s equity method investments in Note I. |
Revenue Recognition | R evenue Recognition: The Company recognizes sales when title passes upon delivery of its products to customers, net of applicable provisions for discounts, returns, and allowances. Products are delivered upon receipt of customer purchase orders with acceptable terms, including price and reasonably assured collectability. The Company offers various sales incentives to customers and consumers. Incentives that are offered off-invoice include prompt pay allowances, will call allowances, spoilage allowances, and temporary price reductions. These incentives are recognized as reductions of revenue at the time title passes. Coupons are used as an incentive for consumers to purchase various products. The coupons reduce revenues at the time they are offered, based on estimated redemption rates. Promotional contracts are performed by customers to promote the Company’s products to consumers. These incentives reduce revenues at the time of performance through direct payments and accrued promotional funds. Accrued promotional funds are unpaid liabilities for promotional contracts in process or completed at the end of a quarter or fiscal year. Promotional contract accruals are based on a review of the unpaid outstanding contracts on which performance has taken place. Estimates used to determine the revenue reduction include the level of customer performance and the historical spend rate versus contracted rates. |
Allowance for Doubtful Accounts | A llowance for Doubtful Accounts: The Company estimates the allowance for doubtful accounts based on a combination of factors, including the age of its accounts receivable balances, customer history, collection experience, and current market factors. Additionally, a specific reserve may be established if the Company becomes aware of a customer’s inability to meet its financial obligations. |
Advertising Expenses | A dvertising Expenses: Advertising costs are expensed when incurred. Advertising expenses include all media advertising but exclude the costs associated with samples, demonstrations, and market research. Advertising costs for fiscal years 2016, 2015, and 2014 were $204.1 million, $145.3 million, and $114.4 million, respectively. |
Shipping and Handling Costs | S hipping and Handling Costs: The Company’s shipping and handling expenses are included in cost of products sold. |
Research and Development Expenses | R esearch and Development Expenses: Research and development costs are expensed as incurred and are included in selling, general and administrative expenses. Research and development expenses incurred for fiscal years 2016, 2015, and 2014 were $34.7 million, $32.0 million, and $29.9 million, respectively. |
Income Taxes | I ncome Taxes: The Company records income taxes in accordance with the liability method of accounting. Deferred taxes are recognized for the estimated taxes ultimately payable or recoverable based on enacted tax law. Changes in enacted tax rates are reflected in the tax provision as they occur. In accordance with ASC 740, Income Taxes , the Company recognizes a tax position in its financial statements when it is more likely than not that the position will be sustained upon examination based on the technical merits of the position. That position is then measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. |
Employee Stock Options | E mployee Stock Options: The Company records stock-based compensation expense in accordance with ASC 718, Compensation - Stock Compensation . For options subject to graded vesting, the Company recognizes stock-based compensation expense ratably over the shorter of the vesting period or requisite service period. Stock-based compensation expense for grants made to retirement-eligible employees is recognized on the date of grant. |
Share Repurchases | S hare Repurchases: On January 29, 2013, the Company’s Board of Directors authorized the repurchase of 10.0 million shares of its common stock with no expiration date. On a pre-split basis, 0.4 million shares were purchased from The Hormel Foundation under this authorization at the average closing price for the three days of September 15, September 16, and September 17, 2015, or $62.32. The Company purchased 1.3 million shares at an average price of $46.87 during fiscal year 2014 on a pre-split basis. On November 23, 2015, the Company’s Board of Directors authorized a two-for-one split of the Company’s voting common stock. As part of the Board’s approval of that stock split, the number of shares remaining to be repurchased was adjusted proportionately. On a post-split basis, 2.4 million shares at an average price of $36.84 were purchased during fiscal year 2016 under the current authorization in place. |
Supplemental Cash Flow Information | S upplemental Cash Flow Information: Non-cash investment activities presented on the Consolidated Statements of Cash Flows generally consist of unrealized gains or losses on the Company’s rabbi trust. The noted investments are included in other assets or short-term marketable securities on the Consolidated Statements of Financial Position. Changes in the value of these investments are included in the Company’s net earnings and are presented in the Consolidated Statements of Operations as either interest and investment income or interest expense, as appropriate. On March 16, 2015, the Company purchased the remaining 19.29% ownership interest in its Shanghai Hormel Foods Corporation joint venture from the minority partner Shanghai Shangshi Meat Products Co. Ltd., resulting in 100.0% ownership of that business. The interest was purchased with $11.7 million in cash, along with the transfer of land use rights and buildings held by the joint venture. The difference between the fair value of the consideration given and the reduction in the noncontrolling interest was recognized as an $11.9 million reduction in additional paid-in capital attributable to the Company. The Company will continue to manufacture at the Shanghai facility by leasing the land use rights and buildings from the previous minority partner. |
Accounting Changes and Recent Accounting Pronouncements | A ccounting Changes and Recent Accounting Pronouncements: In January 2014, the Financial Accounting Standards Board (FASB) updated the guidance within ASC 323, Investments-Equity Method and Joint Ventures . The update provides guidance on accounting for investments by a reporting entity in flow-through limited liability entities that manage or invest in affordable housing projects qualifying for the low-income housing tax credit. The amendments modify the conditions a reporting entity must meet to be eligible to use a method other than the equity or cost methods to account for qualified affordable housing project investments. If the modified conditions are met, the amendments permit an entity to make an accounting policy election to amortize the initial cost of the investment in proportion to the amount of tax credits and other tax benefits received and recognize the net investment performance in the income statement as a component of income tax expense (benefit). Additionally, the amendments introduce new recurring disclosures about all investments in qualified affordable housing projects irrespective of the method used to account for the investments. The updated guidance is to be applied retrospectively and is effective for fiscal years, and interim periods within those years, beginning after December 15, 2014, with early adoption permitted. The Company adopted the new provisions of this accounting standard at the beginning of fiscal year 2016, and adoption did not have a material impact on its consolidated financial statements. In May 2014, the FASB issued ASC 606, Revenue from Contracts with Customers . This topic converges the guidance within U.S. GAAP and international financial reporting standards and supersedes ASC 605, Revenue Recognition . The new standard requires companies to recognize revenue to depict the transfer of goods or services to customers in amounts that reflect the consideration to which the company expects to be entitled in exchange for those goods or services. The new standard will also result in enhanced disclosures about revenue, provide guidance for transactions which were not previously addressed comprehensively, and improve guidance for multiple-element arrangements. On July 8, 2015, the FASB approved a one-year deferral of the effective date. The new guidance is effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period, and early adoption is permitted for annual reporting periods beginning after December 15, 2016. Accordingly, the Company expects to adopt the provisions of this new accounting standard at the beginning of fiscal year 2019, and is currently assessing the impact on its consolidated financial statements with a focus on arrangements with customers. In April 2015, the FASB updated the guidance within ASC 835, Interest . The update provides guidance on simplifying the presentation of debt issuance costs. The amendments require debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. The updated guidance is effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years, with early adoption permitted. The Company expects to adopt the new provisions of this accounting standard at the beginning of fiscal year 2017, and adoption will not have a material impact on its consolidated financial statements. In April 2015, the FASB updated the guidance within ASC 715, Compensation-Retirement Benefits . The update provides guidance on simplifying the measurement date for defined benefit plan assets and obligations. The amendments allow employers with fiscal year ends that do not coincide with a calendar month end to make an accounting policy election to measure defined benefit plan assets and obligations as of the end of the month closest to their fiscal year ends. The updated guidance is effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years, with early adoption permitted. The Company adopted the new provisions of this accounting standard at the beginning of fiscal year 2016, with no accounting policy change elected. In May 2015, the FASB updated the guidance within ASC 820, Fair Value Measurements and Disclosures . The update provides guidance on the disclosures for investments in certain entities that calculate NAV per share (or its equivalent). The amendments remove the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the NAV per share (or its equivalent) as a practical expedient. The updated guidance is to be applied retrospectively and is effective for annual reporting periods beginning after December 15, 2015, and interim periods within those fiscal years, with early adoption permitted. The Company expects to adopt the new provisions of this accounting standard at the beginning of fiscal year 2017, and adoption is not expected to have a material impact on its consolidated financial statements as it will impact year-end disclosures only. In November 2015, the FASB updated the guidance within ASC 740, Balance Sheet Classification of Deferred Taxes . The update requires all deferred tax assets and liabilities, along with any related valuation allowance, be classified as noncurrent on the balance sheet. The updated guidance is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years, with early adoption permitted. The Company adopted the new provisions of this accounting standard prospectively at the beginning of fiscal year 2016, and adoption did not have a material impact on its consolidated financial statements. In February 2016, the FASB updated the guidance within ASC 842, Leases . The update requires lessees to put most leases on their balance sheets while recognizing expenses on their income statements in a manner similar to current U.S. GAAP. The guidance also eliminates current real estate-specific provisions for all entities. For lessors, the guidance modifies the classification criteria and the accounting for sales-type and direct financing leases. The updated guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company is currently assessing the timing and impact of adopting the updated provisions. In March 2016, the FASB updated the guidance within ASC 718, Compensation-Stock Compensation . The update simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The updated guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. Early adoption is permitted in any interim or annual period, with adjustments reflected as of the beginning of the fiscal year. The Company is currently assessing the timing and impact of adopting the updated provisions. In June 2016, the FASB updated the guidance within ASC 326, Financial Instruments - Credit Losses . 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 amendments replace the current incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The updated guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted for all entities for fiscal years beginning after December 15, 2018, and interim periods therein. The Company is currently assessing the timing and impact of adopting the updated provisions. In August 2016, the FASB updated the guidance within ASC 230, Statement of Cash Flows . The update makes eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. The updated guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted provided all amendments are adopted in the same period. The guidance requires application using a retrospective transition method. The Company is currently assessing the timing and impact of adopting the updated provisions. In October 2016, the FASB updated the guidance within ASC 740, Income Taxes . The updated guidance requires the recognition of the income tax consequences of an intra-entity asset transfer, other than transfers of inventory, when the transfer occurs. For intra-entity transfers of inventory, the income tax effects will continue to be deferred until the inventory has been sold to a third party. The updated guidance is effective for reporting periods beginning after December 15, 2017, with early adoption permitted only within the first interim period of a fiscal year. The guidance is required to be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The Company is currently assessing the timing and impact of adopting the updated provisions. |
Acquisitions (Tables)
Acquisitions (Tables) | 12 Months Ended |
Oct. 30, 2016 | |
Applegate | |
