Hormel Foods Corp

SECURITIES AND EXCHANGE COMMISSION

FORM 10-K Annual report pursuant to section 13 and 15(d)

Filing Date: 2016-12-21 | Period of Report: 2016-10-30 SEC Accession No. 0001104659-16-163147

(HTML Version on secdatabase.com)

FILER HORMEL FOODS CORP /DE/ Mailing Address Business Address 1 HORMEL PLACE 1 HORMEL PL CIK:48465| IRS No.: 410319970 | State of Incorp.:DE | Fiscal Year End: 1031 AUSTIN MN 55912-3680 AUSTIN MN 55912-3680 Type: 10-K | Act: 34 | File No.: 001-02402 | Film No.: 162063449 (507) 437-5611 SIC: 2011 Meat packing plants

ANNUAL REPORT ON FORM 10-K

HORMEL FOODS CORPORATION

OCTOBER 30, 2016

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

FORM 10-K

[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended October 30, 2016

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______to ______

Commission File Number: 1-2402

HORMEL FOODS CORPORATION (Exact name of registrant as specified in its charter)

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

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

Registrants telephone number, including area code (507) 437-5611

Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered Common Stock, $0.01465 par value New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes X No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No X

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes X No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulations S-T during the preceding 12 months. Yes X No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ( )

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

Large accelerated filer X Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company

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

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The aggregate market value of the voting and non-voting common stock held by non-affiliates of the registrant as of April 24, 2016, was $10,164,070,958, based on the closing price of $37.66 on the last business day of the registrants most recently completed second fiscal quarter.

As of December 2, 2016, the number of shares outstanding of each of the registrants classes of common stock was as follows:

Common Stock, $0.01465 Par Value 528,801,691 shares Common Stock Non-Voting, $0.01 Par Value 0 shares

DOCUMENTS INCORPORATED BY REFERENCE Portions of the Annual Stockholders Report for the fiscal year ended October 30, 2016, are incorporated by reference into Part I, Items 1 and 1A and Part II, Items 5-8 and 9A, and included as Exhibit 13.1 filed herewith.

Portions of the Proxy Statement for the Annual Meeting of Stockholders to be held January 31, 2017, are incorporated by reference into Part III, Items 10-14.

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HORMEL FOODS CORPORATION TABLE OF CONTENTS

PART I

Item 1. BUSINESS 3

Item 1A. RISK FACTORS 8

Item 1B. UNRESOLVED STAFF COMMENTS 8

Item 2. PROPERTIES 8

Item 3. LEGAL PROCEEDINGS 10

Item 4. MINE SAFETY DISCLOSURES 10

PART II

Item 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 11

Item 6. SELECTED FINANCIAL DATA 11

Item 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 11

Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 12

Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 12

Item 9A. CONTROLS AND PROCEDURES 12

Item 9B. OTHER INFORMATION 12

PART III

Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 13

Item 11. EXECUTIVE COMPENSATION 13

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS 13

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE 13

Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES 14

PART IV

Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES 14

SIGNATURES 15

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PART I

Item 1. BUSINESS

(a) General Development of Business

Hormel Foods Corporation, a Delaware corporation (the Company), was founded by George A. Hormel in 1891 in Austin, Minnesota, as Geo. A. Hormel & Company. The Company started as a processor of meat and food products and continues in this line of business. The Companys name was changed to Hormel Foods Corporation on January 31, 1995. The Company is primarily engaged in the production of a variety of meat and food products and the marketing of those products throughout the United States and internationally. Although pork and turkey remain the major raw materials for its products, the Company has emphasized for several years the manufacturing and distribution of branded, value-added consumer items rather than the commodity fresh meat business. The Company has continually expanded its product portfolio through organic growth, new product development, and acquisitions.

Internationally, the Company markets its products through Hormel Foods International Corporation (HFIC), a wholly owned subsidiary. HFIC has a presence in the international marketplace through joint ventures and placement of personnel in strategic foreign locations

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document such as Australia, Canada, China, Japan, and the Philippines. HFIC has a global presence with a minority position in a food company in the Philippines (The Purefoods-Hormel Company, Inc., 40% holding).

On May 26, 2016, the Company acquired Justins, LLC (Justins) 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. This acquisition allows the Company to enhance its presence in the specialty natural and organic nut butter category.

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

On May 9, 2016, the Company completed the sale of Diamond Crystal Brands resulting in proceeds, net of selling costs, of a preliminary closing price of $110.1 million, pending working capital adjustments.

At the end of fiscal year 2016, the Company was actively marketing Clougherty Packing, LLC, parent company of Farmer John and Saags Specialty Meats, along with PFFJ, LLC, farm operations in California, Arizona, and Wyoming. In November 2016, subsequent to the end of the fiscal year, the Company entered into an agreement for the sale of those businesses and assets.

The Company has not been involved in any bankruptcy, receivership, or similar proceedings during its history. Substantially all the assets of the Company have been acquired in the ordinary course of business.

The Company had no other significant change in the type of products produced or services rendered, or in the markets or methods of distribution since the beginning of the 2016 fiscal year.

(b) Segments

The Companys business is reported in five segments: Grocery Products, Refrigerated Foods, Jennie-O Turkey Store (JOTS), Specialty Foods, and International & Other. Net sales to unaffiliated customers, operating profit, total assets, and the presentation of certain other financial information by segment, are reported in Note P of the Notes to Consolidated Financial Statements and in the Managements Discussion and Analysis of Financial Condition and Results of Operations of the Annual Stockholders Report for the fiscal year ended October 30, 2016, incorporated herein by reference.

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Products and Distribution

The Companys products primarily consist of meat and other food products. The meat products are sold fresh, frozen, cooked, and canned. 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, 2016 October 25, 2015 October 26, 2014 Perishable 53.1% 53.0% 54.5%

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Poultry 20.5 18.6 18.4 Shelf-stable 18.2 18.4 19.0 Miscellaneous 8.2 10.0 8.1 100.0% 100.0% 100.0%

Reporting of revenues from external customers is based on similarity of products, as the same or similar products are sold across multiple distribution channels such as retail, foodservice, or international. Revenues reported are based on financial information used to produce the Companys general-purpose financial statements.

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.

Domestically, the Company sells its products in all 50 states. The Companys products are sold through its sales personnel, operating in assigned territories or as dedicated teams serving major customers, coordinated from sales offices located in most of the larger U.S. cities. The Company also utilizes independent brokers and distributors. As of October 30, 2016, the Company had approximately 850 sales personnel engaged in selling its products. Distribution of products to customers is primarily by common carrier.

Through HFIC, the Company markets its products in various locations throughout the world. Some of the larger markets include Australia, Canada, China, England, Japan, Mexico, Micronesia, the Philippines, Singapore, and South Korea. The distribution of export sales to customers is by common carrier, while the China operations own and operate their own delivery system. The Company, through HFIC, has licensed companies to manufacture various Company products internationally on a royalty basis, with the primary licensees being Tulip International of Denmark and CJ CheilJedang Corporation of South Korea.

Raw Materials

The Company has, for the past several years, been concentrating on branded products for consumers with year-round demand to minimize the seasonal variation experienced with commodity-type products. Pork continues to be the primary raw material for Company products. The Companys expanding line of branded products has reduced, but not eliminated, the sensitivity of Company results to raw material supply and price fluctuations.

The majority of the hogs harvested by the Company are purchased under supply contracts from producers located principally in Minnesota, Iowa, Utah, Nebraska, Kansas, and Colorado. The cost of hogs and the utilization of the Companys facilities are affected by both the level and the methods of pork production in the United States. The Company uses supply contracts to ensure a stable supply of raw materials. The Companys contracts are based on market-based formulas and/or the cost of production, to better balance input costs with customer pricing, and all contract costs are fully reflected in the Companys reported financial statements. In fiscal 2016, the Company purchased 94 percent of its hogs under supply contracts. The Company also procures a portion of its hogs through farms that it either owns or operates in Arizona, California, Colorado, and Wyoming.

In fiscal 2016, JOTS raised turkeys representing approximately 76 percent of the volume needed to meet its raw material requirements for whole bird and branded turkey products. Turkeys not sourced within the Company are contracted with independent turkey growers. JOTS turkey-raising farms are located throughout Minnesota and Wisconsin.

Production costs in raising hogs and turkeys are subject primarily to fluctuations in feed grain prices and, to a lesser extent, fuel costs. To manage this risk, the Company hedges a portion of its anticipated purchases of grain using futures contracts.

Additionally, the cost and supply of avocados, peanuts, whey, and natural and organic protein are impacted by the changing market forces of supply and demand, which can impact the cost of the Companys products. The Company uses long-term supply contracts and forward buying in an attempt to manage these risks.

Manufacturing

The Company has three plants that harvest hogs for processing. Quality Pork Processors, Inc. of Dallas, Texas, operates the harvesting facility at Austin, Minnesota, under a custom harvesting arrangement. The Company currently has seven turkey harvest and processing operations, and 28 facilities that produce and distribute other manufactured items. Albert Lea Select Foods, Inc. operates the processing facility at Albert Lea, Minnesota, under a custom manufacturing agreement. Company products are also custom manufactured by several other companies. The following are the Companys larger custom manufacturers: Abbyland Foods, Inc., Abbotsford, Wisconsin; Agropur Division Natrel USA, Maplewood, Minnesota; Algood Food Company, Louisville, Kentucky; Busseto Foods, Inc., Fresno, California; Deitz & Watson, Inc., Philadelphia, Pennsylvania; Fratelli Beretta USA, Mount Olive, New Jersey; HP Hood LLC, Lynnfield, Massachusetts; John F. Martin and Sons, Stevens, Pennsylvania; Jones Dairy Farm, Fort Atkinson, Wisconsin; OSI Industries LLC, Chicago, Illinois; Perdue Farms Inc., Salisbury, Maryland; Reichel Foods, Inc., Rochester, Minnesota; Resers Fine Foods, Topeka, Kansas; and West Liberty Foods, LLC, West liberty, Iowa. Exel, Inc., based in Westerville, Ohio, operates distribution centers for the Company in Dayton, Ohio, and Osceola, Iowa.

Patents and Trademarks

There are numerous patents and trademarks important to the Companys business. The Company holds 46 U.S.-issued and 19 foreign patents. Most of the trademarks are registered. Some of the more significant owned or licensed trademarks used by the Company or its affiliates are:

HORMEL, ALWAYS TENDER, APPLEGATE, AUSTIN BLUES, BACON 1, BLACK LABEL, BREAD READY, CAFÉ H, CHI- CHIS, COMPLEATS, CURE 81, CYTOSPORT, DANS PRIZE, DI LUSSO, DINTY MOORE, DON MIGUEL, DOÑA MARIA, EMBASA, FAST N EASY, FIRE BRAISED, HERDEZ, HORMEL GATHERINGS, HORMEL VITAL CUISINE, HOUSE OF TSANG, JENNIE-O, JUSTINS, LA VICTORIA, LAYOUT, LLOYDS, MARY KITCHEN, MUSCLE MILK, NATURAL CHOICE, OLD SMOKEHOUSE, PILLOW PACK, RANGE BRAND, REV, ROSA GRANDE, SKIPPY, SPAM, SPECIAL RECIPE, THICK & EASY, VALLEY FRESH, and WHOLLY GUACAMOLE.

The Companys patents expire after a term that is typically 20 years from the date of filing, with earlier expiration possible based on the Companys decision to pay required maintenance fees. As long as the Company intends to continue using its trademarks, they are renewed indefinitely.

Customers and Backlog Orders

During fiscal year 2016, sales to Wal-Mart Stores, Inc. (Wal-Mart) represented approximately 13.7 percent of the Companys revenues (measured as gross sales less returns and allowances), compared to 13.9 percent in fiscal 2015. Wal-Mart is a customer for all five segments of the Company. The five largest customers in each segment make up approximately the following percentage of segment sales: 46 percent of Grocery Products, 36 percent of Refrigerated Foods, 40 percent of JOTS, 37 percent of Specialty Foods, and 22 percent of International & Other. The loss of one or more of the top customers in any of these segments could have a material adverse effect on the results of such segment. Backlog orders are not significant due to the perishable nature of a large portion of the products. Orders are accepted and shipped on a current basis.

Competition

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The production and sale of meat and food products in the United States and internationally are highly competitive. The Company competes with manufacturers of pork and turkey products, as well as national and regional producers of other meat and protein sources, such as beef, chicken, fish, peanut butter, and whey. The Company believes its largest domestic competitors for its Refrigerated Foods segment in 2016 were Tyson Foods, Inc. and Smithfield Foods, Inc.; for its Grocery Products segment, Conagra Brands, Inc., General Mills, Inc., Campbell Soup Co., and J. M. Smucker Co.; and for JOTS, Cargill, Inc. and Butterball, LLC.

All segments compete on the basis of price, product quality and attributes, brand identification, breadth of product line, and customer service. Through aggressive marketing and strong quality assurance programs, the Companys strategy is to provide higher quality products that possess strong brand recognition, which would then support higher value perceptions from customers.

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Research and Development

Research and development continues to be a vital part of the Companys strategy to extend existing brands and expand into new branded items. The expenditures for research and development for fiscal 2016, 2015, and 2014, were approximately $34.7 million, $32.0 million, and $29.9 million, respectively. There are approximately 155 employees engaged in fulltime research and development, 75 in the area of improving existing products and 80 in developing new products.

Employees

As of October 30, 2016, the Company had approximately 21,100 active domestic and foreign employees.

(d) Geographic Areas

Financial information about geographic areas, including total revenues attributed to the U.S. and all foreign countries in total for the last three fiscal years of the Company, is reported in Note P of the Notes to Consolidated Financial Statements of the Annual Stockholders Report for the fiscal year ended October 30, 2016, incorporated herein by reference.

(e) Available Information

The Company makes available, free of charge on its Web site at www.hormelfoods.com, its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934. These reports are accessible under the caption, Investors SEC Filings on the Companys Web site and are available as soon as reasonably practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission.

The documents noted above are also available in print, free of charge, to any stockholder who requests them.