Schedule of allocation of the purchase price to the acquired assets, liabilities, and goodwill | (in thousands) Accounts receivable $ 25,574 Inventory Prepaid and other assets Property, plant and equipment Intangible assets Goodwill Current liabilities ) Deferred taxes ) Purchase price $ |
CytoSport Holdings | |
Schedule of allocation of the purchase price to the acquired assets, liabilities, and goodwill | (in thousands) Accounts receivable $ 30,580 Inventory Prepaid and other assets Property, plant and equipment Intangible assets Goodwill Current liabilities ) Long-term liabilities ) Deferred taxes ) Purchase price $ |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Oct. 30, 2016 | |
Inventories | |
Principal components of inventories | October 30, October 25, (in thousands) 2016 2015 Finished products $ $ Raw materials and work-in-process Materials and supplies Total $ $ |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 12 Months Ended |
Oct. 30, 2016 | |
Goodwill and Intangible Assets | |
Schedule of changes in the carrying amount of goodwill | Grocery Refrigerated Specialty International (in thousands) Products Foods JOTS Foods & Other Total Balance as of October 26, 2014 $ $ 96,643 $ $ $ $ Goodwill acquired – – – – Purchase adjustments – – – – Impairment charge – – – – Product line disposal – – Balance as of October 25, 2015 $ $ $ $ $ $ Goodwill acquired – – – – Purchase adjustments – – – – Goodwill sold – – – – Impairment charge – – – – Balance as of October 30, 2016 $ $ $ $ $ $ |
Schedule of gross carrying amount and accumulated amortization for definite-lived intangible assets | October 30, 2016 October 25, 2015 Gross Weighted- Gross Weighted- Carrying Accumulated Avg Life Carrying Accumulated Avg Life (in thousands) Amount Amortization (in Years) Amount Amortization (in Years) Customer lists/relationships $ $ $ 83,190 $ Formulas and recipes Proprietary software and technology – – N/A Other intangibles Total $ $ $ $ |
Schedule of amortization expense | (in millions) 2016 $ 2015 2014 |
Schedule of estimated annual amortization expense | Estimated annual amortization expense for the five fiscal years after October 30, 2016, is as follows: (in millions) 2017 $ 2018 2019 2020 2021 |
Schedule of carrying amounts for indefinite-lived intangible assets | October 30, October 25, (in thousands) Brands/tradenames/trademarks $ $ Other intangibles Total $ $ |
Assets Held for Sale (Tables)
Assets Held for Sale (Tables) | 12 Months Ended |
Oct. 30, 2016 | |
Assets Held for Sale | |
Schedule of assets and liabilities held for sale | Amounts classified as assets and liabilities held for sale on October 30, 2016, are presented on the Company’s Consolidated Statement of Financial Position within their respective accounts, and include the following: Assets held for sale (in thousands) Current assets $ 80,861 Goodwill Intangibles Property, plant and equipment Total assets held for sale $ Liabilities held for sale (in thousands) Total current liabilities held for sale $ 44,066 Amounts classified as assets and liabilities held for sale on October 25, 2015, were presented on the Company’s Consolidated Statement of Financial Position within their respective accounts, and include the following: Assets held for sale (in thousands) Current assets $ 26,057 Goodwill Intangibles Property, plant and equipment Total assets held for sale $ Liabilities held for sale (in thousands) Total current liabilities held for sale $ 3,191 |
Long-term Debt and Other Borr33
Long-term Debt and Other Borrowing Arrangements (Tables) | 12 Months Ended |
Oct. 30, 2016 | |
Long-term Debt and Other Borrowing Arrangements | |
Schedule of long-term debt | October 30, October 25, (in thousands) Senior unsecured notes, with interest at 4.125%, interest due semi-annually through April 2021 maturity date $ $ Less current maturities – – Total $ $ |
Schedule of interest paid | (in millions) 2016 $ 2015 2014 |
Pension and Other Post-retire34
Pension and Other Post-retirement Benefits (Tables) | 12 Months Ended |
Oct. 30, 2016 | |
Pension and Other Post-retirement Benefits | |
Schedule of net periodic cost of defined benefit plans | Pension Benefits Post-retirement Benefits (in thousands) 2016 2015 2014 2016 2015 2014 Service cost $ 26,951 $ 28,795 $ 25,935 $ 1,297 $ 1,795 $ 1,963 Interest cost Expected return on plan assets ) ) ) – – – Amortization of prior service cost ) ) ) ) ) ) Recognized actuarial loss (gain) ) ) Curtailment (gain) charge ) – – – – – Net periodic cost $ 5,758 $ 6,123 $ 2,989 $ $ $ |
Schedule of amounts that have not been recognized in net periodic pension cost and are included in accumulated other comprehensive loss | Pension Benefits Post-retirement Benefits (in thousands) 2016 2015 2016 2015 Unrecognized prior service credit $ 17,049 $ 32,490 $ 13,845 $ 2,844 Unrecognized actuarial losses ) ) ) ) |
Schedule of amounts that are expected to be recognized in net periodic benefit expense in fiscal year 2016 | The following amounts are expected to be recognized in net periodic benefit expense in fiscal year 2017: Post- Pension retirement (in thousands) Benefits Benefits Amortized prior service credit $ $ Recognized actuarial losses |
Schedule of reconciliation of the beginning and ending balances of the benefit obligation, the fair value of plan assets, and the funded status of the plans | Pension Benefits Post-retirement Benefits (in thousands) 2016 2015 2016 2015 Change in benefit obligation: Benefit obligation at beginning of year $ $ $ $ Service cost Interest cost Actuarial loss (gain) ) Plan amendments – ) – Curtailment (gain) loss ) – – – Participant contributions – – Medicare Part D subsidy – – Benefits paid ) ) ) Benefit obligation at end of year $ $ $ $ Pension Benefits Post-retirement Benefits (in thousands) 2016 2015 2016 2015 Change in plan assets: Fair value of plan assets at beginning of year $ $ $ – $ – Actual return on plan assets – – Participant contributions – – Employer contributions Benefits paid ) ) ) Fair value of plan assets at end of year $ $ $ – $ – Funded status at end of year $ (162,244 ) $ (68,432 ) $ ) $ |
Schedule of amounts recognized in the Consolidated Statements of Financial Position | Pension Benefits Post-retirement Benefits (in thousands) 2016 2015 2016 2015 Pension assets $ 68,901 $ 132,861 $ – $ – Employee related expenses ) ) ) Pension and post-retirement benefits ) ) ) Net amount recognized $ ) $ (68,432 ) $ ) $ |
Schedule of information for pension plans with accumulated benefit obligations in excess of plan assets | (in thousands) 2016 2015 Projected benefit obligation $ $ Accumulated benefit obligation Fair value of plan assets – – |
Schedule of weighted-average assumptions used to determine benefit obligations and net periodic benefit costs | Weighted-average assumptions used to determine benefit obligations are as follows: 2016 2015 Discount rate Rate of future compensation increase (for plans that base benefits on final compensation level) Weighted-average assumptions used to determine net periodic benefit costs are as follows: 2016 2015 2014 Discount rate Rate of future compensation increase (for plans that base benefits on final compensation level) Expected long-term return on plan assets |
Schedule of effects of one-percentage-point change in assumed discount rate, expected long-term rate of return on plan assets, rate of future compensation increase, and health care cost trend rate | 1-Percentage-Point Expense Benefit Obligation (in thousands) Increase Decrease Increase Decrease Pension Benefits: Discount rate $ $ $ $ Expected long-term rate of return on plan assets – – Rate of future compensation increase Post-retirement Benefits: Discount rate $ (1,011) $ 4,710 $ (31,075) $ 37,551 Health care cost trend rate |
Schedule of benefits expected to be paid over the next ten fiscal years | Post- Pension retirement (in thousands) Benefits Benefits 2017 $ 56,099 $ 21,227 2018 2019 2020 2021 2022-2026 |
Schedule of actual and target weighted-average asset allocations for pension plan assets | 2016 2015 Asset Category Actual Target Range Actual Target Range Large Capitalization Equity 12-22% 15-35% Small Capitalization Equity 3-13% 5-15% International Equity 10-20% 15-25% Global Equity 5-20% – – Private Equity 0-15% 0-15% Total Equity Securities 50-75% 50-75% Fixed Income 25-45% 25-45% Real Estate 0-10% – 0-10% Cash and Cash Equivalents – – |
Schedule of fair values of the defined benefit pension plan investments | Fair Value Measurements at October 30, 2016 Quoted Prices in Active Significant Other Significant Markets for Observable Unobservable Total Identical Assets Inputs Inputs (in thousands) Fair Value (Level 1) (Level 2) (Level 3) Investments at Fair Value: Cash Equivalents (1) $ $ $ – $ – Large Capitalization Equity (2) Domestic $ $ $ $ – Foreign – – Total Large Capitalization Equity $ $ $ $ – Small Capitalization Equity (3) Domestic $ $ $ – $ – Foreign – – Total Small Capitalization Equity $ 63,772 $ $ – $ – International Equity (4) Mutual fund $ $ – $ $ – Collective trust – – Total International Equity $ $ – $ $ – Global Equity – Mutual Fund (5) $ 129,014 $ – $ $ – Private Equity (6) Domestic $ $ – $ – $ International – – Total Private Equity $ $ – $ – $ Total Equity $ $ $ $ 68,102 Fixed Income (7) US government issues $ $ $ $ – Municipal issues – – Corporate issues – domestic – – Corporate issues – foreign – – Total Fixed Income $ $ $ $ – Real Estate – Domestic (8) $ $ – $ – $ 63,004 Total Investments at Fair Value $ $ $ $ Fair Value Measurements at October 25, 2015 Quoted Prices in Active Significant Other Significant Markets for Observable Unobservable Total Identical Assets Inputs Inputs) (in thousands) Fair Value (Level 1) (Level 2) (Level 3) Investments at Fair Value: Cash Equivalents (1) $ $ $ – $ – Large Capitalization Equity (2) Domestic $ $ $ $ – Foreign – – World – – Total Large Capitalization Equity $ $ $ $ – Small Capitalization Equity (3) Domestic $ $ $ – $ – Foreign – – Total Small Capitalization Equity $ $ $ – $ – International Equity (4) Mutual fund $ $ – $ $ – Collective trust – – Total International Equity $ $ – $ $ – Private Equity (6) Domestic $ $ – $ – $ International – – Total Private Equity $ 71,775 $ – $ – $ Total Equity $ $ $ $ Fixed Income (7) US government issues $ $ $ $ – Municipal issues – – Corporate issues – domestic – – Corporate issues – foreign – – Total Fixed Income $ 405,191 $ $ $ – Total Investments at Fair Value $ $ $ $ The following is a description of the valuation methodologies used for instruments measured at fair value, including the general classification of such instruments pursuant to the valuation hierarchy: (1) Cash Equivalents: These Level 1 investments consist primarily of money market mutual funds that are highly liquid and traded in active markets. (2) Large Capitalization Equity: The Level 1 investments include a mix of predominately U.S. common stocks and foreign common stocks, which are valued at the closing price reported on the active market in which the individual securities are traded. The Level 2 investment includes mutual funds consisting of a mix of U.S. and foreign common stocks that are valued at the publicly NAV of shares held by the pension plans at year end. (3) Small Capitalization Equity: The Level 1 investments include a mix of predominately U.S. common stocks and foreign common stocks, which are valued at the closing price reported on the active market in which the individual securities are traded. (4) International Equity: These Level 2 investments include a mix of collective investment funds and mutual funds. The mutual funds are valued at the publicly available NAV of shares held by the pension plans at year end. The value of the collective investment funds is based on the fair value of the underlying investments and the NAV can be calculated for these funds. (5) Global Equity: The Level 2 investment includes an open-ended mutual fund consisting of a mix of U.S. common stocks and foreign common stocks, which is valued at the publicly available NAV of shares held by the pension plans at year end. (6) Private Equity: These Level 3 investments consist of various collective investment funds, which are managed by a third party, that invest in a well-diversified portfolio of equity investments from top performing, high quality firms that focus on U.S. and foreign small to mid-markets, venture capitalists, and entrepreneurs with a concentration in areas of innovation. Investment strategies include buyouts, growth capital, buildups, and distressed, as well as early stages of company development mainly in the U.S. The fair value of the units for these investments is based on the fair value of the underlying investments, and the NAV can be calculated for these funds. (7) Fixed Income: The Level 1 investments include U.S. Treasury bonds and notes, which are valued at the closing price reported on the active market in which the individual securities are traded. The Level 2 investments consist principally of U.S. government securities, which are valued daily using institutional bond quote sources and mortgage-backed securities pricing sources; municipal, domestic, and foreign securities, which are valued daily using institutional bond quote sources; and mutual funds invested in long-duration corporate bonds that are valued at the publicly available NAV of shares held by the pension plans at year-end. (8) Real Estate: These Level 3 investments include ownership in open-ended real estate funds, which manage diversified portfolios of commercial properties within the office, residential, retail, and industrial property sectors. Investment strategies aim to acquire, own, hold, or dispose of investments with the goal of achieving current income and/or capital appreciation. The real estate investments are valued at the NAV of shares held by the pension plans. Requests to redeem shares are granted on a quarterly basis with either 45 or 90 days advance notice, subject to availability of cash. |
Schedule of reconciliation of the beginning and ending balance of the investments measured at fair value using significant unobservable inputs (Level 3) | (in thousands) 2016 2015 Beginning Balance $ 71,775 $ Purchases, issuances, and settlements (net) Unrealized (losses) gains Realized gains Interest and dividend income Ending Balance $ $ |
Schedule of unfunded private equity commitment balance for each investment category | (in thousands) 2016 2015 Domestic equity $ 4,696 $ 9,264 International equity Unfunded commitment balance $ $ |