(f) Executive Officers of the Registrant

CURRENT OFFICE AND PREVIOUS NAME AGE FIVE YEARS EXPERIENCE DATES

James P. Snee 49 President and Chief Executive Officer 10/31/16 to Present President and Chief Operating Officer 10/26/15 to 10/30/16

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Group Vice President/President Hormel Foods International 10/29/12 to 10/25/15 Corporations Vice President/Senior Vice President Hormel Foods International 10/31/11 to 10/28/12 Corporation

James N. Sheehan 61 Senior Vice President and Chief Financial Officer 10/31/16 to Present Vice President and Chief Accounting Officer 05/30/16 to 10/30/16 Vice President and Controller 05/01/00 to 5/29/16

Steven G. Binder 59 Executive Vice President/President Hormel Business Units 10/31/11 to Present

Jeffrey R. Baker 52 Group Vice President (Foodservice) 10/26/15 to Present Vice President (Foodservice Marketing) 10/29/12 to 10/25/15 Director (Foodservice Marketing) 06/18/12 to 10/28/12 Director (Fresh Meats Marketing and Precept Foods, LLC) 10/26/09 to 06/17/12

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(f) Executive Officers of the Registrant - Continued

CURRENT OFFICE AND PREVIOUS NAME AGE FIVE YEARS EXPERIENCE DATES

Deanna T. Brady 51 Group Vice President/President Consumer Products Sales 10/26/15 to Present Group Vice President (Foodservice) 10/28/13 to 10/25/15 Vice President Sales (Foodservice Sales) 07/30/07 to 10/27/13

Thomas R. Day 58 Group Vice President (Refrigerated Foods) 10/28/13 to Present Group Vice President (Foodservice) 11/01/10 to 10/27/13

Donald H. Kremin 56 Group Vice President (Specialty Foods Group) 10/31/11 to Present

Glenn R. Leitch 56 Group Vice President/President Jennie-O Turkey Store, Inc. 10/31/11 to Present

Luis G. Marconi 50 Group Vice President (Grocery Products) 10/31/16 to Present Vice President (Grocery Products Marketing) 03/05/12/to 10/30/16 Managing Director MegaMex Foods, LLC 10/26/09 to 03/04/12

James M. Splinter 54 Group Vice President (Corporate Strategy) 10/31/16 to Present Group Vice President (Grocery Products) 11/01/10 to 10/30/16

Larry L. Vorpahl 53 Group Vice President/President Hormel Foods International 10/26/15 to Present Corporation Group Vice President/President Consumer Products Sales 10/31/05 to 10/25/15

Bryan D. Farnsworth 59 Senior Vice President (Supply Chain) 03/03/14 to Present Vice President (Quality Management) 08/01/05 to 03/02/14

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Lawrence C. Lyons 61 Senior Vice President (Human Resources) 03/30/15 to Present Vice President (Human Resources) 03/03/14 to 03/29/15 Director (Human Resources) 01/09/06 to 03/02/14

Lori J. Marco 49 Senior Vice President (External Affairs) and General Counsel 03/30/15 to Present Vice President (External Affairs) and General Counsel 01/24/11 to 03/29/15

Kevin L. Myers, Ph.D. 51 Senior Vice President (Research and Development) 03/30/15 to Present Vice President (Research and Development) 10/28/13 to 03/29/15 Director Product and Process Development (Research and 04/30/12 to 10/27/13 Development) Group Manager Product Development (Research and Development) 03/06/06 to 04/29/12

Jana L. Haynes 44 Vice President and Controller 05/30/16 to Present Director of Investor Relations 10/28/13 to 05/29/16 Director of Taxes 01/01/07 to 10/27/13

Gary L. Jamison 51 Vice President and Treasurer 5/30/16 to Present Vice President and Chief Financial Officer Jennie-O Turkey 12/31/12 to 05/29/16 Store, Inc. Vice President Finance Clougherty Packing, LLC 08/28/06 to 12/30/12

Brian D. Johnson 56 Vice President and Corporate Secretary 11/22/10 to Present

No family relationship exists among the executive officers.

Executive officers are elected annually by the Board of Directors at the first meeting following the Annual Meeting of Stockholders. Vacancies may be filled and additional officers elected at any time.

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Item 1A. RISK FACTORS

Information on the Companys risk factors included in the Managements Discussion and Analysis of Financial Condition and Results of Operations on pages 32 through 35 of the Annual Stockholders Report for the fiscal year ended October 30, 2016, is incorporated herein by reference.

Item 1B. UNRESOLVED STAFF COMMENTS

None.

Item 2. PROPERTIES

Approximate Area (Square Feet, Owned or Lease Location Principal Segment (1) Unless Noted) Leased Expiration Date

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Harvest and Processing Plants Austin, Minnesota Refrigerated Foods 1,398,000 Owned Grocery Products Specialty Foods International & Other Barron, Wisconsin JOTS 425,000 Owned Faribault, Minnesota JOTS 191,000 Owned Fremont, Nebraska Refrigerated Foods 700,000 Owned Grocery Products Specialty Foods International & Other Melrose, Minnesota JOTS 133,000 Owned Vernon, California(4) Refrigerated Foods 724,000 Owned Refrigerated Foods 108,000 Leased March 2019 Willmar, Minnesota JOTS 339,000 Owned

Processing Plants Albert Lea, Minnesota Refrigerated Foods 80,000 Owned Algona, Iowa Refrigerated Foods 154,000 Owned Alma, Kansas Refrigerated Foods 66,000 Owned Aurora, Illinois Specialty Foods 147,000 Owned Grocery Products Beijing, China International & Other 95,000 80% Owned Beloit, Wisconsin Grocery Products 346,000 Owned Specialty Foods Grocery Products 5,000 Leased Specialty Foods Monthly Browerville, Minnesota Refrigerated Foods 103,000 Owned Dubuque, Iowa Grocery Products 343,000 Owned Jiaxing, China International & Other 1,256,000 (2) Owned Knoxville, Iowa Refrigerated Foods 131,000 Owned Lathrop, California Refrigerated Foods 87,000 Owned Little Rock, Arkansas Grocery Products 167,000 Owned Long Prairie, Minnesota Refrigerated Foods 96,000 Owned Mendota Heights, Minnesota Refrigerated Foods 77,000 Owned Montevideo, Minnesota JOTS 89,000 Owned Nevada, Iowa Refrigerated Foods 226,000 Owned Osceola, Iowa Refrigerated Foods 373,000 Owned Pelican Rapids, Minnesota JOTS 374,000 Owned Quakertown, Pennsylvania Specialty Foods 13,000 Owned Rochelle, Illinois Refrigerated Foods 407,000 Owned Grocery Products Specialty Foods San Leandro, California(4) Refrigerated Foods 41,000 Leased November 2021

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Approximate Area (Square Feet, Owned or Lease Location Principal Segment (1) Unless Noted) Leased Expiration Date

Processing Plants (continued) Shanghai, China International & Other 33,000 Leased February 2018 Sparta, Wisconsin Specialty Foods 385,000 Owned Tucker, Georgia Grocery Products 259,000 Owned Refrigerated Foods Specialty Foods Weifang, China International & Other 117,000 Owned Wichita, Kansas Refrigerated Foods 89,000 Owned

Warehouse/Distribution Centers Austin, Minnesota Refrigerated Foods 82,000 Owned Grocery Products Beijing, China International & Other 20,000 Leased June 2017 Dayton, Ohio Refrigerated Foods 140,000 Owned Grocery Products Specialty Foods Eldridge, Iowa Grocery Products 424,000 Leased July 2019 Specialty Foods Osceola, Iowa Refrigerated Foods 233,000 Owned Shanghai, China International & Other 26,000 Leased June 2017 Sparta, Wisconsin Specialty Foods 50,000 Leased June 2019 Vernon, California(4) Refrigerated Foods 115,000 Owned Willmar, Minnesota JOTS 120,000 Owned 5,000 Leased September 2018 Hog Production Facilities Albin, Wyoming(4) Refrigerated Foods 458,000 Owned Corcoran, California(4) Refrigerated Foods 816,000 Owned Holbrook, Arizona(4) Refrigerated Foods 13,000 Owned Las Animas, Colorado Refrigerated Foods 815,000 Owned Pine Bluffs, Wyoming(4) Refrigerated Foods 64,000 Owned Snowflake, Arizona(4) Refrigerated Foods 1,529,000 Owned

Hatcheries Barron, Wisconsin JOTS 29,000 Owned Detroit Lakes, Minnesota JOTS 27,000 Owned Henning, Minnesota JOTS 22,000 Owned

Feed Mills Albin, Wyoming Refrigerated Foods 6,000 Owned Atwater, Minnesota JOTS 19,000 Owned Barron, Wisconsin JOTS 26,000 Owned Corcoran, California Refrigerated Foods 5,000 Owned

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Dawson, Minnesota JOTS 37,000 Owned Faribault, Minnesota JOTS 25,000 Owned Henning, Minnesota JOTS 5,000 Owned Northfield, Minnesota JOTS 17,000 Owned Perham, Minnesota JOTS 26,000 Owned Snowflake, Arizona(4) Refrigerated Foods 28,000 Owned Swanville, Minnesota JOTS 29,000 Owned

Turkey Farms Minnesota and Wisconsin JOTS 14,400 (3) Owned

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Item 2. PROPERTIES Continued

Approximate Area (Square Feet, Owned or Lease Location Principal Segment (1) Unless Noted) Leased Expiration Date

Research and Development Austin, Minnesota All Segments 135,000 Owned Shanghai, China International & Other 4,000 Leased September 2017 Willmar, Minnesota JOTS 10,000 Owned

Administrative Offices Austin, Minnesota All Segments 299,000 Owned Beijing, China International & Other 4,000 Leased May 2017 Boulder, Colorado Grocery Products 6,000 Leased August 2019 Bridgewater, New Jersey Refrigerated Foods 29,000 Leased January 2024 Gainesville, Georgia Refrigerated Foods 5,000 Leased November 2019 Las Animas, Colorado Refrigerated Foods 2,000 Leased July 2019 Moorabbin, Australia International & Other 3,000 Leased September 2018 Shanghai, China International & Other 14,000 Leased September 2017 Taylor, Arizona(4) Refrigerated 5,000 Leased December 2019 Vernon, California(4) Refrigerated Foods 24,000 Leased March 2019 Walnut Creek, California Specialty Foods 22,000 Leased April 2023 Willmar, Minnesota JOTS 56,000 Owned

(1) Many of the Companys properties are not exclusive to any one segment, and a few of the properties are utilized in all five segments. For locations that support multiple segments, but with a substantial percentage of activity attributable to certain segments, only the principal segments have been listed. (2) Property is owned but not fully operational. (3) Acres. (4) Properties included in the businesses sold subsequent to the end of fiscal year 2016 as disclosed in Item 1 under General Development of Business.

The Company believes its operating facilities are well maintained and suitable for current production volumes, and expansion plans are either completed or in process to accommodate all volumes anticipated in the foreseeable future.

The Company is a party to various legal proceedings related to the on-going operation of its business, including claims both by and against the Company. At any time, 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. Resolution of any currently known matters, either individually or in the aggregate, is not expected to have a material effect on the Companys financial condition, results of operations, or liquidity.

Item 4. MINE SAFETY DISCLOSURES

Not applicable.

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PART II

Item 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

The high and low sales price of the Companys common stock and the dividends per share declared for each quarter of fiscal 2016 and fiscal 2015 are shown below (as adjusted for the two-for-one stock split distributed on February 9, 2016):

2016 High Low Dividend First Quarter $40.390 $32.920 $0.145 Second Quarter 45.720 37.490 0.145 Third Quarter 40.535 33.700 0.145 Fourth Quarter 40.000 35.870 0.145

2015 High Low Dividend First Quarter $27.700 $25.030 $0.125 Second Quarter 29.490 25.065 0.125 Third Quarter 29.680 27.075 0.125 Fourth Quarter 34.483 28.443 0.125

Additional information about dividends, principal market of trade, and number of stockholders on pages 68 and 69 of the Annual Stockholders Report for the fiscal year ended October 30, 2016, is incorporated herein by reference. The Companys common stock has been listed on the New York Stock Exchange since January 16, 1990.

Issuer purchases of equity securities in the fourth quarter of fiscal year 2016 are shown below:

Total Number of Maximum Number of Total Shares Purchased as Shares that May Yet Number of Average Part of Publicly Be Purchased Under Shares Price Paid Announced Plans or the Plans or Period Purchased Per Share Programs1 Programs1 July 25, 2016

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document August 28, 2016 206,334 $ 36.78 206,334 14,135,200 August 29, 2016 September 25, 2016 465,201 37.06 465,201 13,669,999 September 26, 2016 October 30, 2016 480,000 37.67 480,000 13,189.999 Total 1,151,535 $37.26 1,151,535

1On January 31, 2013, the Company announced its Board of Directors had authorized the repurchase of 10,000,000 shares of its common stock with no expiration date. The repurchase program was authorized at a meeting of the Companys Board of Directors on January 29, 2013. On November 23, 2015, the Board of Directors authorized a two-for-one split of the Companys common stock. As part of the resolution to approve that stock split, the number of shares remaining to be repurchased was adjusted proportionately. The stock split was subsequently approved by shareholders at the Companys Annual Meeting on January 26, 2016, and effected January 27, 2016. All numbers in the table above reflect the impact of this stock split.

Item 6. SELECTED FINANCIAL DATA

Selected Financial Data for the five fiscal years ended October 30, 2016, on page 14 of the Annual Stockholders Report for the fiscal year ended October 30, 2016, is incorporated herein by reference.

Item 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Information in the Managements Discussion and Analysis of Financial Condition and Results of Operations on pages 15 through 35 of the Annual Stockholders Report for the fiscal year ended October 30, 2016, is incorporated herein by reference.

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Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Information on the Companys exposure to market risk included in the Managements Discussion and Analysis of Financial Condition and Results of Operations on page 35 of the Annual Stockholders Report for the fiscal year ended October 30, 2016, is incorporated herein by reference.

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Consolidated Financial Statements, including unaudited quarterly data, on pages 39 through 67 and the Report of Independent Registered Public Accounting Firm on page 38 of the Annual Stockholders Report for the fiscal year ended October 30, 2016, are incorporated herein by reference.

Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

Item 9A. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document As of the end of the period covered by this report (the Evaluation Date), the Company carried out an evaluation, under the supervision and with the participation of management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended (the Exchange Act)). In designing and evaluating the disclosure controls and procedures, management recognized any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded, as of the Evaluation Date, our disclosure controls and procedures were effective to provide reasonable assurance the information we are required to disclose in reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms, and such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Internal Control over Financial Reporting

(a) The report entitled Managements Report on Internal Control Over Financial Reporting on page 36 of the Annual Stockholders Report for the fiscal year ended October 30, 2016, is incorporated herein by reference.

(b) The report entitled Report of Independent Registered Public Accounting Firm on page 37 of the Annual Stockholders Report for the fiscal year ended October 30, 2016, is incorporated herein by reference.

(c) During the fourth quarter of fiscal year 2016, there has been no change in the Companys internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, the Companys internal control over financial reporting.

Item 9B. OTHER INFORMATION

None.

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PART III

Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Information under Item 1 - Election of Directors on pages 2 through 6, information under Board Independence on pages 8 and 9, and information under Board of Director and Committee Meetings on pages 9 and 10 of the definitive proxy statement for the Annual Meeting of Stockholders to be held January 31, 2017, is incorporated herein by reference.

Information concerning Executive Officers is set forth in Part I, Item 1(f) of this Annual Report on Form 10-K, pursuant to Instruction 3 to Paragraph (b) of Item 401 of Regulation S-K.

Information under Section 16(a) Beneficial Ownership Reporting Compliance, on page 36 of the definitive proxy statement for the Annual Meeting of Stockholders to be held January 31, 2017, is incorporated herein by reference.

The Company has adopted a Code of Ethical Business Conduct in compliance with applicable rules of the Securities and Exchange Commission that applies to its principal executive officer, its principal financial officer, and its principal accounting officer or controller, or persons performing similar functions. A copy of the Code of Ethical Business Conduct is available on the Companys Web site at

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document www.hormelfoods.com, free of charge, under the caption, Investors Corporate Governance Governance Documents. The Company intends to satisfy any disclosure requirement under Item 5.05 of Form 8-K regarding an amendment to, or waiver from, a provision of this Code of Ethical Business Conduct by posting such information on the Companys Web site at the address and location specified above.

Item 11. EXECUTIVE COMPENSATION

Information commencing with Executive Compensation on page 15 through Potential Payments Upon Termination at Fiscal 2016 Year End on pages 31 and 32, and information under Compensation of Directors on pages 11 through 12 of the definitive proxy statement for the Annual Meeting of Stockholders to be held January 31, 2017, is incorporated herein by reference.

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Information regarding the Companys equity compensation plans as of October 30, 2016, is shown below:

Number of Weighted- Securities to be Average Issued Upon Exercise Price Number of Securities Remaining Exercise of of Outstanding Available for Future Issuance Outstanding Options, under Equity Compensation Options, Warrants Warrants and Plans (Excluding Securities Plan Category and Rights Rights Reflected in Column (a)) (a) (b) (c) Equity compensation plans approved by security holders 31,998,052 $ 16.05 48,148,555

Equity compensation plans not _ _ _ approved by security holders

Total 31,998,052 $ 16.05 48,148,555

Information under Security Ownership of Certain Beneficial Owners and Security Ownership of Management on pages 14 and 15 of the definitive proxy statement for the Annual Meeting of Stockholders to be held January 31, 2017, is incorporated herein by reference.

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Information under Related Party Transactions on pages 35 and 36 and Board Independence on pages 8 and 9 of the definitive proxy statement for the Annual Meeting of Stockholders to be held January 31, 2017, is incorporated herein by reference.

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Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Information under Independent Registered Public Accounting Firm Fees and Audit Committee Preapproval Policies and Procedures on page 13 of the definitive proxy statement for the Annual Meeting of Stockholders to be held January 31, 2017, is incorporated herein by reference.

PART IV

Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

The response to Item 15 is submitted as a separate section of this report.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

HORMEL FOODS CORPORATION

By: /s/ JAMES P. SNEE December 21, 2016 JAMES P. SNEE, President, Date Chief Executive Officer, and Director

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Name Date Title /s/ JAMES P. SNEE 12/21/16 President, Chief Executive Officer, and Director JAMES P. SNEE (Principal Executive Officer)

/s/ JAMES N. SHEEHAN 12/21/16 Senior Vice President and Chief Financial Officer JAMES N. SHEEHAN (Principal Financial Officer)

/s/ JANA L. HAYNES 12/21/16 Vice President and Controller JANA L. HAYNES (Principal Accounting Officer)

/s/ JEFFREY M. ETTINGER* 12/21/16 Chairman of the Board JEFFREY M. ETTINGER

/s/ GARY C. BHOJWANI* 12/21/16 Director GARY C. BHOJWANI

/s/ TERRELL K. CREWS* 12/21/16 Director TERRELL K. CREWS

/s/ GLENN S. FORBES* 12/21/16 Director

/s/ STEPHEN M. LACY* 12/21/16 Director STEPHEN M. LACY

/s/ JOHN L. MORRISON* 12/21/16 Director JOHN L. MORRISON

/s/ ELSA A. MURANO* 12/21/16 Director ELSA A. MURANO

/s/ ROBERT C. NAKASONE* 12/21/16 Director ROBERT C. NAKASONE

/s/ SUSAN K. NESTEGARD* 12/21/16 Director SUSAN K. NESTEGARD

/s/ DAKOTA A. PIPPINS* 12/21/16 Director DAKOTA A. PIPPINS

/s/ CHRISTOPHER J. POLICINSKI* 12/21/16 Director CHRISTOPHER J. POLICINSKI

/s/ SALLY J. SMITH* 12/21/16 Director SALLY J. SMITH

/s/ STEVEN A. WHITE* 12/21/16 Director STEVEN A. WHITE

*By: /s/ JANA L. HAYNES 12/21/16 JANA L. HAYNES as Attorney-In-Fact

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F-1

ANNUAL REPORT ON FORM 10-K

LIST OF FINANCIAL STATEMENTS

FINANCIAL STATEMENT SCHEDULE

LIST OF EXHIBITS

FISCAL YEAR ENDED OCTOBER 30, 2016

HORMEL FOODS CORPORATION

Austin, Minnesota

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F-2

Item 15.

LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES

HORMEL FOODS CORPORATION

The following consolidated financial statements of Hormel Foods Corporation included in the Annual Stockholders Report for the fiscal year ended October 30, 2016, are incorporated herein by reference in Item 8 of Part II of this report:

Consolidated Statements of Financial Position--October 30, 2016, and October 25, 2015.

Consolidated Statements of Operations--Fiscal Years Ended October 30, 2016, October 25, 2015, and October 26, 2014.

Consolidated Statements of Comprehensive Income--Fiscal Years Ended October 30, 2016, October 25, 2015, and October 26, 2014.

Consolidated Statements of Changes in Shareholders Investment--Fiscal Years Ended October 30, 2016, October 25, 2015, and October 26, 2014.

Consolidated Statements of Cash Flows--Fiscal Years Ended October 30, 2016, October 25, 2015, and October 26, 2014.

Notes to Consolidated Financial Statements--October 30, 2016.

Report of Independent Registered Public Accounting Firm

FINANCIAL STATEMENT SCHEDULES

The following consolidated financial statement schedule of Hormel Foods Corporation required pursuant to Item 15(c) is submitted herewith:

Schedule II - Valuation and Qualifying Accounts and Reserves...F-3

FINANCIAL STATEMENTS AND SCHEDULES OMITTED

All other financial statements and schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore have been omitted.

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F-3

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

Valuation reserve deduction from assets account:

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.

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LIST OF EXHIBITS HORMEL FOODS CORPORATION

NUMBER DESCRIPTION OF DOCUMENT 2.1(1) Purchase Agreement by and among Hormel Foods Corporation, Applegate Farms, LLC, the management sellers listed on Exhibit A, Weiser, Inc., Stephen M. McDonnell, SPC Partners IV, L.P., K&E Investment Partners, L.P. and Applegate Investment Corporation, dated May 26, 2015. (Incorporated by reference to Exhibit 2.1 to Hormels Quarterly Report on Form 10-Q for the quarter ended April 26, 2015, File No. 001-02402.) Exhibits

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document identified in the agreement have been omitted pursuant to Item 601(b)(2) of Regulation S-K and will be furnished to the Commission upon request.

3.1(2) Restated Certificate of Incorporation as amended January 27, 2016.

3.2(1) Bylaws as amended to date. (Incorporated by reference to Exhibit 3(ii) to Hormels Report on Form 8-K dated September 26, 2016, File No. 001-02402.)

4.1(1) Indenture dated as of April 1, 2011, between the Company and U.S. Bank National Association. (Incorporated by reference to Exhibit 4.3 to Hormels Registration Statement on Form S-3 filed on April 4, 2011, File No. 333-173284.)

4.2(1) Form of 4.125% Notes due 2021. (Incorporated by reference to Exhibit 4.1 to Hormels Current Report on Form 8-K dated April 11, 2011, File No. 001-02402.)

4.3 Pursuant to Item 601(b)(4)(iii) of Regulation S-K, copies of instruments defining the rights of holders of certain long-term debt are not filed. Hormel agrees to furnish copies thereof to the Securities and Exchange Commission upon request.

10.1(1)(3) Hormel Foods Corporation Operators Shares Incentive Compensation Plan. (Incorporated by reference to Appendix A to Hormels definitive Proxy Statement filed on December 19, 2012, File No. 001-02402.)

10.2(1)(3) Hormel Foods Corporation Supplemental Executive Retirement Plan (2007 Restatement). (Incorporated by reference to Exhibit 10.2 to Hormels Current Report on Form 8-K dated November 21, 2011, File No. 001-02402.)

10.3(1)(3) First Amendment of Hormel Foods Corporation Supplemental Executive Retirement Plan (2007 Restatement). (Incorporated by reference to Exhibit 10.3 to Hormels Current Report on Form 8-K dated November 21, 2011, File No. 001-02402.)

10.4(1)(3) Second Amendment of Hormel Foods Corporation Supplemental Executive Retirement Plan (2007 Restatement). (Incorporated by reference to Exhibit 10.4 to Hormels Current Report on Form 8-K dated November 21, 2011, File No. 001-02402.)

10.5(1)(3) Third Amendment of Hormel Foods Corporation Supplemental Executive Retirement Plan (2007 Restatement). (Incorporated by reference to Exhibit 10.5 to Hormels Current Report on Form 8-K dated November 21, 2011, File No. 001-02402.)

10.6(1)(3) Hormel Foods Corporation 2000 Stock Incentive Plan (Amended 1-31-2006). (Incorporated by reference to Exhibit 10.1 to Hormels Current Report on Form 8-K dated January 31, 2006, File No. 001-02402.)

10.7(1)(3) Hormel Foods Corporation Executive Deferred Income Plan II (November 21, 2011 Restatement). (Incorporated by reference to Exhibit 10.1 to Hormels Current Report on Form 8-K dated November 21, 2011, File No. 001-02402.)

10.8(1)(3) Form of Indemnification Agreement for Directors and Officers. (Incorporated by reference to Exhibit 10.1 to Hormels Quarterly Report on Form 10-Q for the quarter ended April 29, 2012, File No. 001-02402.)

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 10.9(1)(3) Hormel Foods Corporation Nonemployee Director Deferred Stock Plan (Plan Adopted October 4, 1999; Amended and Restated Effective January 1, 2008). (Incorporated by reference to Exhibit 10.6 to Hormels Annual Report on Form 10-K for the fiscal year ended October 26, 2008, File No. 001-02402.)

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LIST OF EXHIBITS (CONTINUED) HORMEL FOODS CORPORATION

NUMBER DESCRIPTION OF DOCUMENT

10.10(1)(3) Hormel Foods Corporation 2009 Nonemployee Director Deferred Stock Plan (Plan Adopted November 24, 2008). (Incorporated by reference to Exhibit 10.2 to Hormels Quarterly Report on Form 10-Q for the quarter ended January 25, 2009, File No. 001-02402.)

10.11(1)(3) Hormel Foods Corporation 2009 Long-Term Incentive Plan. (Incorporated by reference to Appendix A to Hormels definitive Proxy Statement filed on December 18, 2013, File No. 001-02402.)

10.12(1)(3) Hormel Survivor Income Plan for Executives (1993 Restatement). (Incorporated by reference to Exhibit 10.11 to Hormels Annual Report on Form 10-K for the fiscal year ended October 29, 2006, File No. 001-02402.)

10.13(1) Underwriting Agreement, dated as of April 4, 2011, by and between the Company and J.P. Morgan Securities LLC and Merrill Lynch, Pierce, Fenner, & Smith Incorporated as representatives of the several underwriters named in Schedule 1 thereto. (Incorporated by reference to Exhibit 1.1 to Hormels Current Report on Form 8-K dated April 11, 2011, File No. 001-02402.)

11.1(2) Statement re: computation of per share earnings. (Included in Exhibit 13.1 filed with this Annual Report on Form 10-K for the fiscal year ended October 30, 2016.)

13.1(2) Pages 14 through 70 of the Annual Stockholders Report for the fiscal year ended October 30, 2016.

21.1(2) Subsidiaries of the Registrant.

23.1(2) Consent of Independent Registered Public Accounting Firm.

24.1(2) Power of Attorney.

31.1(2) Certification Required Under Section 302 of the Sarbanes-Oxley Act of 2002.

31.2(2) Certification Required Under Section 302 of the Sarbanes-Oxley Act of 2002.

32.1(2) Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 99.3(1) U.S. $700,000,000 Amended and Restated Credit Agreement, dated as of June 24, 2015, between the Company, Wells Fargo Bank, National Association, as Administrative Agent, and the lenders identified on the signature pages thereof. (Incorporated by reference to Exhibit 99 to Hormels Current Report on Form 8-K dated June 24, 2015, File No. 001-02402.)

101.INS(2) XBRL Instance Document

101.SCH(2) XBRL Taxonomy Extension Schema Document

101.CAL(2) XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF(2) XBRL Taxonomy Extension Definition Linkbase Document

101.LAB(2) XBRL Taxonomy Extension Labels Linkbase Document

101.PRE(2) XBRL Taxonomy Extension Presentation Linkbase Document

(1) Document has previously been filed with the Securities and Exchange Commission and is incorporated herein by reference. (2) These exhibits transmitted via EDGAR. (3) Management contract or compensatory plan or arrangement.

RESTATED CERTIFICATE OF INCORPORATION OF HORMEL FOODS CORPORATION

(As Amended, January 27, 2016)

This Corporation was originally incorporated September 20, 1928, under the name Geo. A. Hormel & Company.

This Certificate of Incorporation is restated as of January 28, 1997, duly adopted in accordance with the provisions of Section 245 of the Delaware Corporation Law. This restatement only restates and integrates and does not further amend any provision of the Corporations Certificate of Incorporation as theretofore amended or supplemented, and there is no discrepancy between those provisions and the provisions of this Restated Certificate.

FIRST: The name of this corporation is HORMEL FOODS CORPORATION.

SECOND: Its registered office in the State of Delaware is located at 1209 Orange Street, in the City of Wilmington, County of New Castle, Delaware 19801. The name and address of its registered agent is the Corporation Trust Company, 1209 Orange Street, Wilmington, Delaware 19801.

THIRD: The nature of the business, or objects or purposes to be transacted, promoted or carried on are to do any or all of the things herein mentioned as fully and to the same extent as natural persons might or could do, and in any part of the world, viz:

(a) To manufacture, buy and in any manner acquire and to prepare for market and import, export, sell and deal in, both at wholesale and retail and on its own account and on commission, all kinds of meats and meat products and all kinds of food and food products, and in connection therewith to carry on the business of slaughtering livestock and poultry and to deal in and with all kinds of products and by-products arising therefrom; to own and operate packing houses and canning establishments and to market, sell and deal in and with all articles produced or handled in connection therewith; to acquire by purchase or lease and to sell, mortgage, own, manage and operate such real estate and such personal property as may be necessary or convenient in the conduct of its business; to manufacture ice and to operate refrigeration plants, to own and operate refrigerator and other cars, either as owner or lessee, and generally to do all those things which are incidental to the aforesaid business.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (b) To buy, or otherwise acquire, sell, lease, mortgage, own, manage, and operate farms and plantations; to deal in the products thereof; and to transact all business incidental or appurtenant thereto.

(c) To manufacture, purchase, or otherwise acquire, to hold, own, mortgage, pledge, sell, assign, and transfer, or otherwise dispose of, to invest, trade in, deal in and deal with goods, wares, and merchandise and property of every class and description.

(d) To acquire, by purchase or otherwise, to own, hold, buy, sell, convey, lease, mortgage or otherwise encumber real estate or other property, personal or mixed.

(e) To acquire the good will, trademarks, rights and property, and to undertake the whole or any part of the business or liabilities of any person, firm, association or corporation; and to pay for the same in cash, the stock of this corporation, bonds, debentures, promissory notes, or otherwise; and to hold or in any manner to dispose of the whole or any part of the property so purchased; to conduct in any lawful manner the whole or any part of the business so acquired; and to exercise all the powers necessary or convenient in and about the conduct and management of such business.

(f) To apply for, obtain, register, lease, purchase, or otherwise to acquire, and to hold, use, own, operate and introduce, and to sell, assign, or otherwise dispose of, any trademarks, trade names, patents, inventions, improvements and processes used in connection with or secured under Letter Patent of the United States, or elsewhere, or otherwise: and to use, exercise, develop, grant licenses in respect of, or otherwise turn to account, any such trademarks, patents, licenses, processes and the like or any such property or rights.

(g) To enter into, perform and carry out contract of every kind with any person, firm, association or corporation, and to draw, make, accept, endorse, discount, execute and issue promissory notes, bills of exchange, warrants, bonds, debentures and other negotiable or transferable instruments for any of the objects or purposes of the corporation, and to secure the same by mortgage, pledge, deed of trust, or otherwise.

(h) To hold, purchase or otherwise acquire, to sell, assign, transfer, mortgage, pledge or otherwise dispose of, shares of the capital stock and bonds, debentures or other evidences of indebtedness created by any other corporation or corporations, and, while the holder thereof, to exercise all the rights and privileges of ownership, including the right to vote thereon.

(i) To purchase, hold, sell and transfer shares of its own capital stock; provided that the corporation shall not use its funds or property for the purchase of its own shares of capital stock when such use would cause any impairment of its capital, and that shares of its own capital stock belonging to the corporation shall not be voted upon, directly or indirectly.