Derivatives and Hedging (Tables
Derivatives and Hedging (Tables) | 12 Months Ended |
Oct. 30, 2016 | |
Derivatives and hedging | |
Schedule of fair values of derivative instruments | Fair Value (1) Location on Consolidated October 30, October 25, (in thousands) Statements of Financial Position 2016 2015 Asset Derivatives: Derivatives Designated as Hedges: Commodity contracts Other current assets $ $ Derivatives Not Designated as Hedges: Commodity contracts Other current assets Total Asset Derivatives $ (50) $ (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 Statement of Financial Position. See Note M for a discussion of these net amounts as reported in the Consolidated Statements of Financial Position. |
Schedule of gains or losses (before tax) related to derivative instruments | Gain/(Loss) Recognized Gain/(Loss) Reclassified Gain/(Loss) Recognized in AOCL from AOCL into Earnings in Earnings (Effective Portion) (1) (Effective Portion) (1) (Ineffective Portion) (2)(4) Fiscal Year Ended Fiscal Year Ended Fiscal Year Ended October 30, October 25, Location on Consolidated October 30, October 25, October 30, October 25, Cash Flow Hedges: 2016 2015 Statements of Operations 2016 2015 2016 2015 Commodity contracts $ $ Cost of products sold $ $ $ $ Gain/(Loss) Gain/(Loss) Recognized in Earnings Recognized in Earnings (Effective Portion) (3) (Ineffective Portion) (2)(5) Fiscal Year Ended Fiscal Year Ended Location on Consolidated October 30, October 25, October 30, October 25, Fair Value Hedges: Statements of Operations 2016 2015 2016 2015 Commodity contracts Cost of products sold $ $ $ $ Gain/(Loss) Recognized in Earnings Fiscal Year Ended Derivatives Not Location on Consolidated October 30, October 25, Designated as Hedges: Statements of Operations 2016 2015 Commodity contracts Cost of products sold $ $ (1) Amounts represent gains or losses in AOCL before tax. See Note J for the after tax impact of these gains or losses on net earnings. (2) There were no gains or losses excluded from the assessment of hedge effectiveness during the fiscal year. Fiscal years 2016 and 2015 include the mark-to-market impact on certain corn futures contracts which resulted from a temporary suspension of hedge accounting due to market volatility. (3) Amounts represent losses on commodity contracts designated as fair value hedges that were closed during the fiscal year, 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. (4) There were no gains or losses resulting from the discontinuance of cash flow hedges during the fiscal year. (5) There were no gains or losses recognized as a result of a hedged firm commitment no longer qualifying as a fair value hedge during the fiscal year. |
Derivatives not designated as hedges | |
Derivatives and hedging | |
Schedule of outstanding commodity futures contracts | Volume Commodity October 30, 2016 October 25, 2015 Corn 4.0 million bushels 2.6 million bushels Soybean meal 11,000 tons 11,500 tons |
Cash Flow Hedges | |
Derivatives and hedging | |
Schedule of outstanding commodity futures contracts | Volume Commodity October 30, 2016 October 25, 2015 Corn 22.4 million bushels 20.1 million bushels |
Fair Value Hedges | |
Derivatives and hedging | |
Schedule of outstanding commodity futures contracts | Volume Commodity October 30, 2016 October 25, 2015 Corn 3.6 million bushels 5.3 million bushels Lean hogs 0.2 million cwt 0.4 million cwt |
Investments In and Receivable36
Investments In and Receivables from Affiliates (Tables) | 12 Months Ended |
Oct. 30, 2016 | |
Investments In and Receivables from Affiliates | |
Schedule of investments in and receivables from affiliates | October 30, October 25, (in thousands) Segment % Owned 2016 2015 MegaMex Foods, LLC Grocery Products 50% $ 180,437 $ 200,110 Foreign Joint Ventures International & Other Various (26 – 40%) Total $ $ 258,998 |
Schedule of equity in earnings of affiliates | (in thousands) Segment 2016 2015 2014 MegaMex Foods, LLC Grocery Products $ 30,651 $ $ 14,415 Foreign Joint Ventures International & Other Total $ 38,685 $ $ 17,585 |
Accumulated Other Comprehensi37
Accumulated Other Comprehensive Loss (Tables) | 12 Months Ended |
Oct. 30, 2016 | |
Accumulated Other Comprehensive Loss | |
Schedule of components of accumulated other comprehensive loss | Accumulated Foreign Deferred Other Currency Pension & Gain (Loss) Comprehensive (in thousands) Translation Other Benefits – Hedging Loss Balance at October 27, 2013 $ 9,391 $ $ (5,604) $ Unrecognized gains (losses): Gross Tax effect – Reclassification into net earnings: Gross – 6,387 (1) 10,925 (2) Tax effect – Net of tax amount Balance at October 26, 2014 $ $ $ (9,194) $ Unrecognized gains (losses): Gross Tax effect – Reclassification into net earnings: Gross – 12,259 (1) 12,369 (2) Tax effect – Net of tax amount Purchase of additional ownership of noncontrolling interest – – Balance at October 25, 2015 $ 969 $ $ $ Unrecognized gains (losses): Gross Tax effect – Reclassification into net earnings: Gross – 13,533 (1) 1,310 (2) Tax effect – Net of tax amount Balance at October 30, 2016 $ (5,489) $ $ 5,738 $ (1) Included in computation of net periodic cost (see Note G for additional details). (2) Included in cost of products sold in the Consolidated Statements of Operations. |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Oct. 30, 2016 | |
Income Taxes | |
Schedule of components of provision for income taxes | (in thousands) 2016 2015 2014 Current: U.S. Federal $ $ $ State Foreign Total current Deferred: U.S. Federal State Foreign Total deferred Total provision for income taxes $ $ $ |
Schedule of significant components of the deferred income tax liabilities and assets | O ctober 30, O ctober 25, ( in thousands ) 2016 2015 D eferred tax liabilities: G oodwill and intangible assets $ $ Tax over book depreciation and basis differences O ther, net D eferred tax assets: P ension and post-retirement benefits Employee compensation related liabilities M arketing and promotional accruals O ther, net N et deferred tax assets $ 6,223 $ |
Schedule of reconciliation of the statutory federal income tax rate to the effective tax rate | 2016 2015 2014 U.S. statutory rate 35.0% 35.0% 35.0% State taxes on income, net of federal tax benefit 2.1 2.7 2.8 Domestic production activities deduction (2.8) (2.6) (2.7) Foreign tax credit (0.9) – – All other, net (1.0) (0.1) (0.8) Effective tax rate 32.4% 35.0% 34.3% |
Schedule of changes in the unrecognized tax benefits, excluding interest and penalties | (in thousands) Balance as of October 26, 2014 $ Tax positions related to the current period: Increases Tax positions related to prior periods: Increases Decreases Settlements Decreases related to a lapse of applicable statute of limitations Balance as of October 25, 2015 $ Tax positions related to the current period: Increases Tax positions related to prior periods: Increases Decreases Settlements Decreases related to a lapse of applicable statute of limitations Balance as of October 30, 2016 $ |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Oct. 30, 2016 | |
Stock-Based Compensation | |
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 October 30, 2016, and changes during the fiscal year then ended, is as follows: Weighted- Weighted- Average Average Remaining Aggregate Exercise Contractual Intrinsic Shares Price Term Value Outstanding at October 25, 2015 $ Granted Exercised Forfeited Outstanding at October 30, 2016 $ 4.8 yrs $ Exercisable at October 30, 2016 $ 3.9 yrs $ |
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 each of the past three fiscal years is as follows: Fiscal Year Ended October 30, October 25, October 26, 2016 2015 2014 Weighted-average grant date fair value $ 7.82 $ 4.92 $ 4.85 Intrinsic value of exercised options $ $ $ |
Schedule of weighted-average assumptions used to calculate fair value of each option award | Fiscal Year Ended October 30, October 25, October 26, 2016 2015 2014 Risk-free interest rate Dividend yield Stock price volatility Expected option life 8 years 8 years 8 years |
Schedule of reconciliation of the nonvested shares | A reconciliation of the nonvested shares (in thousands) as of October 30, 2016, and changes during the fiscal year then ended, is as follows: Weighted- Average Grant Date Shares Fair Value Nonvested at October 25, 2015 74 $ Granted 47 Vested 74 Nonvested at October 30, 2016 47 $ |
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 nonvested shares granted, the total fair value (in thousands) of nonvested shares granted, and the fair value (in thousands) of shares that have vested during each of the past three fiscal years is as follows: Fiscal Year Ended October 30, October 25, October 26, 2016 2015 2014 Weighted-average grant date fair value $ $ $ Fair value of nonvested shares granted $ $ $ Fair value of shares vested $ $ $ |
Schedule of stock-based compensation expense, along with the related income tax benefit | Fiscal Year Ended October 30, October 25, October 26, (in thousands) 2016 2015 2014 Stock-based compensation expense recognized $ $ 15,717 $ Income tax benefit recognized After-tax stock-based compensation expense $ $ 9,750 $ 8,924 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Oct. 30, 2016 | |
Fair Value Measurements | |
Schedule of financial assets and liabilities carried at fair value on a recurring basis | Fair Value Measurements at October 30, 2016 Quoted Prices in Fair Value at Active Markets Significant Other Significant October 30, for Identical Observable Unobservable (in thousands) 2016 Assets (Level 1) Inputs (Level 2) Inputs (Level 3) Assets at Fair Value: Cash and cash equivalents (1) $ $ $ – $ – Other trading securities (2) – Commodity derivatives (3) – – Total Assets at Fair Value $ $ $ $ – Liabilities at Fair Value: Deferred compensation (2) $ 60,949 $ 28,768 $ $ – Total Liabilities at Fair Value $ 60,949 $ 28,768 $ $ – Fair Value Measurements at October 25, 2015 Quoted Prices in Fair Value at Active Markets Significant Other Significant October 25, for Identical Observable Unobservable (in thousands) 2015 Assets (Level 1) Inputs (Level 2) Inputs (Level 3) Assets at Fair Value: Cash and cash equivalents (1) $ 347,239 $ 347,239 $ – $ – Other trading securities (2) – Commodity derivatives (3) – – Total Assets at Fair Value $ 473,392 $ 393,053 $ $ – Liabilities at Fair Value: Deferred compensation (2) $ 57,869 $ 25,272 $ $ – Total Liabilities at Fair Value $ 57,869 $ 25,272 $ $ – 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 consist primarily of bank deposits, money market funds rated AAA, or other highly liquid investment accounts. As these investments have a maturity date of three months or less, the carrying value approximates fair value. (2) The Company holds trading securities as part of a rabbi trust to fund certain supplemental executive retirement plans and deferred income plans. The rabbi trust is included in other assets on the Consolidated Statements of Financial Position and is valued based on the underlying fair value of each fund held by the trust. A majority of the funds held related to the supplemental executive retirement plans 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 that supports 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, and include equity securities, money market accounts, bond funds, or other portfolios for which there is an active quoted market. Therefore, these securities are classified as Level 1. The related deferred compensation liabilities are included in other long-term liabilities on the Consolidated Statements of Financial Position and are valued based on the underlying investment selections held in each participant’s account. Investment options generally mirror those funds held by the rabbi trust, for which there is an active quoted market. Therefore, these investment balances are classified as Level 1. 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. (3) The Company’s commodity derivatives represent futures contracts used in its hedging or other programs to offset price fluctuations associated with purchases of corn and soybean meal, 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 and soybean meal are traded on the Chicago Board of Trade, while futures contracts for lean hogs are traded on the Chicago Mercantile Exchange. These are active markets with quoted prices available and therefore these contracts are classified as Level 1. All derivatives are reviewed for potential credit risk and risk of nonperformance. The Company nets the derivative assets and liabilities for each of its hedging programs, including cash collateral, when a master netting arrangement exists between the Company and the counterparty to the derivative contract. The net balance for each program is included in other current assets or accounts payable, as appropriate, in the Consolidated Statements of Financial Position. As of October 30, 2016, the Company has recognized the right to reclaim net cash collateral of $3.1 million from various counterparties (including $7.1 million of realized gains offset by cash owed of $4.0 million on closed positions). As of October 25, 2015, the Company had recognized the right to reclaim net cash collateral of $2.3 million from various counterparties (including $13.7 million of cash less $11.4 million of realized losses on closed positions). |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Oct. 30, 2016 | |
Commitments and Contingencies | |
Schedule of purchase commitments | Under these contracts, the Company is committed at October 30, 2016, to make purchases, assuming current price levels, as follows: (in thousands) 2017 $ 2018 2019 2020 2021 Later Years Total $ |
Schedule of noncancelable operating lease commitments | The Company has noncancelable operating lease commitments on facilities and equipment at October 30, 2016, as follows: (in thousands) 2017 $ 2018 2019 2020 2021 Later Years Total $ |
Schedule of purchase obligations that are not reflected in the consolidated statements of financial position | As of October 30, 2016, commitments related to those purchase orders, and all known contracts exceeding $1.0 million, are shown below (in thousands) 2017 $ 2018 2019 2020 2021 Later Years Total $ |
Earnings Per Share Data (Tables
Earnings Per Share Data (Tables) | 12 Months Ended |
Oct. 30, 2016 | |
Earnings Per Share Data | |
Schedule of denominator for the computation of basic and diluted earnings per share | (in thousands) 2016 2015 2014 Basic weighted-average shares outstanding Dilutive potential common shares Diluted weighted-average shares outstanding |