(j) To negotiate policies of insurance, for its own benefit or for the benefit of others, upon the life or lives of any one or more of its officers or employees and to pay the premiums thereon; to cause or permit itself to be made the beneficiary of existing policies of insurance on the life or lives of any one or more of its officers or

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document employees and thereafter to pay the premiums thereon; to cause other persons to be made the beneficiaries of existing policies of insurance on the life or lives of any one or more of its officers or employees and thereafter to pay the premiums thereon; and to pay the premiums on existing policies of insurance, on the life or lives of any one or more of its officers or employees, in which either this corporation or any other person or persons is or are named as beneficiary or beneficiaries.

(k) To do any and all things set forth herein as objects, purposes, powers or otherwise, and to do all other things which corporations organized under the laws of the State of Delaware may do, to the same extent and as fully as natural persons might do, so far as may be permitted by law; provided, however, that nothing herein contained shall be deemed to authorize this corporation to construct, hold, maintain or operate within the State of Delaware railroads, railways, telegraph or telephone lines, or to carry on within said State any public utility business.

(l) In general, to carry on any other business in connection with the foregoing, and to have and to exercise all the powers conferred, now or hereafter, by the laws of Delaware upon this corporation. The foregoing clauses shall be construed both as objects and powers; and it is hereby expressly provided that the foregoing enumeration of specific powers shall not be held to limit or restrict in any manner the powers of this corporation.

FOURTH: The total number of shares of all classes of stock which the Corporation shall have authority to issue is 2,160,000,000 shares, divided into three classes consisting of 1,600,000,000 shares of Common Stock, par value $.01465 per share (Common Stock), 400,000,000 shares of Nonvoting Common Stock, par value $.01 per share (Nonvoting Common Stock) and 160,000,000 shares of Preferred Stock, par value $.01 per share (Preferred Stock). (Amended January 26, 2000; February 1, 2011; January 27, 2016)

Section A. Preferred Stock.

The Board of Directors is authorized at any time and from time to time, subject to any limitations prescribed by law, to provide for the issuance of the shares of Preferred Stock in one or more series, and by filing a certificate pursuant to the applicable law of the State of Delaware, to establish from time to time the number of shares to be included in each such series, and to fix the designation, powers, preferences and rights of the shares of each such series and any qualifications, limitations or restrictions thereof. The number of authorized shares of Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the Common Stock, without a vote of the holders of the Preferred Stock, or of any series thereof, unless a vote of any such holders is required pursuant to the certificate or certificates establishing the series of Preferred Stock.

Section B. Common Stock.

1. Voting rights.

Each holder of record of Common Stock shall he entitled to one (1) vote on all matters for each share of Common Stock owned of record by such holder.

Subject to the rights of the holders of Preferred Stock and any other class or series of stock having a preference as to dividends over the Common Stock then outstanding, the holders of the Common Stock shall be entitled to receive, to the extent permitted by law, such dividends as may be declared from time to time by the Board of Directors, provided, however, that:

(a) No cash dividend or other distribution of assets, rights, evidence of indebtedness or any other property shall be declared, paid or made to the holders of Common Stock unless a cash dividend or other such distribution in like kind and equal per-share amount is simultaneously declared, paid or made to the holders of the Nonvoting Common Stock; and that

(b) Stock dividends declared on the Common Stock shall be payable solely in shares of Common Stock. No stock dividend shall be declared or paid on the Common Stock unless a stock dividend payable in shares of Nonvoting Common Stock, proportionate on a per-share basis to the dividend on the Common Stock, is simultaneously declared and paid on the Nonvoting Common Stock.

3. Liquidation.

In the event of the voluntary or involuntary liquidation, dissolution, distribution of assets or winding-up of the Corporation, after distribution in full of the preferential amounts, if any, to be distributed to the holders of shares of the Preferred Stock and any other class or series of stock having a preference as to liquidating distributions over the Common Stock, the holders of the Common Stock shall be entitled to share ratably on a per-share basis with the holders of the Nonvoting Common Stock as a single class in all of the remaining assets of the Corporation of whatever kind available for distribution to stockholders. A consolidation or merger of the Corporation with and into any other corporation or corporations shall not be deemed to be a liquidation, dissolution, or winding-up of the Corporation as those terms are used in this paragraph 3.

Section C. Nonvoting Common Stock.

1. Voting Rights.

Except as otherwise required by law or provided in this Certificate of Incorporation, the holders of shares of Nonvoting Common Stock shall have no vote on any matter.

2. Dividends.

Subject to the rights of the holders of Preferred Stock and any other class or series of stock having a preference as to dividends over the Nonvoting Common Stock then outstanding, the holders of the Nonvoting Common Stock shall be entitled to receive, to the extent permitted by law, such dividends as may be declared from time to time by the Board of Directors, provided, however, that:

(a) No cash dividend or other distribution of assets, rights, evidence of indebtedness or any other property shall be declared, paid or made to the holders of the Nonvoting Common Stock unless a cash dividend or other

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document such distribution in like kind and equal per-share amount is simultaneously declared, paid or made to the holders of Common Stock; and that

(b) Stock dividends declared on the Nonvoting Common Stock shall be payable solely in shares of Nonvoting Common Stock. No stock dividend shall be declared or paid on the Nonvoting Common Stock unless a stock dividend payable in shares of Common Stock, proportionate on a per-share basis to the dividend on the Nonvoting Common Stock, is simultaneously declared and paid on the Common Stock.

3. Liquidation.

In the event of the voluntary or involuntary liquidation, dissolution, distribution of assets or winding-up of the Corporation, after distribution in full of the preferential amounts, if any, to be distributed to the holders of shares of the Preferred Stock and any other class or series of stock having a preference as to liquidating distributions over the Nonvoting Common Stock, the holders of the Nonvoting Common Stock shall be entitled to share ratably on a per-share basis with the holders of the Common Stock as a single class in all of the remaining assets of the Corporation of whatever kind available for distribution to stockholders. A consolidation or merger of the Corporation with and into any other corporation or corporations shall not be deemed to be a liquidation, dissolution, or winding-up of the Corporation as those terms are used in this paragraph 3.

FIFTH: The corporation is to have perpetual existence.

SIXTH: The private property of the stockholders of the corporation shall not be subject to the payment of corporate debts of the corporation to any extent whatever.

SEVENTH: Whenever a compromise or arrangement is proposed between this corporation and its creditors or any class of them and/or between this corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of this corporation or of any creditor or stockholder thereof, or on the application of any receiver or receivers appointed for this corporation under the provisions of Section 291 of Title 8 of the Delaware Code, or on the application of trustees in dissolution or of any receiver or receivers appointed for this corporation under the provisions of Section 279 of Title 8 of the Delaware Code, order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this corporation, as the case may be, to be summoned in such manner as the said Court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of this corporation as consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall. if sanctioned by the Court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of this corporation, as the case may be, and also on this corporation.

EIGHTH: In furtherance, and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized:

(a) To make, alter, amend and rescind the Bylaws of this corporation;

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (b) From time to time to determine whether and to what extent and at which times and places and under what conditions and regulations, the accounts and books of this corporation (other than the stock ledger) or any of them, shall be open to inspection of stockholders; and no stockholder shall have any right of inspecting any account, book, or document of this corporation except as conferred by statute, unless authorized by a resolution of stockholders or directors;

(c) To fix the amount to be reserved as working capital; to authorize and cause to be executed mortgages and liens upon the real and personal property and franchises of this corporation;

(d) By resolution or resolutions passed by a majority of the whole Board, to designate one or more committees, each committee to consist of two or more of the directors of the corporation, which, to the extent provided in said resolution or resolutions, or in the Bylaws of the corporation shall have and may exercise the powers of the Board of Directors in the management of the business and the affairs of the corporation, and may have power to authorize the seal of the corporation to be affixed to all papers which may require it. Such committee or committees shall have such name or names as may be stated in the Bylaws of the corporation or as may be determined from time to time by resolution adopted by the Board of Directors.

Both stockholders and directors shall have the power, if the Bylaws so provide, to hold their meetings either within or without the State of Delaware; the corporation shall also have the power, if the Bylaws so provide, to have one or more offices within or without the State of Delaware, in addition to the principal office in Delaware, and to keep the books of this corporation (subject to the provisions of the statute) outside of the State of Delaware at such places as may from time to time be designated by the Board of Directors.

This corporation may in its Bylaws confer powers additional to the foregoing upon the directors and may also confer upon them powers in addition to the powers and authorities expressly conferred upon them by the statute.

NINTH: Except as otherwise expressly provided in this Article NINTH:

(i) any merger or consolidation of the corporation with or into any other corporation;

(ii) any sale, lease, exchange or other disposition of all or substantially all of the assets of the corporation to or with any other corporation, person or other entity;

(iii) the issuance or transfer of any securities of the corporation to any other corporation, person or other entity in exchange for assets or securities or a combination thereof (except assets or securities or a combination thereof so acquired in a single transaction or a series of related transactions having an aggregate fair market value of less than $5,000,000); or

(iv) the issuance or transfer of any securities of the corporation to any other corporation, person or other entity for cash, shall require the affirmative vote of the holders of

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (a) at least 75% of the outstanding shares of capital stock of the corporation entitled to vote generally in the election of directors, (considered for the purposes of this Article as one class), and

(b) at least a majority of the outstanding shares of capital stock of the corporation entitled to vote generally in the election of directors which are not beneficially owned, directly or indirectly, by such other corporation, person or other entity, if, as of the record date for the determination of stockholders entitled to notice thereof and to vote thereon, such other corporation, person or other entity is the beneficial owner, directly or indirectly, of 5% or more of the outstanding shares of capital stock of the corporation entitled to vote generally in the election of directors. Such affirmative vote shall be required notwithstanding the fact that no vote may be required, or that some lesser percentage may be specified by law or in any agreement with any national securities exchange.

The provisions of this Article NINTH shall not apply to any transaction described in clauses (i), (ii), (iii) or (iv) of the first paragraph of this Article, (i) with another corporation if a majority, by vote, of the outstanding shares of all classes of capital stock of such other corporation entitled to vote generally in the election of directors, (considered for this purpose as one class), is owned of record or beneficially by the corporation and/or its subsidiaries; or (ii) with another corporation, person or other entity if the Board of Directors of the corporation shall by resolution have approved a memorandum of understanding with such other corporation, person or other entity with respect to and substantially consistent with such transaction prior to the time such other corporation, person or other entity became the beneficial owner, directly or indirectly, of 5% or more of the outstanding shares of capital stock of the corporation entitled to vote generally in the election of directors.

For the purposes of this Article NINTH, a corporation, person or other entity shall be deemed to be the beneficial owner of any shares of capital stock of the corporation (i) which it has the right to acquire pursuant to any agreement, or upon exercise of conversion rights, warrants or options, or otherwise, or (ii) which are

8 beneficially owned, directly or indirectly (including shares deemed owned through application of clause (i) of this paragraph above), by any other corporation, person or other entity (a) with which it or its affiliate or associate (as referenced below) has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of capital stock of the corporation or (b) which is its affiliate or associate as those terms were defined in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934 as in effect on December 1, 1979. For the purposes of this Article NINTH, the outstanding shares of capital stock of the corporation shall include shares deemed owned through the application of clauses (i) and (ii) of this paragraph but shall not include any other shares which may be issuable pursuant to any agreement, or upon exercise of conversion rights, warrants or options, or otherwise.

The Board of Directors of the corporation shall have the power and duty to determine for the purposes of this Article NINTH, on the basis of information then known to it, whether (i) any corporation, person or other entity beneficially owns, directly or indirectly, 5% or more of the outstanding shares of capital stock of the corporation entitled to vote generally in the election of directors, or is an affiliate or an associate (as referenced above) of another, (ii) any proposed sale, lease, exchange or other disposition of part of the assets of the corporation involves a substantial part of the assets of the corporation, (iii) assets or securities, or a combination thereof, to be acquired in exchange for securities of the corporation, have an aggregate fair market value of less than $5,000,000 and whether the same are proposed to be acquired in a single transaction or a series of related

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document transactions, and (iv) the memorandum of understanding referred to above is substantially consistent with the transaction to which it relates. Any such determination by the Board shall be conclusive and binding for all purposes of this Article NINTH.

Notwithstanding any other provision of this Certificate of Incorporation or the Bylaws (and in addition to any other vote that may be required by law, this Certificate of Incorporation or the Bylaws), there shall be required to amend, alter, change, or repeal, directly or indirectly, this Article NINTH the affirmative vote of (i) at least 75% of the outstanding shares of capital stock of the corporation entitled to vote generally in the election of directors and (ii) at least a majority of the outstanding shares of capital stock of the corporation entitled to vote generally in the election of directors exclusive of all voting stock of the corporation beneficially owned, directly or indirectly by any corporation, person or entity which is, as of the record date for the determination of stockholders entitled to notice of such amendment, alteration, change or repeal, and to vote thereon, the beneficial owner, directly or indirectly, of 5% or more of the outstanding shares of capital stock of the corporation entitled to vote generally in the election of directors.

TENTH: Except as otherwise provided in the Certificate of Incorporation or the Bylaws, the corporation reserves the right to amend, alter, change or repeal any

9 provision contained in this Agreement of Merger which constitutes the Certificate of Incorporation, as amended, of the corporation in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation.

ELEVENTH: A director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages or breach of fiduciary duty as a director, except for liability (i) for any breach of the directors duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law or (iv) for any transaction from which the director derived any improper personal benefit. If the Delaware General Corporation law is amended after approval by the stockholders of this provision to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the Delaware General Corporation law, as so amended.

Any repeal or modification of the foregoing paragraph by the stockholders of the Corporation shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification.

(in thousands, except per share amounts) 2016 2015 2014 2013 2012

Operations Net Sales $9,523,224 $9,263,863 $9,316,256 $8,751,654 $8,230,670 Net Earnings 890,517 687,264 606,026 530,076 504,961 Net Earnings Attributable to Hormel Foods Corporation 890,052 686,088 602,677 526,211 500,050 % of net sales 9.35% 7.41% 6.47% 6.01% 6.08% EBIT (1) 1,323,430 1,066,144 928,271 802,124 759,763 % of net sales 13.90% 11.51% 9.96% 9.17% 9.23% EBITDA (2) 1,455,398 1,199,578 1,058,315 926,974 879,257 % of net sales 15.28% 12.95% 11.36% 10.59% 10.68% Return on Invested Capital (3) 19.04% 15.62% 15.79% 14.92% 16.43%

Financial Position Total Assets 6,370,067 6,139,831 5,455,619 4,915,880 4,563,966 Long-term Debt less Current Maturities 250,000 250,000 250,000 250,000 250,000 Hormel Foods Corporation Shareholders Investment 4,448,006 3,998,198 3,605,678 3,311,040 2,819,455

Selected Cash Flow Data Depreciation and Amortization 131,968 133,434 130,044 124,850 119,494 Capital Expenditures 255,524 144,063 159,138 106,762 132,303 Acquisitions of Businesses 280,889 770,587 466,204 665,415 168 Share Repurchase 87,885 24,928 58,937 70,819 61,366 Dividends Paid $ 296,493 $ 250,834 $ 203,156 $ 174,320 $ 152,204

Common Stock** Weighted-Average Shares Outstanding Basic 529,290 528,143 527,624 528,635 526,932 Weighted-Average Shares Outstanding Diluted 542,473 541,002 540,431 540,449 537,782 Earnings per Share Basic $ 1.68 $ 1.30 $ 1.14 $ 1.00 $ 0.95 Earnings per Share Diluted 1.64 1.27 1.12 0.97 0.93 Dividends per Share 0.58 0.50 0.40 0.34 0.30 Hormel Foods Corporation Shareholders Investment per Share 8.42 7.57 6.84 6.28 5.36

The Company provides EBIT, EBITDA, and Return on Invested Capital because these measures are useful to investors as indicators of operating strength and performance relative to prior years, and are typically used to benchmark our Companys performance against other companies in our industry. Management uses EBIT as a component of certain executive incentive plans, but does not utilize EBITDA for any material purpose. These measures are calculated as follows:

(1) EBIT: Net Earnings Attributable to Hormel Foods Corporation $ 890,052 $ 686,088 $ 602,677 $ 526,211 $ 500,050 Plus: Income Tax Expense 426,698 369,879 316,126 268,431 253,374 Plus: Interest Expense 12,871 13,111 12,704 12,453 12,859 Less: Interest and Investment Income 6,191 2,934 3,236 4,971 6,520 EBIT $1,323,430 $1,066,144 $ 928,271 $ 802,124 $ 759,763 (2) EBITDA: EBIT per (1) above 1,323,430 1,066,144 928,271 802,124 759,763 Plus: Depreciation and Amortization 131,968 133,434 130,044 124,850 119,494 EBITDA $1,455,398 $1,199,578 $1,058,315 $ 926,974 $ 879,257 (3) Return on Invested Capital: EBIT per (1) above 1,323,430 1,066,144 928,271 802,124 759,763 X (1 Effective Tax Rate*) 67.59% 64.97% 65.59% 66.22% 66.37% After-tax EBIT $ 894,506 $ 692,674 $ 608,887 $ 531,166 $ 504,257 Divided by: Total Debt 250,000 435,000 250,000 250,000 250,000 Hormel Foods Corporation Shareholders Investment 4,448,006 3,998,198 3,605,678 3,311,040 2,819,455 Total Debt and Shareholders Investment $4,698,006 $4,433,198 $3,855,678 $3,561,040 $3,069,455 Return on Invested Capital 19.04% 15.62% 15.79% 14.92% 16.43%

* Excluding earnings attributable to noncontrolling interests.