Segment Reporting (Tables)
Segment Reporting (Tables) | 12 Months Ended |
Oct. 30, 2016 | |
Segment Reporting | |
Schedule of sales and operating profits for each of the reportable segments and reconciliation to earnings before income taxes | (in thousands) 2016 2015 2014 Net Sales (to unaffiliated customers) Grocery Products $ $ $ Refrigerated Foods Jennie-O Turkey Store Specialty Foods International & Other Total $ $ $ Intersegment Sales Grocery Products $ – $ – $ – Refrigerated Foods Jennie-O Turkey Store Specialty Foods International & Other – – – Total Intersegment elimination Total $ – $ – $ – Segment Net Sales Grocery Products $ $ $ Refrigerated Foods Jennie-O Turkey Store Specialty Foods International & Other Intersegment elimination Total $ $ $ Segment Operating Profit Grocery Products $ 268,461 $ 228,582 $ 195,064 Refrigerated Foods Jennie-O Turkey Store Specialty Foods International & Other Total segment operating profit $ $ $ 961,705 Net interest and investment expense (income) General corporate expense Noncontrolling interest Earnings Before Income Taxes $ $ $ 922,152 (in thousands) Assets Grocery Products $ $ $ Refrigerated Foods Jennie-O Turkey Store Specialty Foods International & Other Corporate Total $ $ $ Additions to Property, Plant and Equipment Grocery Products $ 15,830 $ 18,104 $ 31,741 Refrigerated Foods Jennie-O Turkey Store Specialty Foods International & Other Corporate Total $ 255,524 $ 144,063 $ 159,138 Depreciation and Amortization Grocery Products $ 29,725 $ 26,972 $ 25,883 Refrigerated Foods Jennie-O Turkey Store Specialty Foods International & Other Corporate Total $ 131,968 $ 133,434 $ 130,044 |
Schedule of percentages of total revenues contributed by classes of similar products | Fiscal Year Ended October 30, October 25, October 26, 2016 2015 2014 Perishable Poultry Shelf-stable Miscellaneous |
Schedule of total revenues attributable to U.S. and all foreign countries | Fiscal Year Ended October 30, October 25, October 26, (in thousands) 2016 2015 2014 United States $ $ $ Foreign $ $ $ |
Quarterly Results of Operatio44
Quarterly Results of Operations (Unaudited) (Tables) | 12 Months Ended |
Oct. 30, 2016 | |
Quarterly Results of Operations (Unaudited) | |
Schedule of unaudited quarterly results of operations | Net Earnings Attributable to Basic Diluted Gross Net Hormel Foods Earnings Earnings (in thousands, except per share data) Net Sales Profit Earnings Corporation (1) Per Share Per Share 2016 First quarter $ $ $ $ $ $ Second quarter Third quarter Fourth quarter 2015 First quarter $ $ $ $ $ $ Second quarter Third quarter Fourth quarter (1) Excludes net earnings attributable to the Company’s noncontrolling interests. |
Summary of Significant Accoun45
Summary of Significant Accounting Policies - Stock Split (Details) | Feb. 09, 2016$ / shares | Oct. 30, 2016$ / sharesshares | Jan. 27, 2016shares | Jan. 26, 2016$ / sharesshares | Oct. 25, 2015$ / sharesshares | [1] |
Before stock split | ||||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.0293 | |||||
Common stock, number of shares authorized | shares | 800,000,000 | |||||
After stock split | ||||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.01465 | |||||
Common stock, number of shares authorized | shares | 1,600,000,000 | |||||
Common Stock | ||||||
Authorized stock split ratio | 2 | |||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.01465 | $ 0.01465 | ||||
Common stock, number of shares authorized | shares | 1,600,000,000 | 1,600,000,000 | ||||
[1] | Shares and par values have been restated, as appropriate, to reflect the two-for-one stock split distributed on February 9, 2016. |
Summary of Significant Accoun46
Summary of Significant Accounting Policies - Fiscal Year (Details) | 12 Months Ended | ||
Oct. 30, 2016 | Oct. 25, 2015 | Oct. 26, 2014 | |
Summary of Significant Accounting Policies | |||
Fiscal year term | 371 days | 364 days | 364 days |
Summary of Significant Accoun47
Summary of Significant Accounting Policies - Investments (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 30, 2016 | Oct. 25, 2015 | Oct. 26, 2014 | |
Rabbi trust | |||
Investments | |||
Gains related to securities held | $ 2.6 | $ 2.4 | $ 2.9 |
Summary of Significant Accoun48
Summary of Significant Accounting Policies - Property, Plant and Equipment (Details) | 12 Months Ended |
Oct. 30, 2016 | |
Buildings | Minimum | |
Property, Plant and Equipment | |
Estimated useful life | 20 years |
Buildings | Maximum | |
Property, Plant and Equipment | |
Estimated useful life | 40 years |
Machinery and equipment | Minimum | |
Property, Plant and Equipment | |
Estimated useful life | 5 years |
Machinery and equipment | Maximum | |
Property, Plant and Equipment | |
Estimated useful life | 10 years |
Summary of Significant Accoun49
Summary of Significant Accounting Policies -Goodwill and Other Indefinite-Lived Intangibles (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 30, 2016 | Oct. 25, 2015 | Oct. 26, 2014 | |
Goodwill and Other Indefinite-Lived Intangibles | |||
Goodwill impairment charges | $ 991 | $ 21,537 | $ 0 |
Indefinite-lived intangible assets impairment charges | $ 0 | $ 0 | $ 0 |
Summary of Significant Accoun50
Summary of Significant Accounting Policies - Advertising Expenses (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 30, 2016 | Oct. 25, 2015 | Oct. 26, 2014 | |
Advertising Expenses | |||
Advertising costs | $ 204.1 | $ 145.3 | $ 114.4 |
Summary of Significant Accoun51
Summary of Significant Accounting Policies - Research and Development Expenses (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 30, 2016 | Oct. 25, 2015 | Oct. 26, 2014 | |
Research and Development Expenses | |||
Research and development expense | $ 34.7 | $ 32 | $ 29.9 |
Summary of Significant Accoun52
Summary of Significant Accounting Policies - Share Repurchases (Details) - Common Stock shares in Millions | Feb. 09, 2016 | Oct. 30, 2016$ / sharesshares | Oct. 25, 2015$ / sharesshares | Oct. 26, 2014$ / sharesshares | Jan. 29, 2013shares |
Shares Repurchases | |||||
Authorized stock split ratio | 2 | ||||
2013 Program | |||||
Shares Repurchases | |||||
Number of shares authorized to be repurchased (in shares) | 10 | ||||
Stock repurchased (in shares) | 2.4 | 0.4 | 1.3 | ||
Average price of shares repurchased (in dollars per share) | $ / shares | $ 36.84 | $ 62.32 | $ 46.87 |
Summary of Significant Accoun53
Summary of Significant Accounting Policies -Supplemental Cash Flow (Details) - USD ($) $ in Thousands | Mar. 16, 2015 | Oct. 25, 2015 |
Supplemental Cash Flow Information | ||
Cash amount of ownership interest purchased | $ 11,702 | |
Reduction in additional paid-in capital | $ 14,035 | |
Shanghai Shangshi Meat Products Co. Ltd. | ||
Supplemental Cash Flow Information | ||
Percent of ownership interest purchased | 19.29% | |
Ownership percentage | 100.00% | |
Cash amount of ownership interest purchased | $ 11,700 | |
Reduction in additional paid-in capital | $ 11,900 |
Acquisitions (Detail)
Acquisitions (Detail) - USD ($) $ in Thousands | May 26, 2016 | Jul. 13, 2015 | Aug. 11, 2014 | Nov. 26, 2013 | Oct. 30, 2016 | Oct. 25, 2015 | Oct. 26, 2014 |
Acquisitions | |||||||
Purchase price | $ 280,889 | $ 770,587 | $ 466,204 | ||||
Allocation of the purchase price to the acquired assets, liabilities, and goodwill | |||||||
Goodwill | 1,834,497 | 1,699,484 | 1,226,406 | ||||
Justin's | |||||||
Acquisitions | |||||||
Purchase price | $ 280,900 | ||||||
Present value of the cash flow benefits as a result of tax amortization of the stepped-up basis of assets | 70,000 | ||||||
Allocation of the purchase price to the acquired assets, liabilities, and goodwill | |||||||
Intangible assets | 89,900 | ||||||
Goodwill | $ 186,400 | ||||||
Applegate | |||||||
Acquisitions | |||||||
Purchase price | $ 774,100 | ||||||
Allocation of the purchase price to the acquired assets, liabilities, and goodwill | |||||||
Accounts receivable | 25,574 | ||||||
Inventory | 22,212 | ||||||
Prepaid and other assets | 2,987 | ||||||
Property, plant and equipment | 3,463 | ||||||
Intangible assets | 275,900 | ||||||
Goodwill | 488,235 | ||||||
Current liabilities | (23,420) | ||||||
Deferred taxes | (20,888) | ||||||
Purchase price | $ 774,063 | ||||||
Transaction costs | 9,000 | ||||||
CytoSport Holdings | |||||||
Acquisitions | |||||||
Purchase price | $ 420,900 | ||||||
Potential additional payment | $ 20,000 | ||||||
Term for additional payment | 2 years | ||||||
Allocation of the purchase price to the acquired assets, liabilities, and goodwill | |||||||
Accounts receivable | $ 30,580 | ||||||
Inventory | 62,246 | ||||||
Prepaid and other assets | 3,133 | ||||||
Property, plant and equipment | 8,119 | ||||||
Intangible assets | 188,500 | ||||||
Goodwill | 270,925 | ||||||
Current liabilities | (52,811) | ||||||
Long-term liabilities | (30,140) | ||||||
Deferred taxes | (59,700) | ||||||
Purchase price | 420,852 | ||||||
Potential payments owed under a supplier agreement | $ 15,000 | ||||||
Adjustment to potential payment | $ 1,400 | $ 8,900 | |||||
Transaction costs (excluding transitional service expenses) related to the acquisition | $ 4,800 | ||||||
SKIPPY | China | |||||||
Acquisitions | |||||||
Purchase price | $ 41,900 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Oct. 30, 2016 | Oct. 25, 2015 |
Inventories | ||
Finished products | $ 553,634 | $ 553,298 |
Raw materials and work-in-process | 253,662 | 239,174 |
Materials and supplies | 178,387 | 200,793 |
Total | $ 985,683 | $ 993,265 |
Goodwill and Intangible Asset56
Goodwill and Intangible Assets - Goodwill Rollforward (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 30, 2016 | Oct. 25, 2015 | Oct. 26, 2014 | |
Changes in the carrying amount of goodwill | |||
Balance at the beginning of the period | $ 1,699,484 | $ 1,226,406 | |
Goodwill acquired | 186,379 | 488,476 | |
Purchase adjustments | (241) | 7,096 | |
Impairment charge | (991) | (21,537) | $ 0 |
Product line disposal/Goodwill sold | (50,134) | (957) | |
Balance at the end of the period | 1,834,497 | 1,699,484 | 1,226,406 |
Grocery Products | |||
Changes in the carrying amount of goodwill | |||
Balance at the beginning of the period | 322,421 | 322,942 | |
Goodwill acquired | 186,379 | ||
Product line disposal/Goodwill sold | (521) | ||
Balance at the end of the period | 508,800 | 322,421 | 322,942 |
Refrigerated Foods | |||
Changes in the carrying amount of goodwill | |||
Balance at the beginning of the period | 584,684 | 96,643 | |
Goodwill acquired | 488,476 | ||
Purchase adjustments | (241) | ||
Product line disposal/Goodwill sold | (435) | ||
Balance at the end of the period | 584,443 | 584,684 | 96,643 |
Jennie-O Turkey Store | |||
Changes in the carrying amount of goodwill | |||
Balance at the beginning of the period | 203,214 | 203,214 | |
Balance at the end of the period | 203,214 | 203,214 | 203,214 |
Specialty Foods | |||
Changes in the carrying amount of goodwill | |||
Balance at the beginning of the period | 456,416 | 470,857 | |
Purchase adjustments | 7,096 | ||
Impairment charge | (991) | (21,537) | |
Product line disposal/Goodwill sold | (50,134) | ||
Balance at the end of the period | 405,291 | 456,416 | 470,857 |
International & Other | |||
Changes in the carrying amount of goodwill | |||
Balance at the beginning of the period | 132,749 | 132,750 | |
Product line disposal/Goodwill sold | (1) | ||
Balance at the end of the period | $ 132,749 | $ 132,749 | $ 132,750 |
Goodwill and Intangible Asset57
Goodwill and Intangible Assets - Definite Lived Intangibles Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 30, 2016 | Oct. 25, 2015 | Oct. 26, 2014 | |
Gross carrying amount and accumulated amortization for definite-lived intangible assets | |||
Gross Carrying Amount | $ 93,710 | $ 100,060 | |
Accumulated Amortization | $ (24,210) | $ (28,900) | |
Weighted-Avg Life | 11 years 10 months 24 days | 11 years 3 months 18 days | |
Amortization expense | $ 8,387 | $ 8,142 | $ 9,352 |
Estimated amortization expense | |||
2,017 | 8,300 | ||
2,018 | 7,800 | ||
2,019 | 7,600 | ||
2,020 | 7,400 | ||
2,021 | 7,400 | ||
Customer lists/relationships | |||
Gross carrying amount and accumulated amortization for definite-lived intangible assets | |||
Gross Carrying Amount | 88,240 | 83,190 | |
Accumulated Amortization | $ (20,737) | $ (13,939) | |
Weighted-Avg Life | 12 years 2 months 12 days | 12 years 1 month 6 days | |
Customer lists/relationships | Justin's | |||
Gross carrying amount and accumulated amortization for definite-lived intangible assets | |||
Definite-lived intangible assets acquired | $ 5,800 | ||
Customer lists/relationships | Applegate | |||
Gross carrying amount and accumulated amortization for definite-lived intangible assets | |||
Definite-lived intangible assets acquired | $ 25,100 | ||
Customer lists/relationships | CytoSport Holdings | |||
Gross carrying amount and accumulated amortization for definite-lived intangible assets | |||
Definite-lived intangible assets acquired | 23,300 | ||
Noncompete agreements | Justin's | |||
Gross carrying amount and accumulated amortization for definite-lived intangible assets | |||
Definite-lived intangible assets acquired | 1,400 | ||
Noncompete agreements | Applegate | |||
Gross carrying amount and accumulated amortization for definite-lived intangible assets | |||
Definite-lived intangible assets acquired | 1,200 | ||
Formulas and recipes | |||
Gross carrying amount and accumulated amortization for definite-lived intangible assets | |||
Gross Carrying Amount | 1,950 | 7,490 | |
Accumulated Amortization | $ (1,796) | $ (6,865) | |
Weighted-Avg Life | 10 years | 7 years 2 months 12 days | |
Proprietary software and technology | |||
Gross carrying amount and accumulated amortization for definite-lived intangible assets | |||
Gross Carrying Amount | $ 7,010 | ||
Accumulated Amortization | $ (6,901) | ||
Weighted-Avg Life | 8 years 1 month 6 days | ||
Other intangibles | |||
Gross carrying amount and accumulated amortization for definite-lived intangible assets | |||
Gross Carrying Amount | $ 3,520 | $ 2,370 | |
Accumulated Amortization | $ (1,677) | $ (1,195) | |
Weighted-Avg Life | 6 years 3 months 18 days | 7 years 6 months |
Goodwill and Intangible Asset58
Goodwill and Intangible Assets - Indefinite Lived Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Apr. 24, 2016 | Oct. 30, 2016 | Oct. 25, 2015 | Oct. 26, 2014 | |
Carrying amounts for indefinite-lived intangible assets | ||||