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

Managements Discussion and Analysis of Financial Condition and Results of Operations

Executive Overview raw material costs and soft demand for retail meat products in China. General corporate expense was higher due primarily to an Fiscal 2016: Hormel Foods achieved record earnings for fiscal increase in employee-related expenses. 2016, as we celebrated the Companys 125th anniversary. Sales for the year were $9.5 billion, a 3 percent increase from last year with Our financial performance continued to generate strong operating three of five segments contributing to the sales growth. Fiscal 2016 cash flows. We acquired Justins, LLC, for $280.9 million. The included an extra week compared to the prior year. Net earnings Justins® brand is a leader in the nut butter-based snacking attributable to the Company for fiscal 2016 were $890.1 million, a category. We repurchased 2.4 million shares of common stock in 30 percent increase from $686.1 million in fiscal 2015 with four fiscal 2016, spending $87.9 million. The annual dividend for 2017 segments delivering double-digit earnings growth. Diluted earnings will be $0.68 per share and marks the 51st consecutive year of per share for fiscal 2016 increased 29 percent to $1.64 compared to

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document $1.27 per share last year. Fiscal 2016 net earnings increased 25 dividend increases, representing an increase of 17 percent after a percent over 2015 non-GAAP adjusted net earnings of $714.4 16 percent increase last year. million. Fiscal 2016 diluted earnings per share increased 24 percent 15 over 2015 non-GAAP adjusted net earnings of $1.32 per share (see Fiscal 2017 Outlook: We are pleased with our momentum heading explanation of non-GAAP financial measures in the Consolidated into fiscal 2017 and expect revenue growth to continue as we Results section). progress through the year. The inclusion of Justins® specialty nut butters and contributions from branded products such as Significant performance improvements, including double-digit SKIPPY® peanut butter and Herdez® salsas are expected to drive earnings increases for the Refrigerated Foods, Jennie-O Turkey improved Grocery Products results. We anticipate strong demand Store (JOTS), Grocery Products, and Specialty Foods segments, for value-added retail and foodservice products in Refrigerated drove financial results for the year. The International & Other Foods, supported by contributions from Applegate and favorable segment also had improved profitability compared to the prior year. input costs. Refrigerated Foods sales growth will be muted by the Financial performance for the Refrigerated Foods segment was led anticipated sale of Farmer John. The JOTS segment should benefit by solid gains in many value-added products including foodservice from increased demand for Jennie-O® branded products and stable sales of Hormel® Bacon1TM fully cooked bacon and Hormel® Fire grain prices. Specialty Foods is expected to generate sales and BraisedTM meats and retail sales of Hormel Gatherings® party trays earnings growth net of the DCB divestiture, benefiting from and Hormel® Natural Choice® lunchmeats. The addition of continued growth of Muscle Milk® protein nutrition products. We Applegate and favorable market conditions also benefited the expect the International & Other segment to achieve year-over-year Refrigerated Foods segment. The JOTS segment delivered improved results through the expansion of our business in China, significant sales and earnings growth as they recovered from the led by the opening of our new plant in Jiaxing, China, along with effects of highly pathogenic avian influenza (HPAI) in the prior increased sales of the SPAM® and SKIPPY® family of products. year. Strong demand for fresh, lean ground turkey products was a leading contributor to the years improved performance. The We continue to put a top priority on product innovation, process Grocery Products segment experienced notable sales growth for improvement, and building our branded, value-added product lines. SKIPPY® peanut butter, the SPAM® family of products, and We strive to stay current with the dynamics of a changing Hormel® chili. The segment was also aided by growth of Wholly marketplace and changing consumer needs, introducing new Guacamole® refrigerated dips and Herdez® salsas in MegaMex flavors, convenience, and creative menu options in order to keep Foods along with favorable input costs. Specialty Foods segment our products relevant with consumers and customers. We plan to profit improved on the contributions of Muscle Milk® sports support numerous iconic brands with continued advertising in nutrition products, offsetting the impacts of the divestiture of fiscal 2017. Strong cash flow, along with a solid balance sheet, will Diamond Crystal Brands (DCB) in May. The International & Other enable us to continue to return cash to shareholders while segment results exceeded last year as improved contributions from providing the foundation to expand our business through internal pork exports and growth of SKIPPY® peanut butter in China investment and strategic acquisitions. covered higher Critical Accounting Policies

This discussion and analysis of financial condition and results of operations is based upon the consolidated financial statements of Hormel Foods Corporation (the Company), which have been prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP). The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. The Company evaluates, on an ongoing basis, its estimates for reasonableness as changes occur in its business environment. The Company bases its estimates on experience, the use of independent third-party specialists, and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document values of assets and liabilities that are not readily apparent from end of the fiscal year. The level of customer performance and the other sources. Actual results may differ materially from these historical spend rate versus contracted rates are significant estimates under different assumptions or conditions. estimates used to determine these liabilities.

Critical accounting policies are defined as those that are reflective Inventory Valuation: The Company values its pork inventories at of significant judgments, estimates, and uncertainties, and the lower of cost or USDA market prices (primal values). When potentially result in materially different results under different the carcasses are disassembled and transferred from primal assumptions and conditions. The Company believes the following processing to various manufacturing departments, the primal are its critical accounting policies: values, as adjusted by the Company for product specifications and further processing, become the basis for calculating inventory Stock Split: Unless otherwise noted, all prior year share amounts values. Turkey raw materials are represented by the deboned meat and per share calculations throughout this Annual Report have quantities. The Company values these raw materials using a been restated to reflect the impact of the two-for-one stock split concept referred to as the meat cost pool. The meat cost pool is distributed on February 9, 2016. determined by combining the cost to grow turkeys with processing costs, less any net sales revenue from by-products created from the Revenue Recognition: The Company recognizes sales when title processing and not used in producing Company products. The passes upon delivery of its products to customers, net of applicable Company has developed a series of ratios using historical data and provisions for discounts, returns, and allowances. Products are current market conditions (which themselves involve estimates and delivered upon receipt of customer purchase orders with acceptable judgment determinations by the Company) to allocate the meat terms, including price and reasonably assured collectability. cost pool to each meat component. Substantially all inventoriable expenses, meat, packaging, and supplies are valued by the average The Company offers various sales incentives to customers and cost method. consumers. Incentives that are offered off-invoice include prompt pay allowances, will call allowances, spoilage allowances, and Goodwill and Other Indefinite-Lived Intangibles: Indefinite- temporary price reductions. These incentives are recognized as lived intangible assets are originally recorded at their estimated fair reductions of revenue at the time title passes. Coupons are used as values at date of acquisition and the residual of the purchase price an incentive for consumers to purchase various products. The is recorded to goodwill. Goodwill and other indefinite-lived coupons reduce revenues at the time they are offered, based on intangible assets are allocated to reporting units that will receive estimated redemption rates. Promotional contracts are performed the related sales and income. Goodwill and indefinite-lived by customers to promote the Companys products to consumers. intangible assets are tested annually for impairment, or more These incentives reduce revenues at the time of performance frequently if impairment indicators arise. through direct payments and accrued promotional funds. Accrued promotional funds are unpaid liabilities for promotional contracts In conducting the annual impairment test for goodwill, the in process or completed at the end of a quarter or fiscal year. Company first performs a qualitative assessment to determine Promotional contractual accruals are based on agreements with whether it is more likely than not (> 50% likelihood) that the fair customers for defined performance. The liability relating to these value of any reporting unit is less than its carrying amount. If the agreements is based on a review of the outstanding contracts on Company concludes this is the case, then a two-step quantitative which performance has taken place but for which the promotional test for goodwill impairment is performed for the appropriate payments relating to such contracts remain unpaid as of the 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, each reporting unit assesses critical areas that may impact their business, including macroeconomic conditions and the related impact, market-related exposures, any plans to market all or a portion of their business,

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document competitive changes, new or discontinued product lines, changes in key personnel, or any other potential risks to their projected 16 financial results.

If performed, the quantitative goodwill impairment test is a two- step process performed at the reporting unit level. First, the fair reporting unit is estimated using discounted cash flow valuations value of each reporting unit is compared to its corresponding (Level 3), which incorporate assumptions regarding future growth carrying value, including goodwill. The fair value of each rates, terminal values, and discount rates. The estimates and mortality rates, discount rates, overall compensation increases, assumptions used consider historical performance and are expected return on plan assets, and health care cost trend rates. The consistent with the assumptions used in determining future profit Company considers historical data as well as current facts and plans for each reporting unit, which are approved by the circumstances when determining these estimates. The Company Companys Board of Directors. If the first step results in the uses third-party specialists to assist management in the carrying value exceeding the fair value of any reporting unit, then a determination of these estimates and the calculation of certain second step must be completed in order to determine the amount of employee benefit expenses and the outstanding obligation. goodwill impairment that should be recorded. In the second step, the implied fair value of the reporting units goodwill is Income Taxes: The Company records income taxes in accordance determined by allocating the reporting units fair value to all of its with the liability method of accounting. Deferred taxes are assets and liabilities other than goodwill in a manner similar to a recognized for the estimated taxes ultimately payable or purchase price allocation. The implied fair value of the goodwill recoverable based on enacted tax law. Changes in enacted tax rates that results from the application of this second step is then are reflected in the tax provision as they occur. compared to the carrying amount of the goodwill and an impairment charge is recorded for the difference. The Company computes its provision for income taxes based on the statutory tax rates and tax planning opportunities available to it During fiscal 2016, 2015, and 2014, as a result of the qualitative in the various jurisdictions in which it operates. Significant testing performed, no impairment charges were recorded other than judgment is required in evaluating the Companys tax positions for the DCB assets held for sale in fiscal 2016 and 2015. and determining its annual tax provision. While the Company considers all of its tax positions fully supportable, the Company is In conducting the annual impairment test for its indefinite-lived occasionally challenged by various tax authorities regarding the intangible assets, the Company first performs a qualitative amount of taxes due. The Company recognizes a tax position in its assessment to determine whether it is more likely than not (> 50% financial statements when it is more likely than not that the likelihood) that an indefinite-lived intangible asset is impaired. If position will be sustained upon examination, based on the technical the Company concludes this is the case, then a quantitative test for merits of the position. That position is then measured at the largest impairment must be performed. Otherwise, the Company does not amount of benefit that is greater than 50 percent likely of being need to perform a quantitative test. realized upon ultimate settlement. A change in judgment related to the expected ultimate resolution of uncertain tax positions will be In conducting the initial qualitative assessment, the Company recognized in earnings in the quarter of such change. analyzes growth rates for historical and projected net sales and the results of prior quantitative tests performed. Additionally, the Contingent Liabilities: At any time, the Company may be subject Company assesses critical areas that may impact its intangible to investigations, legal proceedings, or claims related to the on- assets or the applicable royalty rates to determine if there are going operation of its business, including claims both by and factors that could indicate impairment of the asset. against the Company. Such proceedings typically involve claims related to product liability, contract disputes, wage and hour laws, If performed, the quantitative impairment test compares the fair employment practices, or other actions brought by employees, value to the carrying value of the indefinite-lived intangible asset. consumers, competitors, or suppliers. The Company routinely The fair value of indefinite-lived intangible assets is primarily assesses the likelihood of any adverse outcomes related to these determined on the basis of estimated discounted value, using the matters on a case by case basis, as well as the potential ranges of relief from royalty method (Level 3). This method incorporates losses and fees. The Company establishes accruals for its potential assumptions regarding future sales projections and discount rates. exposure, as appropriate, for claims against the Company when

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document If the carrying value exceeds fair value, the indefinite-lived losses become probable and reasonably estimable. Where the intangible asset is considered impaired and an impairment charge is Company is able to reasonably estimate a range of potential losses, recorded. Even if not required, the Company periodically elects to 17the Company records the amount within that range which perform the quantitative test in order to confirm the qualitative constitutes the Companys best estimate. The Company also assessment. discloses the nature and range of loss for claims against the Company when losses are reasonably possible and material. These Based on the qualitative assessment conducted in fiscal 2016, accruals and disclosures are determined based on the facts and performance of the quantitative test was not required for any of the circumstances related to the individual cases and require estimates Companys indefinite-lived intangible assets. No impairment and judgments regarding the interpretation of facts and laws, as charges were recorded for indefinite-lived intangible assets for well as the effectiveness of strategies or factors beyond our control. fiscal 2016, 2015, or 2014. Results of Operations

Employee Benefit Plans: The Company incurs expenses relating OVERVIEW to employee benefits, such as noncontributory defined benefit pension plans and post-retirement health care benefits. In accounting for these employment costs, management must make a The Company is a processor of branded and unbranded food products for variety of assumptions and estimates including retail, foodservice, and fresh product customers. The Company operates in the following five reportable segments:

Segment Business Conducted Grocery Products This 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 Companys MegaMex Foods, LLC (MegaMex) joint venture.

Refrigerated Foods This 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.

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

Specialty Foods This segment consists of the processing, marketing, and sale of nutritional and private label shelf-stable products to retail, foodservice, and industrial customers.

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

The Companys fiscal year consisted of 53 weeks in 2016. Fiscal years 2015 and 2014 consisted of 52 weeks.

FISCAL YEARS 2016 AND 2015:

Consolidated Results

Net Earnings and Diluted Earnings per Share

Fourth Quarter Ended Year Ended

October 30, October 25, October 30, October 25,

Net earnings $243.9 $187.2 30.3 $890.1 $686.1 29.7

Diluted earnings per share 0.45 0.35 28.6 1.64 1.27 29.1

Adjusted net earnings 243.9 199.9(1) 22.0 890.1 714.4(1) 24.6

Adjusted diluted earnings per share 0.45 0.37(1) 21.6 1.64 1.32(1) 24.2

(1) The non-GAAP adjusted financial measurements are presented to provide investors additional information to facilitate the comparison of past and present operations. The non-GAAP adjusted financial measurements are used for internal purposes to evaluate the results of operations and to measure a component of certain employee incentive plans in fiscal year 2015. Non-GAAP measurements are not intended to be a substitute for U.S. GAAP measurements in analyzing financial performance. These non-GAAP measurements are not in accordance with generally accepted accounting principles and may be different from non-GAAP measures used by other companies.