Carrying amounts for indefinite-lived intangible assets | $ 833,758 | $ 756,059 | ||
Indefinite-lived intangible assets impairment charges | 0 | 0 | $ 0 | |
Goodwill impairment charges | 991 | 21,537 | $ 0 | |
Brands/tradename/trademarks | ||||
Carrying amounts for indefinite-lived intangible assets | ||||
Carrying amounts for indefinite-lived intangible assets | 825,774 | 748,075 | ||
Other intangibles | ||||
Carrying amounts for indefinite-lived intangible assets | ||||
Carrying amounts for indefinite-lived intangible assets | $ 7,984 | $ 7,984 | ||
Assets Sold | Portion of DCB | ||||
Carrying amounts for indefinite-lived intangible assets | ||||
Goodwill impairment charges | $ 1,000 |
Assets Held for Sale (Details)
Assets Held for Sale (Details) - USD ($) $ in Thousands | May 09, 2016 | Apr. 24, 2016 | Oct. 25, 2015 | Oct. 30, 2016 | Oct. 25, 2015 | Oct. 26, 2014 |
Assets Held For Sale | ||||||
Goodwill impairment charge | $ 991 | $ 21,537 | $ 0 | |||
Proceeds from sale of business | 110,149 | |||||
Clougherty Packing, LLC and with PFFJ, LLC | Assets Held For Sale | ||||||
Assets held for sale | ||||||
Current assets | 80,861 | |||||
Goodwill | 12,703 | |||||
Intangibles | 14,321 | |||||
Property, plant and equipment | 74,812 | |||||
Total assets held for sale | 182,697 | |||||
Liabilities held for sale | ||||||
Total current liabilities held for sale | $ 44,066 | |||||
Portion of DCB | Assets Held For Sale | ||||||
Assets Held For Sale | ||||||
Net sales | 256,000 | |||||
Assets held for sale | ||||||
Current assets | $ 26,057 | 26,057 | ||||
Goodwill | 51,811 | 51,811 | ||||
Intangibles | 5,389 | 5,389 | ||||
Property, plant and equipment | 31,678 | 31,678 | ||||
Total assets held for sale | 114,935 | 114,935 | ||||
Liabilities held for sale | ||||||
Total current liabilities held for sale | 3,191 | $ 3,191 | ||||
Portion of DCB | Assets Sold | ||||||
Assets Held For Sale | ||||||
Goodwill impairment charge | $ 1,000 | |||||
Proceeds from sale of business | $ 110,100 | |||||
Significant Other Observable Inputs (Level 2) | Portion of DCB | Assets Held For Sale | ||||||
Assets Held For Sale | ||||||
Goodwill impairment charge | $ 21,500 |
Long-term Debt and Other Borr60
Long-term Debt and Other Borrowing Arrangements (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 30, 2016 | Oct. 25, 2015 | Oct. 26, 2014 | |
Long-term Debt and Other Borrowing Arrangements | |||
Total | $ 250,000 | $ 250,000 | |
Outstanding amount | 185,000 | ||
Interest paid | 12,900 | 13,100 | $ 12,700 |
4.125% Senior unsecured notes, due April 2021 | |||
Long-term Debt and Other Borrowing Arrangements | |||
Long-term debt | $ 250,000 | $ 250,000 | |
Interest rate (as a percent) | 4.125% | 4.125% | |
Revolving line of credit | |||
Long-term Debt and Other Borrowing Arrangements | |||
Maximum borrowing capacity | $ 400,000 | ||
Outstanding draws | 0 | $ 0 | |
Term loan facility | |||
Long-term Debt and Other Borrowing Arrangements | |||
Maximum borrowing capacity | 300,000 | ||
Outstanding amount | $ 0 | $ 185,000 |
Pension and Other Post-retire61
Pension and Other Post-retirement Benefits - Costs And Obligations (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 30, 2016 | Oct. 25, 2015 | Oct. 26, 2014 | |
Pension and other post-retirement benefits | |||
Costs associated with the defined contribution benefit plans | $ 33,500 | $ 31,700 | $ 30,100 |
Amounts recognized in the Consolidated Statements of Financial Position | |||
Pension assets | 68,901 | 132,861 | |
Pension and post-retirement benefits | (522,356) | (509,261) | |
Pension Benefits | |||
Net periodic cost of defined benefit plans | |||
Service cost | 26,951 | 28,795 | 25,935 |
Interest cost | 55,728 | 52,522 | 53,030 |
Expected return on plan assets | (88,681) | (88,792) | (83,702) |
Amortization of prior service cost | (4,120) | (4,878) | (4,971) |
Recognized actuarial loss (gain) | 20,318 | 18,476 | 12,697 |
Curtailment (gain) charge | (4,438) | ||
Net periodic cost | 5,758 | 6,123 | 2,989 |
Amounts recognized in accumulated other comprehensive loss | |||
Unrecognized prior service credit | 17,049 | 32,490 | |
Unrecognized actuarial gains (losses) | (464,091) | (360,949) | |
Amount of prior service credit (cost) included in accumulated other comprehensive loss expected to be recognized during next year | (3,000) | ||
Amount of actuarial loss included in accumulated other comprehensive loss expected to be recognized during next year | 26,166 | ||
Change in benefit obligation: | |||
Benefit obligation at beginning of year | 1,248,209 | 1,235,769 | |
Service cost | 26,951 | 28,795 | 25,935 |
Interest cost | 55,728 | 52,522 | 53,030 |
Actuarial loss (gain) | 112,208 | (16,872) | |
Plan amendments | 6,884 | ||
Curtailment (gain) loss | (674) | ||
Benefits paid | (54,436) | (52,005) | |
Benefit obligation at end of year | 1,394,870 | 1,248,209 | 1,235,769 |
Changes in plan assets | |||
Fair value of plan assets at beginning of year | 1,179,777 | 1,168,765 | |
Actual return on plan assets | 76,756 | 35,870 | |
Employer contributions | 30,529 | 27,147 | |
Benefits paid | (54,436) | (52,005) | |
Fair value of plan assets at end of year | 1,232,626 | 1,179,777 | 1,168,765 |
Funded status at end of year | (162,244) | (68,432) | |
Amounts recognized in the Consolidated Statements of Financial Position | |||
Pension assets | 68,901 | 132,861 | |
Employee related expenses | (5,425) | (4,931) | |
Pension and post-retirement benefits | (225,720) | (196,362) | |
Net amount recognized | (162,244) | (68,432) | |
Accumulated benefit obligation in excess of plan assets | |||
Projected benefit obligation | 231,145 | 201,293 | |
Accumulated benefit obligation | $ 225,364 | 193,913 | |
Pension Benefits | Minimum | |||
Accumulated benefit obligation in excess of plan assets | |||
Amortization period of actuarial gains and losses and any adjustments resulting from plan amendments | 9 years | ||
Pension Benefits | Maximum | |||
Accumulated benefit obligation in excess of plan assets | |||
Amortization period of actuarial gains and losses and any adjustments resulting from plan amendments | 23 years | ||
Post-retirement Benefits | |||
Net periodic cost of defined benefit plans | |||
Service cost | $ 1,297 | 1,795 | 1,963 |
Interest cost | 13,346 | 13,479 | 15,279 |
Amortization of prior service cost | (4,282) | (1,337) | (1,337) |
Recognized actuarial loss (gain) | 1,617 | (2) | (2) |
Net periodic cost | 11,978 | 13,935 | 15,903 |
Amounts recognized in accumulated other comprehensive loss | |||
Unrecognized prior service credit | 13,845 | 2,844 | |
Unrecognized actuarial gains (losses) | (44,258) | (40,590) | |
Amount of prior service credit (cost) included in accumulated other comprehensive loss expected to be recognized during next year | (4,274) | ||
Amount of actuarial loss included in accumulated other comprehensive loss expected to be recognized during next year | 2,424 | ||
Change in benefit obligation: | |||
Benefit obligation at beginning of year | 334,544 | 330,841 | |
Service cost | 1,297 | 1,795 | 1,963 |
Interest cost | 13,346 | 13,479 | 15,279 |
Actuarial loss (gain) | 5,285 | 10,339 | |
Plan amendments | (15,283) | ||
Participant contributions | 2,959 | 2,798 | |
Medicare Part D subsidy | 2,090 | 1,313 | |
Benefits paid | (26,766) | (26,021) | |
Benefit obligation at end of year | 317,472 | 334,544 | $ 330,841 |
Changes in plan assets | |||
Participant contributions | 2,959 | 2,798 | |
Employer contributions | 23,807 | 23,223 | |
Benefits paid | (26,766) | (26,021) | |
Funded status at end of year | (317,472) | (334,544) | |
Amounts recognized in the Consolidated Statements of Financial Position | |||
Employee related expenses | (20,836) | (21,645) | |
Pension and post-retirement benefits | (296,636) | (312,899) | |
Net amount recognized | $ (317,472) | $ (334,544) | |
Post-retirement Benefits | Minimum | |||
Accumulated benefit obligation in excess of plan assets | |||
Amortization period of actuarial gains and losses and any adjustments resulting from plan amendments | 5 years | ||
Post-retirement Benefits | Maximum | |||
Accumulated benefit obligation in excess of plan assets | |||
Amortization period of actuarial gains and losses and any adjustments resulting from plan amendments | 24 years |
Pension and Other Post-retire62
Pension and Other Post-retirement Benefits - Assumptions (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 30, 2016 | Oct. 25, 2015 | Oct. 26, 2014 | |
Pension Benefits | |||
Weighted-average assumptions used to determine benefit obligations | |||
Discount rate (as a percent) | 3.94% | 4.50% | |
Rate of future compensation increase (as a percent) | 3.96% | 3.92% | |
Weighted-average assumptions used to determine net periodic benefit costs | |||
Discount rate (as a percent) | 4.50% | 4.31% | 4.89% |
Rate of future compensation increase (as a percent) | 3.92% | 3.94% | 3.91% |
Expected long-term return on plan assets (as a percent) | 7.60% | 7.70% | 7.80% |
Effect of one-percentage-point change | |||
Effect of one-percentage-point increase in discount rate on expense | $ (14,259) | ||
Effect of one-percentage-point decrease in discount rate on expense | 16,745 | ||
Effect of one-percentage-point increase in discount rate on benefit obligation | (181,910) | ||
Effect of one-percentage-point decrease in discount rate on benefit obligation | 230,150 | ||
Effect of one-percentage-point increase in expected long-term rate of return on plan assets | (12,125) | ||
Effect of one-percentage-point decrease in expected long-term rate of return on plan assets | 12,125 | ||
Effect of one-percentage-point increase in rate of future compensation increase on expense | 2,577 | ||
Effect of one-percentage-point decrease in rate of future compensation increase on expense | (2,263) | ||
Effect of one-percentage-point increase in rate of future compensation increase on benefit obligation | 1,421 | ||
Effect of one-percentage-point decrease in rate of future compensation increase on benefit obligation | $ (1,332) | ||
Post-retirement Benefits | |||
Weighted-average assumptions used to determine net periodic benefit costs | |||
Increase in per capita cost of covered health care benefits assumed for next fiscal year (as a percent) | 8.00% | ||
Expected ultimate pre-Medicare and post-Medicare rate (as a percent) | 5.00% | ||
Year that reaches the ultimate trend rate | 2,022 | ||
Effect of one-percentage-point change | |||
Effect of one-percentage-point increase in discount rate on expense | $ (1,011) | ||
Effect of one-percentage-point decrease in discount rate on expense | 4,710 | ||
Effect of one-percentage-point increase in discount rate on benefit obligation | (31,075) | ||
Effect of one-percentage-point decrease in discount rate on benefit obligation | 37,551 | ||
Effect of one-percentage-point increase in health care cost trend rate on expense | 1,575 | ||
Effect of one-percentage-point decrease in health care cost trend rate on expense | (1,347) | ||
Effect of one-percentage-point increase in health care cost trend rate on benefit obligation | 33,249 | ||
Effect of one-percentage-point decrease in health care cost trend rate on benefit obligation | $ (28,432) |
Pension and Other Post-retire63
Pension and Other Post-retirement Benefits - Contributions And Benefits (Details) $ in Thousands | 12 Months Ended |
Oct. 30, 2016USD ($) | |
Pension Benefits | |
Pension and other post-retirement benefits | |
Employers contribution in next fiscal year | $ 17,200 |
Expected contribution representing benefit payments for unfunded plans during next fiscal year | 26,800 |
Expected future benefit payments | |
2,017 | 56,099 |
2,018 | 58,466 |
2,019 | 61,024 |
2,020 | 63,940 |
2,021 | 66,871 |
2022 - 2026 | 378,191 |
Post-retirement Benefits | |
Expected future benefit payments | |
2,017 | 21,227 |
2,018 | 21,393 |
2,019 | 21,519 |
2,020 | 21,461 |
2,021 | 21,384 |
2022 - 2026 | 101,662 |
Expected federal subsidy receipts related to prescription drug benefits per year through 2024 | $ 800 |
Pension and Other Post-retire64
Pension and Other Post-retirement Benefits - Plan Assets Allocations (Details) - Pension Benefits | 12 Months Ended | |
Oct. 30, 2016 | Oct. 25, 2015 | |
Large Capitalization Equity | ||
Pension and other post-retirement benefits | ||
Actual weighted-average asset allocations (as a percent) | 21.70% | 38.80% |
Small Capitalization Equity | ||
Pension and other post-retirement benefits | ||
Actual weighted-average asset allocations (as a percent) | 5.20% | 5.40% |
International Equity | ||
Pension and other post-retirement benefits | ||
Actual weighted-average asset allocations (as a percent) | 13.70% | 14.00% |
Global Equity | ||
Pension and other post-retirement benefits | ||
Actual weighted-average asset allocations (as a percent) | 10.50% | |
Private Equity | ||
Pension and other post-retirement benefits | ||
Actual weighted-average asset allocations (as a percent) | 5.50% | 6.10% |
Equity Securities | ||
Pension and other post-retirement benefits | ||
Actual weighted-average asset allocations (as a percent) | 56.60% | 64.30% |
Fixed Income | ||
Pension and other post-retirement benefits | ||
Actual weighted-average asset allocations (as a percent) | 36.40% | 34.30% |
Real Estate - Domestic | ||
Pension and other post-retirement benefits | ||
Actual weighted-average asset allocations (as a percent) | 5.00% | |
Cash and Cash Equivalents | ||
Pension and other post-retirement benefits | ||
Actual weighted-average asset allocations (as a percent) | 2.00% | 1.40% |
Maximum | Large Capitalization Equity | ||
Pension and other post-retirement benefits | ||
Target range of weighted-average asset allocations (as a percent) | 22.00% | 35.00% |
Maximum | Small Capitalization Equity | ||
Pension and other post-retirement benefits | ||
Target range of weighted-average asset allocations (as a percent) | 13.00% | 15.00% |
Maximum | International Equity | ||
Pension and other post-retirement benefits | ||
Target range of weighted-average asset allocations (as a percent) | 20.00% | 25.00% |
Maximum | Global Equity | ||
Pension and other post-retirement benefits | ||
Target range of weighted-average asset allocations (as a percent) | 20.00% | |
Maximum | Private Equity | ||
Pension and other post-retirement benefits | ||
Target range of weighted-average asset allocations (as a percent) | 15.00% | 15.00% |
Maximum | Equity Securities | ||
Pension and other post-retirement benefits | ||
Target range of weighted-average asset allocations (as a percent) | 75.00% | 75.00% |