Adjusted net earnings and diluted net earnings per share exclude charges relating to the closure of the Stockton, California, manufacturing facility and the exit from international joint venture businesses in the first quarter of fiscal 2015, and charges relating to the goodwill impairment charge associated with the DCB business and an adjustment to the contingent consideration accrual for CytoSport in the fourth quarter of fiscal 2015. The tables below show the calculations to reconcile from the non-GAAP adjusted measures to the GAAP measures in both the fourth quarter and full year of fiscal 2015.

Fourth Quarter

2015 Diamond CytoSport

Non-GAAP Crystal Contingent

2016 Adjusted Brands Consideration 2015 GAAP

(in thousands, except per share amounts) Earnings Earnings Impairment Adjustment Earnings

Grocery Products $ 82,734 $ 78,772 $ $ $ 78,772

Refrigerated Foods 168,040 111,287 111,287

Jennie-O Turkey Store 92,299 73,227 73,227

Specialty Foods 20,182 35,015 (21,537) 8,870 22,348

International & Other 19,570 23,300 23,300

Total segment operating profit $ 382,825 $ 321,601 $(21,537) $8,870 $ 308,934

General corporate expense (17,325) (16,649) (16,649)

Net interest & investment expense (1,017) (3,341) (3,341)

Earnings before income taxes $ 364,483 $ 301,611 $(21,537) $8,870 $ 288,944

Income taxes (120,543) (101,713) (101,713)

Net earnings attributable to Hormel Foods Corporation $ 243,940 $ 199,898 $(21,537) $8,870 $ 187,231

Diluted net earnings per share $ 0.45 $ 0.37 $ (0.04) $ 0.02 $ 0.35

Fiscal Year

2015 Diamond CytoSport

Non-GAAP Stockton Crystal Contingent

(in thousands, 2016 Adjusted Plant International Brands Consideration 2015 GAAP

except per share amounts) Earnings Earnings Closure Business Exit Impairment Adjustment Earnings

Refrigerated Foods 585,652 424,968 424,968

Jennie-O Turkey Store 329,427 276,217 276,217

Specialty Foods 110,917 105,925 (21,537) 8,870 93,258

International & Other 78,409 87,864 (9,546) 78,318

Total segment operating profit $1,372,866 $1,134,082 $(10,526) $(9,546) $(21,537) $8,870 $1,101,343

General corporate expense (49,436) (35,199) (35,199)

Net interest & investment expense (6,680) (10,177) (10,177)

Earnings before income taxes $1,316,750 $1,088,706 $(10,526) $(9,546) $(21,537) $8,870 $1,055,967

Income taxes (426,698) (374,334) 3,685 770 (369,879)

Net earnings attributable to Hormel Foods Corporation $ 890,052 $ 714,372 $ (6,841) $(8,776) $(21,537) $8,870 $ 686,088

Diluted net earnings per share $ 1.64 $ 1.32 $ (0.01) $ (0.02) $ (0.04) $ 0.02 $ 1.27

Net Sales

Fourth Quarter Ended Year Ended

October 30, October 25, October 30, October 25,

(in millions) 2016 2015 % Change 2016 2015 % Change

Net sales $2,627.9 $2,400.9 9.5 $9,523.2 $9,263.9 2.8

Tonnage (lbs.) 1,421.0 1,308.3 8.6 5,192.0 5,109.5 1.6

Four of the Companys five segments posted sales growth in the fourth quarter, more than offsetting lower sales for the Specialty Foods segment, which was impacted by the divestiture of DCB on May 9, 2016. Strong value-added sales for the Refrigerated Foods and JOTS segments drove higher sales for the fourth quarter.

Positive momentum in the second half of the year led to improved net sales results for both the fourth quarter and fiscal year. Sales in the first half of the year were tempered by lower turkey volumes in the JOTS segment and soft export demand in the International & Other segment. JOTS posted strong results in both the fourth quarter and fiscal year as production volumes returned to normalized levels during the third quarter. The Refrigerated Foods and Grocery Products segments experienced strong value-added product sales. Due to challenging market conditions in China, fiscal 2016 net sales declined for the International & Other segment.

Moving into fiscal 2017, the Company expects continued growth for value-added products such as SKIPPY® peanut butter and Herdez® salsas, along with the addition of Justins® specialty nut butters in the Grocery Products segment. JOTS should benefit from increased demand for Jennie-O® branded products and stable grain prices. Continued strong momentum of both retail and foodservice value-added sales is anticipated for the Refrigerated Foods segment. The International & Other segment should show growth through increased export sales and sales growth in the Companys China operations. Growth of Muscle Milk® protein nutrition products is expected to drive sales for the Specialty Foods segment.

Cost of Products Sold

Fourth Quarter Ended Year Ended

(in millions) 2016 2015 % Change 2016 2015 % Change

Cost of products sold $2,029.4 $1,905.8 6.5 $7,365.0 $7,455.3 (1.2)

The increase in cost of products sold for the fourth quarter of fiscal 2016 is primarily a result of higher sales volumes of JOTS products. JOTS sales volumes declined in fiscal 2015 as HPAI significantly impacted the availability of raw materials. For the fiscal year, cost of products sold decreased due to lower pork input costs for the Refrigerated Foods and Grocery Products segments along with lower grain costs for JOTS and favorable input costs for Specialty Foods. In the first quarter of fiscal 2015, charges totaling $10.5 million were recognized for the closure of the Stockton, California, manufacturing facility.

Gross Profit

Fourth Quarter Ended Year Ended

October 30, October 25, October 30, October 25,

(in millions) 2016 2015 % Change 2016 2015 % Change

Gross profit $598.5 $495.0 20.9 $2,158.2 $1,808.6 19.3

Percentage of net sales 22.8 20.6 22.7 19.5

Higher margins from the JOTS, Refrigerated Foods, Grocery Products, and Specialty Foods segments in the fourth quarter of fiscal 2016 offset lower results in the International & Other segment. The improved gross profit for JOTS is the result of strong value-added sales following the recovery from HPAI. Margins in the Refrigerated Foods and Grocery Products segments were driven by value-added sales growth and favorable market conditions. For fiscal 2016, strong value-added sales results across the Companys segments boosted margins.

The Company expects overall favorable market conditions in fiscal 2017. Continued low input costs should benefit the value-added products within the Refrigerated Foods and Grocery Products segments, while stable grain prices will benefit JOTS. The International & Other segment is entering 2017 anticipating improved results in China. The Specialty Foods segment expects to deliver increases through growth of Muscle Milk® protein nutrition products.

Selling, General and Administrative (SG&A)

Fourth Quarter Ended Year Ended

October 30, October 25, October 30, October 25,

(in millions) 2016 2015 % Change 2016 2015 % Change

SG&A $244.0 $189.0 29.1 $872.0 $743.6 17.3

Percentage of net sales 9.3 7.9 9.2 8.0

The Company increased advertising expense by $58.8 million and incurred $24.2 million higher employee-related expenses in fiscal 2016. Fiscal 2016 includes higher advertising for the Companys value-added products along with the addition of Applegates advertising expenses. In fiscal 2017, the Company intends to continue to build brand awareness through advertising investments and anticipates advertising expense to be similar to fiscal 2016. The Company will continue to invest in key brands such as Jennie-O® products, Hormel® Natural Choice® meats, Hormel® pepperoni, SKIPPY® peanut butter, the SPAM® family of products, Wholly Guacamole® dips, and Muscle Milk® protein nutrition products.

Research and development expenses were $9.6 million and $34.7 million for the fiscal 2016 fourth quarter and year, respectively, compared to $8.5 million and $32.0 million in fiscal 2015.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Goodwill Impairment Charge: Goodwill impairment charges related to the divestiture of DCB of $1.0 million and $21.5 million were recorded in the second quarter of fiscal 2016 and fourth quarter of fiscal 2015, respectively.

Equity in Earnings of Affiliates

Fourth Quarter Ended Year Ended

October 30, October 25, October 30, October 25,

(in millions) 2016 2015 % Change 2016 2015 % Change

Equity in earnings of affiliates $11.2 $8.0 40.0 $38.7 $23.9 61.9

The increase for both the fourth quarter and fiscal 2016 was largely the result of improved earnings from the Companys 50 percent-owned MegaMex joint venture.

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 receivables from other affiliates, are included in the Consolidated Statements of Financial Position as investments in and receivables from affiliates. The composition of this line item at October 30, 2016, was as follows:

(in thousands) Investments/Receivables

Country

United States $180,437

Foreign 59,153

Total $239,590

Effective Tax Rate

Fourth Quarter Ended Year Ended

October 30, October 25, October 30, October 25,

2016 2015 2016 2015

Effective tax rate 33.0% 35.2% 32.4% 35.0%

The lower comparative tax rate for the fourth quarter was due to the impact of the fiscal 2015 DCB goodwill impairment charge. The fiscal 2016 rate was lower due to the benefit from a foreign tax credit, along with a comparison to the unfavorable impact of the exit from international joint venture businesses in fiscal 2015. The Company expects the effective tax rate in fiscal 2017 to be between 33.0 and 33.5 percent.

Segment Results

Net sales and operating profits for each of the Companys reportable segments are set forth below. The Company is an integrated enterprise, characterized by substantial intersegment cooperation, cost allocations, and sharing of assets. Therefore, the Company does not represent that these segments, if operated independently, would report the operating profit and other financial information shown below. (Additional segment financial information can be found in Note P Segment Reporting.)

October 30, October 25, October 30, October 25,

(in thousands) 2016 2015 % Change 2016 2015 % Change

Net Sales

Grocery Products $ 491,724 $ 422,570 16.4 $1,684,756 $1,617,680 4.1

Refrigerated Foods 1,237,276 1,149,496 7.6 4,647,173 4,372,347 6.3

Jennie-O Turkey Store 541,409 420,312 28.8 1,740,968 1,635,776 6.4

Specialty Foods 216,674 269,887 (19.7) 939,134 1,103,359 (14.9)

International & Other 140,858 138,593 1.6 511,193 534,701 (4.4) Total Net Sales $2,627,941 $2,400,858 9.5 $9,523,224 $9,263,863 2.8

Segment Operating Profit

Grocery Products $ 82,734 $ 78,772 5.0 $ 268,461 $ 228,582 17.4

Refrigerated Foods 168,040 111,287 51.0 585,652 424,968 37.8

Jennie-O Turkey Store 92,299 73,227 26.0 329,427 276,217 19.3

Specialty Foods 20,182 22,348 (9.7) 110,917 93,258 18.9

International & Other 19,570 23,300 (16.0) 78,409 78,318 0.1

Total Segment Operating Profit $ 382,825 $ 308,934 23.9 $1,372,866 $1,101,343 24.7

Net interest and investment expense (income) 1,017 3,341 (69.6) 6,680 10,177 (34.4)

General corporate expense 17,325 16,649 4.1 49,436 35,199 40.4

Less: Noncontrolling interest 250 212 17.9 465 1,176 (60.5)

Earnings Before Income Taxes $ 364,733 $ 289,156 26.1 $1,317,215 $1,057,143 24.6

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

Fourth Quarter Ended Year Ended

October 30, October 25, October 30, October 25,

(in thousands) 2016 2015 % Change 2016 2015 % Change

Net sales $491,724 $422,570 16.4 $1,684,756 $1,617,680 4.1

Tonnage (lbs.) 258,386 230,170 12.3 906,202 890,735 1.7

Segment profit $ 82,734 $ 78,772 5.0 $ 268,461 $ 228,582 17.4

Results reflect the addition of Justins acquired on May 25, 2016. Justins contributed incremental sales of $24.3 million in the fourth quarter and $36.8 million for the twelve months ended October 30, 2016. Increased sales of SPAM® luncheon meat, SKIPPY® peanut butter, Wholly Guacamole® dips, and Herdez® salsas also contributed to the improved sales results in the fourth quarter and full year of fiscal 2016.

Fourth quarter and full year segment profit results benefited from the net sales growth noted above along with favorable beef and pork input costs. Charges totaling $10.5 million related to the closure of the Stockton, California, manufacturing facility impacted the first quarter of fiscal 2015.

Looking ahead to fiscal 2017, the Company anticipates positive momentum in SKIPPY® peanut butter products, Herdez® salsas, and Wholly Guacamole® dips in addition to Justins® for Grocery Products.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Refrigerated Foods: Results for the Refrigerated Foods segment compared to the prior year are as follows:

Fourth Quarter Ended Year Ended

October 30, October 25, October 30, October 25,

(in thousands) 2016 2015 % Change 2016 2015 % Change

Net sales $1,237,276 $1,149,496 7.6 $4,647,173 $4,372,347 6.3

Tonnage (lbs.) 658,506 601,857 9.4 2,493,358 2,368,804 5.3

Segment profit $ 168,040 $ 111,287 51.0 $ 585,652 $ 424,968 37.8

Results reflect the addition of Applegate acquired on July 13, 2015, contributing an incremental $236.8 million of net sales and 36.0 million pounds for fiscal 2016.

Many of the Companys value-added products enjoyed strong sales growth during the fourth quarter. Foodservice sales of Hormel® Bacon 1TM fully cooked bacon and Hormel® Fire BraisedTM meats along with retail sales of Applegate® deli meats, Hormel® Natural Choice® meats, and Hormel Gatherings® party trays drove the sales growth for the fourth quarter.

Segment profit results for the fourth quarter were driven by strong results from the Companys value-added products and favorable raw material markets. Fiscal 2016 benefitted from lower input costs, the addition of Applegate, and strong foodservice results.

Looking forward, the Company anticipates low input costs to provide a benefit for the Refrigerated Foods value-added products in addition to positive momentum in both retail and foodservice channels. In November 2016, subsequent to the end of the fiscal year, the Company entered into an agreement for the sale of Farmer John, which will partially offset the sales gains expected for value-added products.

Jennie-O Turkey Store: Results for the JOTS segment compared to the prior year are as follows:

Fourth Quarter Ended Year Ended

October 30, October 25, October 30, October 25,

(in thousands) 2016 2015 % Change 2016 2015 % Change

Net sales $541,409 $420,312 28.8 $1,740,968 $1,635,776 6.4

Tonnage (lbs.) 291,587 221,528 31.6 902,073 849,418 6.2

Segment profit $ 92,299 $ 73,227 26.0 $ 329,427 $ 276,217 19.3

Net sales and segment profit exceeded last year, which was negatively impacted by HPAI. The HPAI outbreak last year created large volume shortfalls and corresponding declines in sales and operational efficiencies. Value-added sales of Jennie-O® foodservice products were strong in the fourth quarter, with growth coming from items in the raw boneless breast and sliced meat categories.

Retail sales of Jennie-O® lean ground turkey and Jennie-O® turkey bacon improved during the fourth quarter of fiscal 2016. For the year, lean ground tray pack, turkey bacon, and Jennie-O® Oven Ready® products drove the improved sales results.

Segment profit for the fourth quarter improved over last year, as the 2015 results reflected the impact of HPAI. Favorable input costs this year also provided benefits in both the quarter and year-to-date results.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document JOTS expects to improve on its segment profit performance in fiscal 2017. The Company looks to continue the positive momentum in branded Jennie-O® products next year supported with continued media and promotional support.

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

Fourth Quarter Ended Year Ended

October 30, October 25, October 30, October 25,

(in thousands) 2016 2015 % Change 2016 2015 % Change

Net sales $216,674 $269,887 (19.7) $939,134 $1,103,359 (14.9)

Tonnage (lbs.) 127,053 177,784 (28.5) 583,267 702,110 (16.9)

Segment profit $ 20,182 $ 22,348 (9.7) $110,917 $ 93,258 18.9

The results for the fourth quarter and fiscal year reflect the May 9, 2016, divestiture of DCB, resulting in lower sales and tonnage in fiscal 2016. Muscle Milk® branded items posted strong sales growth throughout the fiscal year with increases across many product lines including protein powders and ready-to-drink protein beverages.

Fourth quarter segment profit declined versus the prior year primarily due to increased advertising. For the fiscal year, favorable input costs and operational synergies drove segment profit gains.

The Company expects the Specialty Foods segment to deliver sales and profit increases through the growth of Muscle Milk® protein nutrition products in fiscal 2017.

International & Other: Results for the International & Other segment compared to the prior year are as follows:

Fourth Quarter Ended Year Ended

October 30, October 25, October 30, October 25,

(in thousands) 2016 2015 % Change 2016 2015 % Change

Net sales $140,858 $138,593 1.6 $511,193 $534,701 (4.4)

Tonnage (lbs.) 85,454 76,953 11.0 307,127 298,421 2.9

Segment profit $ 19,570 $ 23,300 (16.0) $ 78,409 $ 78,318 0.1

Pork exports drove net sales growth during the fourth quarter, as volumes and markets improved compared to the prior year. For the fiscal year, challenging market conditions and unfavorable exchange rates resulted in an overall decline in export sales compared to fiscal 2015. In China, the Company also experienced softness in the meat business throughout fiscal 2016, while the SKIPPY® peanut butter business continued to grow in both retail and foodservice channels.

Segment profit results for both the fourth quarter and fiscal year primarily reflect weaker margins for the China meat business and lower exports of branded items. These losses offset improved profitability for pork exports and growth in the China SKIPPY® peanut butter business. Stronger equity in earnings results did provide a benefit for the year. Fiscal 2015 results also included charges of $9.5 million related to the exit from international joint venture businesses.

Entering 2017, the International & Other segment expects improved export results across all key brands, including SPAM®, SKIPPY®, and Muscle Milk®. The Company anticipates pork markets will remain favorable in fiscal 2017, benefitting pork exports. Continued expansion in China is also projected as the Companys new plant in Jiaxing, China, will provide additional capacity and in-country SPAM® luncheon meat production beginning in the spring of 2017. Hog costs in China are projected to remain high in the near-term, but are expected to moderate in the second half, which should enhance segment margins.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Unallocated Income and Expense: 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 Companys noncontrolling interests are excluded. These items are included in the segment table for the purpose of reconciling segment results to earnings before income taxes.

Fourth Quarter Ended Year Ended

October 30, October 25, October 30, October 25,

(in millions) 2016 2015 2016 2015

Net interest and investment expense (income) $ 1.0 $ 3.3 $ 6.7 $ 10.2

Interest expense 3.3 3.8 12.9 13.1

General corporate expense 17.3 16.6 49.4 35.2

Noncontrolling interest earnings 0.3 0.2 0.5 1.2

Net interest and investment expense was lower than last year due to higher interest income, favorable currency exchange, and improved returns on the rabbi trust. General corporate expense was higher for the both the fourth quarter and fiscal year primarily reflecting higher employee- related expenses.

FISCAL YEARS 2015 AND 2014:

Consolidated Results

Net Earnings and Diluted Earnings per Share

Fourth Quarter Ended Year Ended

October 25, October 26, October 25, October 26,

(in millions, except per share amounts) 2015 2014 % Change 2015 2014 % Change

Net earnings $187.2 $171.3 9.3 $686.1 $602.7 13.8

Diluted earnings per share 0.35 0.32 9.4 1.27 1.12 13.4

Adjusted net earnings 199.9(1) 171.3 16.7 714.4(1) 602.7 18.5

Adjusted diluted earnings per share 0.37(1) 0.32 15.6 1.32(1) 1.12 17.9

(1) The non-GAAP adjusted financial measurements are presented to provide investors additional information to facilitate the comparison of past and present operations. The non-GAAP adjusted financial measurements are used for internal purposes to evaluate the results of operations and to measure a component of certain employee incentive plans in fiscal 2015. Non-GAAP measurements are not intended to be a substitute for U.S. GAAP measurements in analyzing financial performance. These non-GAAP measurements are not in accordance with generally accepted accounting principles and may be different from non-GAAP measures used by other companies.

2015 Diamond CytoSport

Non-GAAP Crystal Contingent

Adjusted Brands Consideration 2015 GAAP

(in thousands, except per share amounts) Earnings Impairment Adjustment Earnings

Grocery Products $ 78,772 $ $ $ 78,772

Refrigerated Foods 111,287 111,287

Jennie-O Turkey Store 73,227 73,227

Specialty Foods 35,015 (21,537) 8,870 22,348

International & Other 23,300 23,300

Total segment operating profit $ 321,601 $(21,537) $8,870 $ 308,934

General corporate expense (16,649) (16,649)

Net interest & investment expense (3,341) (3,341)

Earnings before income taxes $ 301,611 $(21,537) $8,870 $ 288,944

Income taxes (101,713) (101,713)

Net earnings attributable to Hormel Foods Corporation $ 199,898 $(21,537) $8,870 $ 187,231

Diluted net earnings per share $ 0.37 $ (0.04) $ 0.02 $ 0.35

Fiscal Year 2015

2015 Diamond CytoSport

Non-GAAP Stockton International Crystal Contingent

Adjusted Plant Business Brands Consideration 2015 GAAP

(in thousands, except per share amounts) Earnings Closure Exit Impairment Adjustment Earnings

Grocery Products $ 239,108 $(10,526) $ $ $ $ 228,582

Refrigerated Foods 424,968 424,968

Jennie-O Turkey Store 276,217 276,217

Specialty Foods 105,925 (21,537) 8,870 93,258

International & Other 87,864 (9,546) 78,318

Total segment operating profit $ 1,134,082 $(10,526) $(9,546) $(21,537) $8,870 $1,101,343

General corporate expense (35,199) (35,199)

Net interest & investment expense (10,177) (10,177)

Earnings before income taxes $ 1,088,706 $(10,526) $(9,546) $(21,537) $8,870 $1,055,967

Income taxes (374,334) 3,685 770 (369,879)

Net earnings attributable to Hormel Foods Corporation $ 714,372 $ (6,841) $(8,776) $(21,537) $8,870 $ 686,088

Diluted net earnings per share $ 1.32 $ (0.01) $ (0.02) $ (0.04) $ 0.02 $ 1.27

Fourth Quarter Ended Year Ended

October 25, October 26, October 25, October 26,

(in millions) 2015 2014 % Change 2015 2014 % Change

Net sales $2,400.9 $2,543.8 (5.6) $9,263.9 $9,316.3 (0.6)

Tonnage (lbs.) 1,308.3 1,336.5 (2.1) 5,109.5 5,000.9 2.2

Lower sales for the fourth quarter and fiscal year 2015 were primarily due to turkey supply shortages in the JOTS segment and price deflation in pork markets, impacting sales within the Refrigerated Foods and International & Other segments along with the dissolution of the Precept Foods joint venture at the end of fiscal 2014.

Net sales and tonnage for the fiscal 2015 fourth quarter and year were positively impacted by the following incremental sales from Applegate, CytoSport, and additional MegaMex products not included in the prior year:

(in thousands) Fourth Quarter Ended Year Ended

Segment Net Sales Tonnage (lbs.) Net Sales Tonnage (lbs.)

Specialty Foods $ 13,209 5,463 $237,829 102,915

Grocery Products 26,478 16,415 95,942 64,404

Refrigerated Foods 80,352 12,670 92,796 14,646

Despite a strong start to fiscal 2015, the effects of HPAI on the turkey supply chain significantly impacted JOTS as the number of birds through the Companys facilities was reduced in the second half of fiscal 2015. Value-added sales across the Companys segments were strong, but price reductions taken on certain items in the Refrigerated Foods and International & Other segments due to declining pork markets tempered top-line results.

Cost of Products Sold

Fourth Quarter Ended Year Ended

October 25, October 26, October 25, October 26,

(in millions) 2015 2014 % Change 2015 2014 % Change Cost of products sold $1,905.8 $2,120.2 (10.1) $7,455.3 $7,751.3 (3.8)

Lower pork input costs for the Refrigerated Foods, Grocery Products, and International & Other segments led to the decrease for the quarter and fiscal year of 2015, partially offset by additional product costs from the acquisition of Applegate for the fourth quarter and CytoSport for the fiscal year. Results for fiscal year 2015 also reflect charges totaling $10.5 million related to the closure of the Stockton, California, manufacturing facility.

Gross Profit

Fourth Quarter Ended Year Ended

October 25, October 26, October 25, October 26,

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (in millions) 2015 2014 % Change 2015 2014 % Change Gross profit $495.0 $423.6 16.9 $1,808.6 $1,565.0 15.6 Percentage of net sales 20.6 16.7 19.5 16.8

Higher margins from the Grocery Products, Refrigerated Foods, and International & Other segments in the fourth quarter of fiscal 2015 offset lower margins in the JOTS and Specialty Foods segments. Favorable raw material and plant operating costs along with improved equity in earnings contributed to the growth for Grocery Products. The Refrigerated Foods segment posted solid margin gains in the fourth quarter of fiscal 2015 led by strong performance from Affiliated Foods. Positive results in China along with favorable costs on products such as SPAM® luncheon meat and SKIPPY® peanut butter in the International & Other segment aided margins. JOTS finished below fiscal 2014 as shortfalls due to flocks lost to HPAI lowered plant processing and sales volumes. For the year, synergies captured within the CytoSport and Century Foods operations contributed to the improved margins in fiscal 2015. Additionally, the Companys value-added businesses within the Refrigerated Foods segment benefited from the lower input costs referenced above.

Selling, General and Administrative (SG&A)

Fourth Quarter Ended Year Ended

October 25, October 26, October 25, October 26,

(in millions) 2015 2014 % Change 2015 2014 % Change SG&A $189.0 $165.9 13.9 $743.6 $650.9 14.2 Percentage of net sales 7.9 6.5 8.0 7.0

The Company incurred $40.4 million higher employee-related expenses and $31.0 million higher advertising expenses in fiscal 2015 in addition to the added expenses related to the acquisitions of Applegate during the fourth quarter and CytoSport for the fiscal year 2015.

Research and development expenses were $8.5 million and $32.0 million for the fiscal 2015 fourth quarter and year, respectively, compared to $7.5 million and $29.9 million in fiscal 2014.

Goodwill Impairment Charge: A goodwill impairment charge of $21.5 million was recorded in the fourth quarter of fiscal 2015 as the Company decided to sell a portion of DCB and classify it as held for sale.

Equity in Earnings of Affiliates

Fourth Quarter Ended Year Ended

October 25, October 26, October 25, October 26,

(in millions) 2015 2014 % Change 2015 2014 % Change Equity in earnings of affiliates $8.0 $5.7 40.4 $23.9 $17.6 35.8

The increase for both the fourth quarter and fiscal 2015 is largely the result of improved earnings from the Companys 50 percent owned MegaMex joint venture, reflecting the impact of incentive expenses on the Fresherized Foods acquisition recognized in the prior year.

Country

United States $200,110

Foreign 58,888

Total $258,998

Effective Tax Rate

Fourth Quarter Ended Year Ended

October 25, October 26, October 25, October 26,

2015 2014 2015 2014

Effective tax rate 35.2% 34.1% 35.0% 34.3%

The higher rate for the fourth quarter of fiscal 2015 is due to the impact of the goodwill impairment charge. Fiscal 2015 was also impacted by the unfavorable impact of the exit from international joint venture businesses.

Segment Results

Fourth Quarter Ended Year Ended

October 25, October 26, October 25, October 26,

(in thousands) 2015 2014 % Change 2015 2014 % Change

Net Sales

Grocery Products $ 422,570 $ 405,166 4.3 $1,617,680 $1,558,265 3.8

Refrigerated Foods 1,149,496 1,211,890 (5.1) 4,372,347 4,644,179 (5.9)

Jennie-O Turkey Store 420,312 509,980 (17.6) 1,635,776 1,672,452 (2.2)

Specialty Foods 269,887 277,559 (2.8) 1,103,359 907,120 21.6

International & Other 138,593 139,176 (0.4) 534,701 534,240 0.1

Total Net Sales $2,400,858 $2,543,771 (5.6) $9,263,863 $9,316,256 (0.6)

Segment Operating Profit

Grocery Products $ 78,772 $ 50,051 57.4 $ 228,582 $ 195,064 17.2

Refrigerated Foods 111,287 87,296 27.5 424,968 338,020 25.7

Jennie-O Turkey Store 73,227 95,253 (23.1) 276,217 272,362 1.4

Specialty Foods 22,348 13,747 62.6 93,258 71,514 30.4

International & Other 23,300 22,629 3.0 78,318 84,745 (7.6)

Total Segment Operating Profit $ 308,934 $ 268,976 14.9 $1,101,343 $ 961,705 14.5

Net interest and investment expense (income) 3,341 2,626 27.2 10,177 9,468 7.5

General corporate expense 16,649 6,192 168.9 35,199 33,434 5.3

Less: Noncontrolling interest 212 584 (63.7) 1,176 3,349 (64.9)

Grocery Products: Results for the Grocery Products segment for fiscal 2015 compared to fiscal 2014 are as follows:

Fourth Quarter Ended Year Ended

October 25, October 26, October 25, October 26,

(in thousands) 2015 2014 % Change 2015 2014 % Change

Net sales $ 422,570 $ 405,166 4.3 $ 1,617,680 $ 1,558,265 3.8

Tonnage (lbs.) 230,170 218,912 5.1 890,735 850,844 4.7

Segment profit $ 78,772 $ 50,051 57.4 $ 228,582 $ 195,064 17.2

Additional MegaMex products not included in the prior year contributed an incremental $26.4 million of net sales and 16.4 million lbs. for the fourth quarter, and $95.9 million of net sales and 64.4 million lbs. for the year in fiscal 2015. Strong sales of SKIPPY® peanut butter, Dinty Moore® stew, and Hormel® chili also contributed to the improved net sales results for the fourth quarter, offsetting sales declines of Hormel® Compleats® microwave meals.

Lower pork and beef input costs and improved manufacturing productivity drove segment profit results in the fourth quarter, as well as improved equity in earnings results. Segment profit results for the year in fiscal 2015 were impacted by charges totaling $10.5 million related to the closure of the Stockton, California, manufacturing facility.

Refrigerated Foods: Results for the Refrigerated Foods segment for fiscal 2015 compared to fiscal 2014 are as follows:

Fourth Quarter Ended Year Ended

October 25, October 26, October 25, October 26,

(in thousands) 2015 2014 % Change 2015 2014 % Change

Net sales $ 1,149,496 $ 1,211,890 (5.1) $ 4,372,347 $ 4,644,179 (5.9)

Tonnage (lbs.) 601,857 587,862 2.4 2,368,804 2,351,898 0.7

Segment profit $ 111,287 $ 87,296 27.5 $ 424,968 $ 338,020 25.7

The comparative results for the fourth quarter and fiscal year reflect the addition of Applegate acquired on July 13, 2015, contributing an incremental $80.4 million of net sales and 12.6 million lbs. for the fourth quarter and $92.8 million of net sales and 14.6 million lbs. for fiscal 2015.

Many of the Companys value-added products enjoyed strong sales growth during the fourth quarter. On the retail side, sales gains were led by sales of Hormel® refrigerated entrees, Hormel® pepperoni, and Hormel Gatherings® party trays. Within foodservice, sales of Hormel® Fire BraisedTM meats and Hormel® pizza toppings experienced gains for the quarter. Despite robust value-added sales, overall sales declined for the fourth quarter and fiscal year due to price reductions taken on certain items in light of lower pork markets compared to the record high pork markets in the prior year and the dissolution of the Precept Foods joint venture at the end of fiscal 2014. Tonnage was higher in fiscal 2015, as the impact of the Porcine Epidemic Diarrhea Virus (PEDv) in the industry reduced volumes processed through the Companys harvest facilities in fiscal 2014.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Segment profit results for the fourth quarter were driven by strong results from Affiliated Foods, higher pork operating margins, and the addition of Applegate on July 13, 2015. Fiscal 2015 benefitted from lower input costs. For the full year, $9.0 million of transaction costs offset the results from Applegate.