Maximum | Fixed Income | ||
Pension and other post-retirement benefits | ||
Target range of weighted-average asset allocations (as a percent) | 45.00% | 45.00% |
Maximum | Real Estate - Domestic | ||
Pension and other post-retirement benefits | ||
Target range of weighted-average asset allocations (as a percent) | 10.00% | 10.00% |
Minimum | Large Capitalization Equity | ||
Pension and other post-retirement benefits | ||
Target range of weighted-average asset allocations (as a percent) | 12.00% | 15.00% |
Minimum | Small Capitalization Equity | ||
Pension and other post-retirement benefits | ||
Target range of weighted-average asset allocations (as a percent) | 3.00% | 5.00% |
Minimum | International Equity | ||
Pension and other post-retirement benefits | ||
Target range of weighted-average asset allocations (as a percent) | 10.00% | 15.00% |
Minimum | Global Equity | ||
Pension and other post-retirement benefits | ||
Target range of weighted-average asset allocations (as a percent) | 5.00% | |
Minimum | Private Equity | ||
Pension and other post-retirement benefits | ||
Target range of weighted-average asset allocations (as a percent) | 0.00% | 0.00% |
Minimum | Equity Securities | ||
Pension and other post-retirement benefits | ||
Target range of weighted-average asset allocations (as a percent) | 50.00% | 50.00% |
Minimum | Fixed Income | ||
Pension and other post-retirement benefits | ||
Target range of weighted-average asset allocations (as a percent) | 25.00% | 25.00% |
Minimum | Real Estate - Domestic | ||
Pension and other post-retirement benefits | ||
Target range of weighted-average asset allocations (as a percent) | 0.00% | 0.00% |
Pension and Other Post-retire65
Pension and Other Post-retirement Benefits - Assets Allocations (Details) - Pension Benefits - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 30, 2016 | Oct. 25, 2015 | Oct. 26, 2014 | |
Fair values of defined benefit pension plan investments by asset category and fair value hierarchy level | |||
Total Investments at Fair Value | $ 1,232,626 | $ 1,179,777 | $ 1,168,765 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | |||
Fair values of defined benefit pension plan investments by asset category and fair value hierarchy level | |||
Total Investments at Fair Value | 404,147 | 396,613 | |
Significant Other Observable Inputs (Level 2) | |||
Fair values of defined benefit pension plan investments by asset category and fair value hierarchy level | |||
Total Investments at Fair Value | 697,373 | 711,389 | |
Significant Other Unobservable Inputs (Level 3) | |||
Fair values of defined benefit pension plan investments by asset category and fair value hierarchy level | |||
Total Investments at Fair Value | 131,106 | 71,775 | $ 58,723 |
Cash and Cash Equivalents | |||
Fair values of defined benefit pension plan investments by asset category and fair value hierarchy level | |||
Total Investments at Fair Value | 24,412 | 16,551 | |
Cash and Cash Equivalents | Quoted Prices in Active Markets for Identical Assets (Level 1) | |||
Fair values of defined benefit pension plan investments by asset category and fair value hierarchy level | |||
Total Investments at Fair Value | 24,412 | 16,551 | |
Large Capitalization Equity | |||
Fair values of defined benefit pension plan investments by asset category and fair value hierarchy level | |||
Total Investments at Fair Value | 267,428 | 457,578 | |
Large Capitalization Equity | Quoted Prices in Active Markets for Identical Assets (Level 1) | |||
Fair values of defined benefit pension plan investments by asset category and fair value hierarchy level | |||
Total Investments at Fair Value | 189,290 | 211,843 | |
Large Capitalization Equity | Significant Other Observable Inputs (Level 2) | |||
Fair values of defined benefit pension plan investments by asset category and fair value hierarchy level | |||
Total Investments at Fair Value | 78,138 | 245,735 | |
Large Capitalization Equity - Domestic | |||
Fair values of defined benefit pension plan investments by asset category and fair value hierarchy level | |||
Total Investments at Fair Value | 234,633 | 300,735 | |
Large Capitalization Equity - Domestic | Quoted Prices in Active Markets for Identical Assets (Level 1) | |||
Fair values of defined benefit pension plan investments by asset category and fair value hierarchy level | |||
Total Investments at Fair Value | 156,495 | 175,206 | |
Large Capitalization Equity - Domestic | Significant Other Observable Inputs (Level 2) | |||
Fair values of defined benefit pension plan investments by asset category and fair value hierarchy level | |||
Total Investments at Fair Value | 78,138 | 125,529 | |
Large Capitalization Equity - Foreign | |||
Fair values of defined benefit pension plan investments by asset category and fair value hierarchy level | |||
Total Investments at Fair Value | 32,795 | 36,637 | |
Large Capitalization Equity - Foreign | Quoted Prices in Active Markets for Identical Assets (Level 1) | |||
Fair values of defined benefit pension plan investments by asset category and fair value hierarchy level | |||
Total Investments at Fair Value | 32,795 | 36,637 | |
Large Capitalization Equity - World | |||
Fair values of defined benefit pension plan investments by asset category and fair value hierarchy level | |||
Total Investments at Fair Value | 120,206 | ||
Large Capitalization Equity - World | Significant Other Observable Inputs (Level 2) | |||
Fair values of defined benefit pension plan investments by asset category and fair value hierarchy level | |||
Total Investments at Fair Value | 120,206 | ||
Small Capitalization Equity | |||
Fair values of defined benefit pension plan investments by asset category and fair value hierarchy level | |||
Total Investments at Fair Value | 63,772 | 63,759 | |
Small Capitalization Equity | Quoted Prices in Active Markets for Identical Assets (Level 1) | |||
Fair values of defined benefit pension plan investments by asset category and fair value hierarchy level | |||
Total Investments at Fair Value | 63,772 | 63,759 | |
Small Capitalization Equity - Domestic | |||
Fair values of defined benefit pension plan investments by asset category and fair value hierarchy level | |||
Total Investments at Fair Value | 52,599 | 55,513 | |
Small Capitalization Equity - Domestic | Quoted Prices in Active Markets for Identical Assets (Level 1) | |||
Fair values of defined benefit pension plan investments by asset category and fair value hierarchy level | |||
Total Investments at Fair Value | 52,599 | 55,513 | |
Small Capitalization Equity - Foreign | |||
Fair values of defined benefit pension plan investments by asset category and fair value hierarchy level | |||
Total Investments at Fair Value | 11,173 | 8,246 | |
Small Capitalization Equity - Foreign | Quoted Prices in Active Markets for Identical Assets (Level 1) | |||
Fair values of defined benefit pension plan investments by asset category and fair value hierarchy level | |||
Total Investments at Fair Value | 11,173 | 8,246 | |
International Equity | |||
Fair values of defined benefit pension plan investments by asset category and fair value hierarchy level | |||
Total Investments at Fair Value | 168,819 | 164,923 | |
International Equity | Significant Other Observable Inputs (Level 2) | |||
Fair values of defined benefit pension plan investments by asset category and fair value hierarchy level | |||
Total Investments at Fair Value | 168,819 | 164,923 | |
Mutual fund | |||
Fair values of defined benefit pension plan investments by asset category and fair value hierarchy level | |||
Total Investments at Fair Value | 99,635 | 101,062 | |
Mutual fund | Significant Other Observable Inputs (Level 2) | |||
Fair values of defined benefit pension plan investments by asset category and fair value hierarchy level | |||
Total Investments at Fair Value | 99,635 | 101,062 | |
Collective trust | |||
Fair values of defined benefit pension plan investments by asset category and fair value hierarchy level | |||
Total Investments at Fair Value | 69,184 | 63,861 | |
Collective trust | Significant Other Observable Inputs (Level 2) | |||
Fair values of defined benefit pension plan investments by asset category and fair value hierarchy level | |||
Total Investments at Fair Value | 69,184 | 63,861 | |
Global Equity | |||
Fair values of defined benefit pension plan investments by asset category and fair value hierarchy level | |||
Total Investments at Fair Value | 129,014 | ||
Global Equity | Significant Other Observable Inputs (Level 2) | |||
Fair values of defined benefit pension plan investments by asset category and fair value hierarchy level | |||
Total Investments at Fair Value | 129,014 | ||
Private Equity | |||
Fair values of defined benefit pension plan investments by asset category and fair value hierarchy level | |||
Total Investments at Fair Value | 68,102 | 71,775 | |
Private Equity | Significant Other Unobservable Inputs (Level 3) | |||
Fair values of defined benefit pension plan investments by asset category and fair value hierarchy level | |||
Total Investments at Fair Value | 68,102 | 71,775 | |
Private Equity - Domestic | |||
Fair values of defined benefit pension plan investments by asset category and fair value hierarchy level | |||
Total Investments at Fair Value | 54,613 | 54,748 | |
Private Equity - Domestic | Significant Other Unobservable Inputs (Level 3) | |||
Fair values of defined benefit pension plan investments by asset category and fair value hierarchy level | |||
Total Investments at Fair Value | 54,613 | 54,748 | |
Private Equity - International | |||
Fair values of defined benefit pension plan investments by asset category and fair value hierarchy level | |||
Total Investments at Fair Value | 13,489 | 17,027 | |
Private Equity - International | Significant Other Unobservable Inputs (Level 3) | |||
Fair values of defined benefit pension plan investments by asset category and fair value hierarchy level | |||
Total Investments at Fair Value | 13,489 | 17,027 | |
Equity Securities | |||
Fair values of defined benefit pension plan investments by asset category and fair value hierarchy level | |||
Total Investments at Fair Value | 697,135 | 758,035 | |
Equity Securities | Quoted Prices in Active Markets for Identical Assets (Level 1) | |||
Fair values of defined benefit pension plan investments by asset category and fair value hierarchy level | |||
Total Investments at Fair Value | 253,062 | 275,602 | |
Equity Securities | Significant Other Observable Inputs (Level 2) | |||
Fair values of defined benefit pension plan investments by asset category and fair value hierarchy level | |||
Total Investments at Fair Value | 375,971 | 410,658 | |
Equity Securities | Significant Other Unobservable Inputs (Level 3) | |||
Fair values of defined benefit pension plan investments by asset category and fair value hierarchy level | |||
Total Investments at Fair Value | 68,102 | 71,775 | |
Fixed Income | |||
Fair values of defined benefit pension plan investments by asset category and fair value hierarchy level | |||
Total Investments at Fair Value | 448,075 | 405,191 | |
Fixed Income | Quoted Prices in Active Markets for Identical Assets (Level 1) | |||
Fair values of defined benefit pension plan investments by asset category and fair value hierarchy level | |||
Total Investments at Fair Value | 126,673 | 104,460 | |
Fixed Income | Significant Other Observable Inputs (Level 2) | |||
Fair values of defined benefit pension plan investments by asset category and fair value hierarchy level | |||
Total Investments at Fair Value | 321,402 | 300,731 | |
US government issues | |||
Fair values of defined benefit pension plan investments by asset category and fair value hierarchy level | |||
Total Investments at Fair Value | 153,333 | 130,456 | |
US government issues | Quoted Prices in Active Markets for Identical Assets (Level 1) | |||
Fair values of defined benefit pension plan investments by asset category and fair value hierarchy level | |||
Total Investments at Fair Value | 126,673 | 104,460 | |
US government issues | Significant Other Observable Inputs (Level 2) | |||
Fair values of defined benefit pension plan investments by asset category and fair value hierarchy level | |||
Total Investments at Fair Value | 26,660 | 25,996 | |
Municipal issues | |||
Fair values of defined benefit pension plan investments by asset category and fair value hierarchy level | |||
Total Investments at Fair Value | 21,451 | 20,211 | |
Municipal issues | Significant Other Observable Inputs (Level 2) | |||
Fair values of defined benefit pension plan investments by asset category and fair value hierarchy level | |||
Total Investments at Fair Value | 21,451 | 20,211 | |
Corporate issues domestic | |||
Fair values of defined benefit pension plan investments by asset category and fair value hierarchy level | |||
Total Investments at Fair Value | 224,963 | 210,035 | |
Corporate issues domestic | Significant Other Observable Inputs (Level 2) | |||
Fair values of defined benefit pension plan investments by asset category and fair value hierarchy level | |||
Total Investments at Fair Value | 224,963 | 210,035 | |
Corporate issues foreign | |||
Fair values of defined benefit pension plan investments by asset category and fair value hierarchy level | |||
Total Investments at Fair Value | 48,328 | 44,489 | |
Corporate issues foreign | Significant Other Observable Inputs (Level 2) | |||
Fair values of defined benefit pension plan investments by asset category and fair value hierarchy level | |||
Total Investments at Fair Value | 48,328 | $ 44,489 | |
Real Estate - Domestic | |||
Fair values of defined benefit pension plan investments by asset category and fair value hierarchy level | |||
Total Investments at Fair Value | $ 63,004 | ||
Advance notice to requests redemption of shares, first option | 45 days | ||
Advance notice to requests redemption of shares, second option | 90 days | ||
Real Estate - Domestic | Significant Other Unobservable Inputs (Level 3) | |||
Fair values of defined benefit pension plan investments by asset category and fair value hierarchy level | |||
Total Investments at Fair Value | $ 63,004 |
Pension and Other Post-retire66
Pension and Other Post-retirement Benefits - Changes In Fair Value (Details) - Pension Benefits - USD ($) $ in Thousands | 12 Months Ended | |
Oct. 30, 2016 | Oct. 25, 2015 | |
Changes in plan assets | ||
Fair value of plan assets at beginning of year | $ 1,179,777 | $ 1,168,765 |
Fair value of plan assets at end of year | 1,232,626 | 1,179,777 |
Significant Other Unobservable Inputs (Level 3) | ||
Changes in plan assets | ||
Fair value of plan assets at beginning of year | 71,775 | 58,723 |
Purchases, issuances and settlements (net) | 52,891 | (3,574) |
Unrealized (losses) gains | (5,177) | 7,741 |
Realized gains | 4,276 | 7,623 |
Interest and dividend income | 7,341 | 1,262 |
Fair value of plan assets at end of year | $ 131,106 | $ 71,775 |
Pension and Other Post-retire67
Pension and Other Post-retirement Benefits - Commitments (Details) - Pension Benefits - USD ($) $ in Thousands | 12 Months Ended | |
Oct. 30, 2016 | Oct. 25, 2015 | |
Investment commitment | ||
Unfunded commitments for investments | $ 12,569 | $ 18,778 |
Private Equity | ||
Investment commitment | ||
Commitment for investments | 85,000 | 85,000 |
Private Equity - Domestic | ||
Investment commitment | ||
Unfunded commitments for investments | 4,696 | 9,264 |
Private Equity - International | ||
Investment commitment | ||
Unfunded commitments for investments | $ 7,873 | $ 9,514 |
Derivatives and Hedging - Outst
Derivatives and Hedging - Outstanding Contracts (Details) item in Millions, bu in Millions, $ in Millions | 12 Months Ended | |
Oct. 30, 2016USD ($)itemTbu | Oct. 25, 2015USD ($)itemTbu | |
Derivatives and Hedging | ||
Maximum number of upcoming fiscal years to hedge grain or natural gas exposure | 2 years | |
Accumulated change, pretax, in accumulated gains from derivative instruments designated and qualifying as the effective portion of cash flow hedges | $ | $ 9.2 | $ 1 |
Period over which majority of hedging gains is expected to be recognized | 12 months | |
Corn | Derivatives not designated as hedges | ||
Derivatives and Hedging | ||
Futures contracts, volume (in million bushels) | 4 | 2.6 |
Corn | Cash Flow Hedges | ||
Derivatives and Hedging | ||
Futures contracts, volume (in million bushels) | 22.4 | 20.1 |
Corn | Fair Value Hedges | ||
Derivatives and Hedging | ||
Futures contracts, volume (in million bushels) | 3.6 | 5.3 |
Lean hogs | Fair Value Hedges | ||
Derivatives and Hedging | ||
Futures contracts, volume ( in centum weight) | item | 0.2 | 0.4 |
Soybean meal | Derivatives not designated as hedges | ||
Derivatives and Hedging | ||
Futures contracts, volume (in tons) | T | 11,000 | 11,500 |
Derivatives and Hedging - Fair
Derivatives and Hedging - Fair Value Of Derivatives (Details) - USD ($) $ in Thousands | Oct. 30, 2016 | Oct. 25, 2015 |
Derivatives fair value | ||
Fair values of derivative instruments | $ (50) | $ 553 |
Derivatives designated as hedges | Commodity contracts | Other current assets | ||
Derivatives fair value | ||
Fair values of derivative instruments | (194) | 305 |
Derivatives not designated as hedges | Commodity contracts | Other current assets | ||
Derivatives fair value | ||
Fair values of derivative instruments | $ 144 | $ 248 |
Derivatives and Hedging - Gains
Derivatives and Hedging - Gains And Losses (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Oct. 30, 2016 | Oct. 25, 2015 | |
Derivative instruments gains or losses (before tax) | ||
Gains or losses excluded from the assessment of cash flow hedge effectiveness | $ 0 | $ 0 |
Gains or losses excluded from the assessment of fair value hedge effectiveness | 0 | 0 |
Gains or losses resulting from the discontinuance of cash flow hedges | 0 | 0 |
Gains or losses recognized as a result of a hedged firm commitment no longer qualifying as a fair value hedge | 0 | 0 |
Derivatives not designated as hedges | Commodity contracts | Cost of products sold | ||
Derivative instruments gains or losses (before tax) | ||
Gain/(Loss) Recognized in Earnings | (796) | (269) |
Cash Flow Hedges | Commodity contracts | ||
Derivative instruments gains or losses (before tax) | ||
Gain/(Loss) Recognized in AOCL (Effective Portion) | 6,852 | 3,409 |
Cash Flow Hedges | Commodity contracts | Cost of products sold | ||
Derivative instruments gains or losses (before tax) | ||
Gain/(Loss) Reclassified from AOCL into Earnings (Effective Portion) | (1,310) | (12,369) |
Gain/(Loss) Recognized in Earnings (Ineffective Portion) | (14,591) | (6,127) |
Fair Value Hedges | Derivatives designated as hedges | Commodity contracts | Cost of products sold | ||
Derivative instruments gains or losses (before tax) | ||
Gain/(Loss) Recognized in Earnings (Effective Portion) | 1,796 | (4,297) |
Gain/(Loss) Recognized in Earnings (Ineffective Portion) | $ 4,849 | $ 2,547 |
Investments In and Receivable71
Investments In and Receivables from Affiliates (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Oct. 30, 2016 | Oct. 25, 2015 | Oct. 26, 2014 | Oct. 26, 2009 | |
Investments In and Receivables from Affiliates | ||||
Investments in and receivables from affiliates | $ 239,590 | $ 258,998 | ||
Equity in earnings of affiliates | 38,685 | 23,887 | $ 17,585 | |
Dividends received from affiliates | $ 46,200 | 37,300 | 22,800 | |
MegaMex Foods, LLC | ||||
Investments In and Receivables from Affiliates | ||||
Ownership percentage | 50.00% | |||
Investments in and receivables from affiliates | $ 180,437 | 200,110 | ||
Equity in earnings of affiliates | 30,651 | 26,849 | 14,415 | |
Excess of investment over the underlying equity in net assets of the joint venture | 15,300 | $ 21,300 | ||
Foreign Joint Ventures | ||||
Investments In and Receivables from Affiliates | ||||
Investments in and receivables from affiliates | 59,153 | 58,888 | ||
Equity in earnings of affiliates | $ 8,034 | $ (2,962) | $ 3,170 | |
Foreign Joint Ventures | Minimum | ||||
Investments In and Receivables from Affiliates | ||||
Ownership percentage | 26.00% | |||
Foreign Joint Ventures | Maximum | ||||
Investments In and Receivables from Affiliates | ||||
Ownership percentage | 40.00% |
Accumulated Other Comprehensi72
Accumulated Other Comprehensive Loss (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 30, 2016 | Oct. 25, 2015 | Oct. 26, 2014 | |
Accumulated Other Comprehensive Loss | |||
Balance at beginning of period | $ 3,998,198 | ||
Reclassification into net earnings: | |||
Balance at end of period | 4,448,006 | $ 3,998,198 | |
Accumulated Other Comprehensive Income (Loss) | |||
Accumulated Other Comprehensive Loss | |||
Balance at beginning of period | (225,668) | (207,700) | $ (149,214) |
Unrecognized gains (losses): | |||
Gross | (124,389) | (49,886) | (110,296) |
Tax effect | 44,276 | 16,207 | 41,042 |
Reclassification into net earnings: | |||
Gross | 14,843 | 24,628 | 17,312 |
Tax effect | (5,365) | (9,312) | (6,544) |
Net tax amount | (70,635) | (18,363) | (58,486) |
Purchase of additional ownership | 395 | ||
Balance at end of period | (296,303) | (225,668) | (207,700) |
Foreign Currency Translation | |||
Accumulated Other Comprehensive Loss | |||
Balance at beginning of period | 969 | 7,480 | 9,391 |
Unrecognized gains (losses): | |||
Gross | (6,458) | (6,906) | (1,911) |
Reclassification into net earnings: | |||
Net tax amount | (6,458) | (6,906) | (1,911) |
Purchase of additional ownership | 395 | ||
Balance at end of period | (5,489) | 969 | 7,480 |
Pension & Other Benefits | |||
Accumulated Other Comprehensive Loss | |||
Balance at beginning of period | (227,266) | (205,986) | (153,001) |
Unrecognized gains (losses): | |||
Gross | (124,783) | (46,389) | (91,684) |
Tax effect | 47,068 | 17,492 | 34,737 |
Reclassification into net earnings: | |||
Gross | 13,533 | 12,259 | 6,387 |
Tax effect | (5,104) | (4,642) | (2,425) |
Net tax amount | (69,286) | (21,280) | (52,985) |
Balance at end of period | (296,552) | (227,266) | (205,986) |
Deferred Gain (Loss) - Hedging | |||
Accumulated Other Comprehensive Loss | |||
Balance at beginning of period | 629 | (9,194) | (5,604) |
Unrecognized gains (losses): | |||
Gross | 6,852 | 3,409 | (16,701) |
Tax effect | (2,792) | (1,285) | 6,305 |
Reclassification into net earnings: | |||
Gross | 1,310 | 12,369 | 10,925 |
Tax effect | (261) | (4,670) | (4,119) |
Net tax amount | 5,109 | 9,823 | (3,590) |
Balance at end of period | $ 5,738 | $ 629 | $ (9,194) |
Income Taxes (Detail)
Income Taxes (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 30, 2016 | Oct. 25, 2015 | Oct. 26, 2014 | |
Current: | |||
U.S. Federal | $ 341,799 | $ 299,557 | $ 264,533 |
State | 33,753 | 39,817 | 34,034 |
Foreign | 6,819 | 10,526 | 7,759 |
Total current | 382,371 | 349,900 | 306,326 |
Deferred: | |||
U.S. Federal | 40,456 | 18,451 | 8,756 |
State | 3,770 | 1,070 | 873 |
Foreign | 101 | 458 | 171 |
Total deferred | 44,327 | 19,979 | 9,800 |
Total provision for income taxes | 426,698 | 369,879 | $ 316,126 |
Deferred tax liabilities: | |||
Goodwill and intangible assets | (250,330) | (213,312) | |
Tax over book depreciation and basis differences | (98,628) | (94,496) | |
Other, net | (18,295) | (18,788) | |
Deferred tax assets: | |||
Pension and post-retirement benefits | 182,444 | 154,306 | |
Employee compensation related liabilities | 107,343 | 109,061 | |
Marketing and promotional accruals | 36,844 | 37,603 | |
Other, net | 46,845 | 48,432 | |
Net deferred tax assets | $ 6,223 | $ 22,806 | |
Reconciliation of the statutory federal income tax rate to the effective tax rate | |||
U.S. statutory rate (as a percent) | 35.00% | 35.00% | 35.00% |
State taxes on income, net of federal tax benefit (as a percent) | 2.10% | 2.70% | 2.80% |
Domestic production activities deduction (as a percent) | (2.80%) | (2.60%) | (2.70%) |
Foreign tax credit | (0.90%) | ||
All other, net (as a percent) | (1.00%) | (0.10%) | (0.80%) |
Effective tax rate (as a percent) | 32.40% | 35.00% | 34.30% |
Foreign earnings repatriated | $ 38,000 | ||
Foreign tax benefit | 12,100 | ||
Undistributed earnings of foreign subsidiaries and joint ventures | 62,500 | ||
Income taxes paid | 372,000 | $ 296,500 | $ 285,800 |
Changes in unrecognized tax benefits | |||
Balance at the beginning of the period | 21,337 | 22,608 | |
Tax positions related to the current period | |||
Increases | 3,587 | 2,920 | |
Tax positions related to prior periods: | |||
Increases | 9,723 | 1,629 | |
Decreases | (3,913) | (796) | |
Settlements | (1,273) | (2,839) | |
Decreases related to a lapse of applicable statute of limitations | (2,072) | (2,185) | |
Balance at the end of the period | 27,389 | 21,337 | $ 22,608 |
Portion of unrecognized tax benefit including interest and penalties, that if recognized, would impact effective tax rate | 19,500 | 16,000 | |
Interest and penalties expense related to uncertain tax positions recognized in income tax expense | 500 | ||
Accrued interest and penalties, associated with unrecognized tax benefits | $ 2,600 | $ 3,200 |
Stock-Based Compensation - Opti
Stock-Based Compensation - Options (Details) - Stock options - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | ||
Oct. 30, 2016 | Oct. 25, 2015 | Oct. 26, 2014 | |
Stock-based compensation | |||
Vesting period | 4 years | ||
Stock option expiration period | 10 years | ||
Reconciliation of Stock Options | |||
Outstanding, at the beginning of the period (in shares) | 34,397 | ||
Granted (in shares) | 2,128 | ||
Exercised (in shares) | 4,502 | ||
Forfeited (in shares) | 25 | ||
Outstanding, at the end of the period (in shares) | 31,998 | 34,397 | |
Exercisable at the end of the period (in shares) | 25,112 | ||
Weighted-Average Exercise Price | |||
Outstanding at the beginning of the period (in dollars per share) | $ 13.83 | ||
Granted (in dollars per share) | 38.31 | ||
Exercised (in dollars per share) | 9.60 | ||
Forfeited (in dollars per share) | 22.03 | ||
Outstanding at the end of the period (in dollars per share) | 16.05 | $ 13.83 | |
Exercisable at end of period (in dollars per share) | $ 12.88 | ||
Weighted-Average Remaining Contractual Term | |||
Outstanding at the end of the period | 4 years 9 months 18 days | ||
Exercisable at end of period | 3 years 10 months 24 days | ||
Aggregate Intrinsic Value | |||
Outstanding at the end of the period | $ 710,346 | ||
Exercisable at end of period | $ 636,449 | ||
Weighted-average grant date fair value of stock options granted, and the total intrinsic value of options exercised | |||
Weighted-average grant date fair value of options granted (in dollars per share) | $ 7.82 | $ 4.92 | $ 4.85 |
Intrinsic value of exercised options | $ 135,593 | $ 67,516 | $ 74,972 |
Weighted-average assumptions used to calculate fair value of each ordinary option award | |||
Risk-free interest rate (as a percent) | 2.10% | 2.10% | 2.50% |
Dividend yield (as a percent) | 1.50% | 1.90% | 1.80% |
Stock price volatility (as a percent) | 19.00% | 19.00% | 20.00% |
Expected option life | 8 years | 8 years | 8 years |
Stock-Based Compensation - Nonv
Stock-Based Compensation - Nonvested Shares (Details) - Nonvested shares - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | ||
Oct. 30, 2016 | Oct. 25, 2015 | Oct. 26, 2014 | |
Shares | |||
Nonvested shares at the beginning of the period | 74 | ||
Granted | 47 | ||
Vested | 74 | ||
Nonvested shares at the end of the period | 47 | 74 | |
Weighted Average Grant Date Fair Value | |||
Nonvested shares at the beginning of the period (in dollars per share) | $ 25.87 | ||
Granted (in dollars per share) | 41.01 | $ 25.87 | $ 22.06 |
Vested (in dollars per share) | 25.87 | ||
Nonvested shares at the end of the period (in dollars per share) | $ 41.01 | $ 25.87 | |
Weighted-average grant date fair value, the total fair value of nonvested shares granted, and the fair value of shares that have vested | |||
Fair value of nonvested shares granted | $ 1,920 | $ 1,920 | $ 1,760 |
Fair value of shares vested | $ 1,920 | $ 2,347 | $ 2,085 |
Maximum | |||
Stock-based compensation | |||
Vesting period | 1 year |
Stock-Based Compensation - Expe
Stock-Based Compensation - Expense and Exercises (Details) - USD ($) $ in Thousands, shares in Millions | 12 Months Ended | ||
Oct. 30, 2016 | Oct. 25, 2015 | Oct. 26, 2014 | |
Stock-based compensation expense, along with the related income tax benefit | |||
Stock based compensation expense recognized | $ 17,829 | $ 15,717 | $ 14,393 |
Income tax benefit recognized | (6,764) | (5,967) | (5,469) |
After-tax stock-based compensation expense | 11,065 | $ 9,750 | $ 8,924 |
Other disclosures | |||
Stock-based compensation expense unrecognized | $ 9,900 | ||
Period for recognition of unrecognized stock-based compensation expense | 2 years 6 months | ||
Number of shares available for future grants | 48.1 | 50.1 | 53.2 |
Stock options | |||
Other disclosures | |||
Cash received from stock options exercised | $ 12,100 | $ 10,500 | $ 10,500 |
Tax benefit realized from stock options, aggregate | $ 51,600 | $ 25,600 | $ 28,400 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||
Apr. 24, 2016 | Oct. 25, 2015 | Oct. 30, 2016 | Oct. 25, 2015 | Oct. 26, 2014 | |
Methods and assumptions used to estimate the fair value of the financial assets and liabilities | |||||
Recognized right to reclaim net cash collateral | $ 2,300 | $ 3,100 | $ 2,300 | ||
Realized gains/losses on closed positions | (11,400) | 7,100 | (11,400) | ||
Recognized obligation to return cash collateral | 4,000 | ||||
Cash collateral posted | 13,700 | 13,700 | |||
Fair value, long-term debt | |||||
Fair value of long-term debt (including current maturities) | 268,400 | 274,900 | 268,400 | ||
Impairment charge | |||||
Goodwill impairment charge | 991 | 21,537 | $ 0 | ||
Fair Value | Recurring basis | |||||
Assets at Fair Value: | |||||
Cash and cash equivalents | 347,239 | 415,143 | 347,239 | ||
Other trading securities | 119,668 | 122,305 | 119,668 | ||
Commodity derivatives | 6,485 | 3,094 | 6,485 | ||
Total Assets at Fair Value | 473,392 | 540,542 | 473,392 | ||
Liabilities at Fair Value: | |||||
Deferred compensation | 57,869 | 60,949 | 57,869 | ||
Total Liabilities at Fair Value | 57,869 | 60,949 | 57,869 | ||
Fair Value | Recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | |||||
Assets at Fair Value: | |||||
Cash and cash equivalents | 347,239 | 415,143 | 347,239 | ||
Other trading securities | 39,329 | 39,903 | 39,329 | ||
Commodity derivatives | 6,485 | 3,094 | 6,485 | ||
Total Assets at Fair Value | 393,053 | 458,140 | 393,053 | ||
Liabilities at Fair Value: | |||||
Deferred compensation | 25,272 | 28,768 | 25,272 | ||
Total Liabilities at Fair Value | 25,272 | 28,768 | 25,272 | ||
Fair Value | Recurring basis | Significant Other Observable Inputs (Level 2) | |||||
Assets at Fair Value: | |||||
Other trading securities | 80,339 | 82,402 | 80,339 | ||
Total Assets at Fair Value | 80,339 | 82,402 | 80,339 | ||
Liabilities at Fair Value: | |||||
Deferred compensation | 32,597 | 32,181 | 32,597 | ||
Total Liabilities at Fair Value | 32,597 | $ 32,181 | $ 32,597 | ||
Assets Held For Sale | Portion of DCB | Significant Other Observable Inputs (Level 2) | |||||
Impairment charge | |||||
Goodwill impairment charge | $ 21,500 | ||||
Assets Sold | Portion of DCB | |||||
Impairment charge | |||||
Goodwill impairment charge | $ 1,000 | ||||
Rabbi trust | |||||
Methods and assumptions used to estimate the fair value of the financial assets and liabilities | |||||
Guarantee period at issue for rate of return on fixed income funds | 1 year |
Commitments and Contingencies78
Commitments and Contingencies (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 30, 2016 | Oct. 25, 2015 | Oct. 26, 2014 | |
Purchase commitments | |||
2,017 | $ 957,418 | ||
2,018 | 636,239 | ||
2,019 | 378,857 | ||
2,020 | 247,295 | ||
2,021 | 150,233 | ||
Later Years | 75,572 | ||
Total | 2,445,614 | ||
Purchases under contracts | 1,600,000 | $ 1,600,000 | $ 2,200,000 |
Noncancelable operating lease commitments | |||
2,017 | 11,085 | ||
2,018 | 7,700 | ||
2,019 | 5,717 | ||
2,020 | 4,294 | ||
2,021 | 3,128 | ||
Later years | 4,154 | ||
Total | 36,078 | ||
Expenses under noncancelable operating lease commitments | 21,600 | $ 22,400 | $ 21,100 |
Approximate amount of commitments to complete construction in progress at various locations | 165,400 | ||
Standby letters of credit | 44,400 | ||
Revocable standby letter of credit | 4,000 | ||
Portion of expected future cash expenditures | |||
Purchase commitments | |||
Contract value threshold | 1,000 | ||
2,017 | 589,298 | ||
2,018 | 140,924 | ||
2,019 | 74,438 | ||
2,020 | 64,599 | ||
2,021 | 55,273 | ||
Later Years | 134,010 | ||
Total | $ 1,058,542 | ||
Hogs and turkeys | Maximum | |||
Purchase commitments | |||
Purchase commitments, time period | 10 years | ||
Grow-out contracts | Maximum | |||
Purchase commitments | |||
Purchase commitments, time period | 25 years | ||
Corn, soybean meal and other feed | Maximum | |||
Purchase commitments | |||
Purchase commitments, time period | 3 years |
Earnings Per Share Data (Detail
Earnings Per Share Data (Details) - shares shares in Thousands | 12 Months Ended | ||||
Oct. 30, 2016 | Oct. 25, 2015 | Oct. 26, 2014 | |||
Earnings Per Share Data | |||||
Basic weighted-average shares outstanding | 529,290 | 528,143 | [1] | 527,624 | [1] |
Dilutive potential common shares | 13,183 | 12,859 | 12,807 | ||
Diluted weighted-average shares outstanding | 542,473 | 541,002 | [1] | 540,431 | [1] |
Weighted average stock options not included in the computation of dilutive potential common shares | 1,100 | 900 | 800 | ||
[1] | Shares and par values have been restated, as appropriate, to reflect the two-for-one stock split distributed on February 9, 2016. |
Segment Reporting - Operating P
Segment Reporting - Operating Profit (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Oct. 30, 2016USD ($) | Jul. 24, 2016USD ($) | Apr. 24, 2016USD ($) | Jan. 24, 2016USD ($) | Oct. 25, 2015USD ($) | Jul. 26, 2015USD ($) | Apr. 26, 2015USD ($) | Jan. 25, 2015USD ($) | Oct. 30, 2016USD ($)segment | Oct. 25, 2015USD ($) | Oct. 26, 2014USD ($) | |
Operating profit and other financial information | |||||||||||
Number of reportable business segments | segment | 5 | ||||||||||
Sales | $ 2,627,941 | $ 2,302,376 | $ 2,300,235 | $ 2,292,672 | $ 2,400,858 | $ 2,188,587 | $ 2,279,345 | $ 2,395,073 | $ 9,523,224 | $ 9,263,863 | $ 9,316,256 |
Segment Operating Profit | 1,323,895 | 1,067,320 | 931,620 | ||||||||
Net interest and investment expense | 6,680 | 10,177 | 9,468 | ||||||||
General corporate expense | 49,436 | 35,199 | 33,434 | ||||||||
Noncontrolling interest | 465 | 1,176 | 3,349 | ||||||||
EARNINGS BEFORE INCOME TAXES | 1,317,215 | 1,057,143 | 922,152 | ||||||||
Assets | 6,370,067 | 6,139,831 | 6,370,067 | 6,139,831 | 5,455,619 | ||||||
Additions to Property, Plant and Equipment | 255,524 | 144,063 | 159,138 | ||||||||
Depreciation and Amortization | 131,968 | 133,434 | 130,044 | ||||||||
Intersegment sales | |||||||||||
Operating profit and other financial information | |||||||||||
Sales | 132,109 | 141,317 | 167,422 | ||||||||
Operating segment | |||||||||||
Operating profit and other financial information | |||||||||||
Sales | 9,523,224 | 9,263,863 | 9,316,256 | ||||||||
Segment Operating Profit | 1,372,866 | 1,101,343 | 961,705 | ||||||||
Intersegment elimination | |||||||||||
Operating profit and other financial information | |||||||||||
Sales | (132,109) | (141,317) | (167,422) | ||||||||
Corporate | |||||||||||
Operating profit and other financial information | |||||||||||
Assets | 698,617 | 705,107 | 698,617 | 705,107 | 712,928 | ||||||
Additions to Property, Plant and Equipment | 35,145 | 15,750 | 32,291 | ||||||||
Depreciation and Amortization | 10,655 | 10,428 | 6,821 | ||||||||
Grocery Products | |||||||||||
Operating profit and other financial information | |||||||||||
Sales | 1,684,756 | 1,617,680 | 1,558,265 | ||||||||
Assets | 1,472,316 | 1,214,988 | 1,472,316 | 1,214,988 | 1,249,631 | ||||||
Additions to Property, Plant and Equipment | 15,830 | 18,104 | 31,741 | ||||||||
Depreciation and Amortization | 29,725 | 26,972 | 25,883 | ||||||||
Grocery Products | Operating segment | |||||||||||
Operating profit and other financial information | |||||||||||
Sales | 1,684,756 | 1,617,680 | 1,558,265 | ||||||||
Segment Operating Profit | 268,461 | 228,582 | 195,064 | ||||||||
Refrigerated Foods | |||||||||||
Operating profit and other financial information | |||||||||||
Sales | 4,647,173 | 4,372,347 | 4,644,179 | ||||||||
Assets | 1,999,821 | 1,973,424 | 1,999,821 | 1,973,424 | 1,215,694 | ||||||
Additions to Property, Plant and Equipment | 93,430 | 54,074 | 61,183 | ||||||||
Depreciation and Amortization | 53,229 | 53,325 | 57,709 | ||||||||
Refrigerated Foods | Intersegment sales | |||||||||||
Operating profit and other financial information | |||||||||||
Sales | 11,341 | 13,058 | 23,163 | ||||||||
Refrigerated Foods | Operating segment | |||||||||||
Operating profit and other financial information | |||||||||||
Sales | 4,658,514 | 4,385,405 | 4,667,342 | ||||||||
Segment Operating Profit | 585,652 | 424,968 | 338,020 | ||||||||
Jennie-O Turkey Store | |||||||||||
Operating profit and other financial information | |||||||||||
Sales | 1,740,968 | 1,635,776 | 1,672,452 | ||||||||
Assets | 882,812 | 811,693 | 882,812 | 811,693 | 857,697 | ||||||
Additions to Property, Plant and Equipment | 61,340 | 32,250 | 25,761 | ||||||||
Depreciation and Amortization | 29,225 | 28,262 | 27,091 | ||||||||
Jennie-O Turkey Store | Intersegment sales | |||||||||||
Operating profit and other financial information | |||||||||||
Sales | 120,742 | 128,195 | 144,137 | ||||||||
Jennie-O Turkey Store | Operating segment | |||||||||||
Operating profit and other financial information | |||||||||||
Sales | 1,861,710 | 1,763,971 | 1,816,589 | ||||||||
Segment Operating Profit | 329,427 | 276,217 | 272,362 | ||||||||
Specialty Foods | |||||||||||
Operating profit and other financial information | |||||||||||
Sales | 939,134 | 1,103,359 | 907,120 | ||||||||
Assets | 837,107 | 988,455 | 837,107 | 988,455 | 1,013,420 | ||||||
Additions to Property, Plant and Equipment | 5,372 | 5,309 | 3,266 | ||||||||
Depreciation and Amortization | 5,165 | 11,075 | 8,999 | ||||||||
Specialty Foods | Intersegment sales | |||||||||||
Operating profit and other financial information | |||||||||||
Sales | 26 | 64 | 122 | ||||||||
Specialty Foods | Operating segment | |||||||||||
Operating profit and other financial information | |||||||||||
Sales | 939,160 | 1,103,423 | 907,242 | ||||||||
Segment Operating Profit | 110,917 | 93,258 | 71,514 | ||||||||
International & Other | |||||||||||
Operating profit and other financial information | |||||||||||
Sales | 511,193 | 534,701 | 534,240 | ||||||||
Assets | $ 479,394 | $ 446,164 | 479,394 | 446,164 | 406,249 | ||||||
Additions to Property, Plant and Equipment | 44,407 | 18,576 | 4,896 | ||||||||
Depreciation and Amortization | 3,969 | 3,372 | 3,541 | ||||||||
International & Other | Operating segment | |||||||||||
Operating profit and other financial information | |||||||||||
Sales | 511,193 | 534,701 | 534,240 | ||||||||
Segment Operating Profit | $ 78,409 | $ 78,318 | $ 84,745 |
Segment Reporting - Percentage
Segment Reporting - Percentage Of Revenues By Product (Details) - Revenues | 12 Months Ended | ||
Oct. 30, 2016 | Oct. 25, 2015 | Oct. 26, 2014 | |
Percentage of revenue by classes of products | |||
Percentage of total revenues | 100.00% | 100.00% | 100.00% |
Perishable | |||
Percentage of revenue by classes of products | |||
Percentage of total revenues | 53.10% | 53.00% | 54.50% |
Poultry | |||
Percentage of revenue by classes of products | |||
Percentage of total revenues | 20.50% | 18.60% | 18.40% |
Shelf-stable | |||
Percentage of revenue by classes of products | |||
Percentage of total revenues | 18.20% | 18.40% | 19.00% |
Miscellaneous | |||
Percentage of revenue by classes of products | |||
Percentage of total revenues | 8.20% | 10.00% | 8.10% |
Segment Reporting - Revenue By
Segment Reporting - Revenue By Geographic Locations (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Oct. 30, 2016 | Jul. 24, 2016 | Apr. 24, 2016 | Jan. 24, 2016 | Oct. 25, 2015 | Jul. 26, 2015 | Apr. 26, 2015 | Jan. 25, 2015 | Oct. 30, 2016 | Oct. 25, 2015 | Oct. 26, 2014 | |
Revenues attributable to U.S. and Foreign countries | |||||||||||
Revenue, Net | $ 2,627,941 | $ 2,302,376 | $ 2,300,235 | $ 2,292,672 | $ 2,400,858 | $ 2,188,587 | $ 2,279,345 | $ 2,395,073 | $ 9,523,224 | $ 9,263,863 | $ 9,316,256 |
United States | |||||||||||
Revenues attributable to U.S. and Foreign countries | |||||||||||
Revenue, Net | 9,012,797 | 8,721,722 | 8,708,042 | ||||||||
Foreign | |||||||||||
Revenues attributable to U.S. and Foreign countries | |||||||||||
Revenue, Net | $ 510,427 | $ 542,141 | $ 608,214 |
Segment Reporting - Concentrati
Segment Reporting - Concentration Revenue By Customer (Details) - Revenues - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 30, 2016 | Oct. 25, 2015 | Oct. 26, 2014 | |
Revenues from major customer | |||
Concentration risk (as a percent) | 100.00% | 100.00% | 100.00% |
Customer concentration | Wal-Mart Stores | |||
Revenues from major customer | |||
Gross sales, less returns and allowances | $ 1,450 | $ 1,430 | |
Concentration risk (as a percent) | 13.70% | 13.90% |
Quarterly Results of Operatio84
Quarterly Results of Operations (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||
Oct. 30, 2016 | Jul. 24, 2016 | Apr. 24, 2016 | Jan. 24, 2016 | Oct. 25, 2015 | Jul. 26, 2015 | Apr. 26, 2015 | Jan. 25, 2015 | Oct. 30, 2016 | Oct. 25, 2015 | Oct. 26, 2014 | |||
Quarterly Results of Operations (Unaudited) | |||||||||||||
Net sales | $ 2,627,941 | $ 2,302,376 | $ 2,300,235 | $ 2,292,672 | $ 2,400,858 | $ 2,188,587 | $ 2,279,345 | $ 2,395,073 | $ 9,523,224 | $ 9,263,863 | $ 9,316,256 | ||
Gross Profit | 598,520 | 475,285 | 526,359 | 558,011 | 495,030 | 409,390 | 459,556 | 444,605 | 2,158,175 | 1,808,581 | 1,564,983 | ||
Net earnings | 244,190 | 195,776 | 215,384 | 235,167 | 187,443 | 146,956 | 180,435 | 172,430 | 890,517 | 687,264 | 606,026 | ||
Net Earnings Attributable to Hormel Foods Corporation | $ 243,940 | $ 195,654 | $ 215,397 | $ 235,061 | $ 187,231 | $ 146,938 | $ 180,201 | $ 171,718 | $ 890,052 | $ 686,088 | $ 602,677 | ||
Basic Earnings Per Share (in dollars per share) | $ 0.46 | $ 0.37 | $ 0.41 | $ 0.44 | $ 0.35 | $ 0.28 | $ 0.34 | $ 0.33 | $ 1.68 | $ 1.30 | [1] | $ 1.14 | [1] |
Diluted Earnings Per Share (in dollars per share) | $ 0.45 | $ 0.36 | $ 0.40 | $ 0.43 | $ 0.35 | $ 0.27 | $ 0.33 | $ 0.32 | $ 1.64 | $ 1.27 | [1] | $ 1.12 | [1] |
[1] | Shares and par values have been restated, as appropriate, to reflect the two-for-one stock split distributed on February 9, 2016. |
SCHEDULE II - VALUATION AND Q85
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 30, 2016 | Oct. 25, 2015 | Oct. 26, 2014 | |
Change in valuation and qualifying accounts and reserves | |||
Balance at Beginning of Period | $ 4,086 | $ 4,050 | $ 4,000 |
Additions/(Benefits) Charged to Costs and Expenses | 611 | (24) | 4,076 |
Additions/(Benefits) Charged to Other Accounts Describe | 36 | 50 | |
Deductions-Describe, Uncollectible accounts written off | 652 | 52 | 4,152 |
Deductions-Describe, Recoveries on accounts previously written off | (77) | (76) | |
Balance at End of Period | $ 4,045 | $ 4,086 | $ 4,050 |