Jennie-O Turkey Store: Results for the JOTS segment for fiscal 2015 compared to fiscal 2014 are as follows:

Fourth Quarter Ended Year Ended

October 25, October 26, October 25, October 26,

(in thousands) 2015 2014 % Change 2015 2014 % Change

Net sales $ 420,312 $ 509,980 (17.6) $ 1,635,776 $ 1,672,452 (2.2)

Tonnage (lbs.) 221,528 280,810 (21.1) 849,418 892,965 (4.9)

Segment profit $ 73,227 $ 95,253 (23.1) $ 276,217 $ 272,362 1.4

Both top and bottom-line results for the fourth quarter and fiscal 2015 were negatively impacted by HPAI, which created large volume shortfalls in operations and sales. Although JOTS was able to purchase some turkey meat to partially offset flock losses, turkey breast prices remained at a record high due to overall industry shortages. The strong value-added product sales enjoyed during the first half of the year along with second half price increases and controlled spending allowed JOTS to finish above last year in segment profit with lower volume and sales.

Specialty Foods: Results for the Specialty Foods segment compared for fiscal 2015 compared to fiscal 2014 are as follows:

Fourth Quarter Ended Year Ended

October 25, October 26, October 25, October 26,

(in thousands) 2015 2014 % Change 2015 2014 % Change

Net sales $269,887 $277,559 (2.8) $1,103,359 $907,120 21.6

Tonnage (lbs.) 177,784 175,285 1.4 702,110 612,415 14.6

Segment profit $ 22,348 $ 13,747 62.6 $ 93,258 $ 71,514 30.4

The comparative results for the fourth quarter and fiscal year reflect the addition of CytoSport acquired on August 11, 2014, which contributed an incremental $13.2 million of net sales and 5.5 million lbs. to top-line results for the fourth quarter and $237.8 million of net sales and 102.9 million lbs. for fiscal 2015. Full year sales benefited from the addition of Muscle Milk® protein nutrition products, but were unable to offset lower contract packaging sales in the fourth quarter.

Fiscal year 2015 fourth quarter segment profit results reflect synergies captured within the CytoSport and Century Foods supply chain and a beneficial comparison to fiscal year 2014 CytoSport acquisition-related costs of $9.3 million. The Company made the decision to explore the sale of a portion of DCB and classified it as held for sale in fiscal year 2015. The fair value of the net assets to be sold was determined utilizing a market participant bid along with internal valuations of the business. The Company recorded a goodwill impairment charge of $21.5 million for the assets held for sale, which was partially offset by an $8.9 million reduction to a contingent consideration liability related to the CytoSport acquisition.

International & Other: Results for the International & Other segment for fiscal 2015 compared to fiscal 2014 are as follows:

Fourth Quarter Ended Year Ended

October 25, October 26, October 25, October 26,

Net sales $138,593 $139,176 (0.4) $534,701 $534,240 0.1

Tonnage (lbs.) 76,953 73,585 4.6 298,421 292,790 1.9

Segment profit $ 23,300 $ 22,629 3.0 $ 78,318 $ 84,745 (7.6)

Strong export sales of the SPAM® family of products and continued growth in China were offset by softer pork export sales in the fourth quarter. For fiscal 2015, robust performance from China and sales growth for SKIPPY® peanut butter products drove top-line results.

Fourth quarter segment profit results for fiscal 2015 were driven by growth in our core product lines and strong results in China, as noted above, along with improved royalties. Profitability on pork exports remained significantly below the prior year. For the 2015 fiscal year, International & Other segment profits were negatively impacted by pork markets, port challenges experienced in the first half of the year, and charges of $9.5 million related to the exit from international joint venture businesses.

Unallocated Income and Expense: 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 Companys noncontrolling interests are excluded. These items are included in the segment table for the purpose of reconciling segment results to earnings before income taxes.

Fourth Quarter Ended Year Ended

October 25, October 26, October 25, October 26,

(in millions) 2015 2014 2015 2014

Net interest and investment expense (income) $ 3.3 $2.6 $10.2 $ 9.5

Interest expense 3.8 3.4 13.1 12.7

General corporate expense 16.6 6.2 35.2 33.4

Noncontrolling interest earnings 0.2 0.6 1.2 3.3

The increased expense for the fourth quarter and fiscal year 2015 is primarily due to higher interest expense associated with Applegate-related debt, as the Company utilized short-term financing along with its revolving line of credit to fund the Applegate acquisition in the third quarter.

The higher expense for the fourth quarter of fiscal 2015 reflects no amounts were owed on the revolving credit facility. In the third higher employee-related expenses and increased professional and quarter of fiscal 2015, in connection with the purchase of legal fees. General corporate expense for the fiscal year 2015 was Applegate, the Company borrowed $300.0 million under a term higher compared to last year, primarily the result of the fourth loan facility and $50.0 million under a revolving credit facility, of quarter expenses mentioned above. which $165.0 million was paid down in the fourth quarter. On March 16, 2015, the Company purchased the remaining 19.29% RELATED PARTY TRANSACTIONS 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 at the end of the During the fourth quarter of fiscal 2015, the Company purchased second quarter. The interest was purchased with $11.7 million in 0.8 million shares of common stock from The Hormel Foundation

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document at $31.16 per share, representing the average closing price for the cash, along with the transfer of land use rights and buildings held three days of September 15, September 16, and September 17, by the joint venture. 2015. Settlement took place on September 18, 2015. 30 The Company used $87.9 million for common stock repurchases The Company was not party to any other material related party during fiscal 2016, compared to $24.9 million in fiscal 2015 and transactions during fiscal years 2016, 2015, or 2014. $58.9 million in fiscal 2014. During fiscal 2016, the Company repurchased 2.4 million shares of its common stock at an average price per share of $36.84. During fiscal year 2015, 0.8 million Liquidity and Capital Resources shares were repurchased from The Hormel Foundation at the average closing price for the three days of September 15, Cash and cash equivalents were $415.1 million at the end of fiscal September 16, and September 17, 2015, of $31.16. On January 29, 2016 compared to $347.2 million at the end of fiscal 2015 and 2013, the Companys Board of Directors authorized the repurchase $334.2 million at the end of fiscal 2014. of 10.0 million shares of its common stock with no expiration date, which was adjusted for the stock split during the first quarter of During fiscal 2016, cash provided by operating activities was fiscal 2016. As of the end of fiscal 2016, there were 13.2 million $992.8 million compared to $992.0 million in fiscal 2015 and shares remaining for repurchase under that authorization. $746.9 million in fiscal 2014. Continued higher earnings led to the increase in fiscal 2016, offsetting higher working capital. Cash dividends paid to the Companys shareholders continues to be an ongoing financing activity for the Company, with $296.5 Cash used in investing activities decreased to $409.0 million in million in dividends paid in fiscal 2016, compared to $250.8 fiscal 2016 from $900.9 million in fiscal 2015 and $616.8 million million in the fiscal 2015 and $203.2 million in fiscal 2014. The in fiscal 2014. Fiscal 2016 included $280.9 million to purchase dividend rate was $0.58 per share in 2016, which reflected a 16.0 Justins, which was offset by the sale of DCB for $110.1 million. percent increase over the fiscal 2015 rate of $0.50 per share. The Fiscal 2015 included $774.1 million used to purchase Applegate. Company has paid dividends for 353 consecutive quarters. The Fiscal 2014 included $424.3 million used to purchase CytoSport annual dividend rate for fiscal 2017 was increased 17 percent to Holdings, Inc. and $41.9 million used to purchase the China-based $0.68 per share, representing the 51st consecutive annual dividend SKIPPY® peanut butter business in Weifang, China. Capital increase. expenditures in fiscal 2016 increased to $255.5 million, from $144.1 million in 2015, and $159.1 million in 2014. The increased Cash flows from operating activities continue to provide the expenditures are primarily related to the Companys new plant in Company with its principal source of liquidity. The Company does Jiaxing, China, and a lean ground turkey expansion at JOTS. The not anticipate a significant risk to cash flows from this source in primary reason for lower capital expenditures in fiscal 2015 the foreseeable future because the Company operates in a relatively compared to fiscal 2014 was the Companys decision to delay the stable industry and has strong brands across many categories and addition of capacity at JOTS in the face of lower turkey supply due channels. to the impacts of HPAI. Capital expenditures for fiscal 2017 are estimated to be approximately $250.0 million as several projects in The Company intends to continue the longstanding policy of process during fiscal 2016 will be completed, including increasing the dividend returned to shareholders year-after-year. construction of the Jiaxing, China, plant. The Company remains focused on growing the business through supporting innovation to drive organic growth, along with strategic Cash used in financing activities was $509.6 million in fiscal 2016 acquisitions. Reinvesting in the business is a key focus, with compared to $70.6 million in fiscal 2015 and $229.4 million in employee safety and food safety taking top priority. Capital fiscal 2014. In the third quarter of fiscal 2016, in connection with spending to enhance and expand current operations will also be a the purchase of Justins, the Company borrowed $145.0 million significant cash outflow in fiscal 2017. under a revolving credit facility. At the end of fiscal 2016, Contractual Obligations and Commercial Commitments

The following table outlines the Companys future contractual financial obligations as of October 30, 2016, (for additional information regarding these obligations, see Note F Long-term Debt and Other Borrowing Arrangements and Note N Commitments and Contingencies):

Less Than More Than

Contractual Obligations (in thousands) Total 1 Year 1-3 Years 3-5 Years 5 Years

Purchase obligations:

Hog and turkey commitments(1) $2,348,215 $ 909,430 $ 998,297 $387,748 $ 52,740

Grain commitments(1) 39,578 38,596 982

Turkey grow-out contracts(2) 57,821 9,392 15,817 9,780 22,832

Other(3) 1,058,542 589,298 215,362 119,872 134,010

Current and long-term debt 250,000 250,000

Interest payments on long-term debt 46,010 10,313 20,625 15,072

Capital expenditures(4) 165,437 148,837 13,300 3,300

Leases 36,078 11,085 13,417 7,422 4,154

Other long-term liabilities(5)(6) 66,770 4,811 7,988 8,443 45,528

Total Contractual Cash Obligations $4,068,451 $1,721,762 $1,285,788 $801,637 $259,264

(1) In the normal course of business, the Company commits to purchase fixed quantities of livestock and grain from producers to ensure a steady supply of production inputs. Certain of these contracts are based on market prices at the time of delivery, for which the Company has estimated the purchase commitment using current market prices as of October 30, 2016. The Company also utilizes various hedging programs to manage the price risk associated with these commitments. As of October 30, 2016, these hedging programs result in a net decrease of $3.1 million in future cash payments associated with the purchase commitments, which is not reflected in the table above.

(2) The Company also utilizes grow-out contracts with independent farmers to raise turkeys for the Company. Under these contracts, the turkeys, feed, and other supplies are owned by the Company. The farmers provide the required labor and facilities, and receive a fee per pound when the turkeys are delivered. Some of the facilities are sub-leased by the Company to the independent farmers. As of October 30, 2016, the Company had approximately 90 active contracts ranging from one to twenty-five years in duration. The grow-out activity is assumed to continue through the term of these active contracts, and amounts in the table represent the Companys obligation based on turkeys expected to be delivered from these farmers.

(3) Amounts presented for other purchase obligations represent all known open purchase orders and all known contracts exceeding $1.0 million, related to the procurement of raw materials, supplies, and various services. The Company primarily purchases goods and services on an as-needed basis. Therefore, the amounts in the table represent only a portion of expected future cash expenditures.

(4) Amounts presented for capital expenditures represent only the Companys current commitments to complete construction in progress at various locations. The Company estimates total capital expenditures for fiscal year 2017 to be approximately $250.0 million.

(5) Other long-term liabilities represent payments under the Companys deferred compensation plans. Excluded from the table above are payments under the Companys defined benefit pension and other post-retirement benefit plans. (See estimated benefit payments for the next ten fiscal years in Note G Pension and Other Post-retirement Benefits.)

(6) As discussed in Note K Income Taxes, the total liability for unrecognized tax benefits, including interest and penalties, at October 30, 2016, was $19.5 million, which is not included in the table above as the ultimate amount or timing of settlement of the Companys reserves for income taxes cannot be reasonably estimated.

In addition to the commitments set forth in the above table, at Forward-Looking Statements October 30, 2016, the Company had $44.4 million in standby letters of credit issued on behalf of the Company. The standby

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document letters of credit are primarily related to the Companys self-insured This report contains forward-looking information within the workers compensation programs. meaning of the federal securities laws. The forward-looking 31information may include statements concerning the Companys The Company believes its financial resources, including a outlook for the future as well as other statements of beliefs, future revolving credit facility for $400.0 million and anticipated funds plans, strategies, or anticipated events and similar expressions from operations, will be adequate to meet all current commitments. concerning matters that are not historical facts.

Off-Balance Sheet Arrangements The Private Securities Litigation Reform Act of 1995 (the Reform Act) provides a safe harbor for forward-looking statements to As of October 30, 2016, the Company had $44.4 million of standby encourage companies to provide prospective information. The letters of credit issued on its behalf. The standby letters of credit Company is filing this cautionary statement in connection with the are primarily related to the Companys self-insured workers Reform Act. When used in the Companys Annual Report to compensation programs. However, that amount also includes Stockholders, other filings by the Company with the U.S. revocable standby letters of credit totaling $4.0 million for Securities and Exchange Commission, the Companys press obligations of an affiliated party that may arise under workers releases, and oral statements made by the Companys compensation claims. Letters of credit are not reflected in the representatives, the words or phrases should result, believe, Companys Consolidated Statements of Financial Position. intend, plan, are expected to, targeted, will continue, will approximate, is anticipated, estimate, project, or similar expressions are intended to identify forward- looking statements within the meaning of the Reform Act. Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical earnings and those anticipated or projected.

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

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

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The Company cautions readers not to place undue reliance on The pathogens which may cause food contamination are found forward-looking statements, which represent current views as of generally in livestock and in the environment and thus may be the date made. Forward-looking statements are inherently at risk to present in our products as a result of food processing. These any changes in the national and worldwide economic environment, pathogens also can be introduced to our products as a result of which could include, among other things, economic conditions, improper handling by customers or consumers. We do not have political developments, currency exchange rates, interest and control over handling procedures once our products have been inflation rates, accounting standards, taxes, and laws and shipped for distribution. If one or more of these risks were to regulations affecting the Company and its markets. materialize, the Companys brand and business reputation could be negatively impacted. In addition, revenues could decrease, costs of Risk Factors doing business could increase, and the Companys operating results could be adversely affected. The Companys operations are subject to the general risks of the food industry. The food products manufacturing industry is Deterioration of economic conditions could harm the subject to the risks posed by: Companys business. The Companys business may be adversely · food spoilage; affected by changes in national or global economic conditions, · food contamination caused by disease-producing organisms or including inflation, interest rates, availability of capital, energy pathogens, such as Listeria monocytogenes, Salmonella, and availability and costs (including fuel surcharges), and the effects of pathogenic E coli.; governmental initiatives to manage economic conditions. · food allergens; Decreases in consumer spending rates and shifts in consumer · nutritional and health-related concerns; product preferences could also negatively impact the Company. · federal, state, and local food processing controls; · consumer product liability claims; Volatility in financial markets and the deterioration of national and · product tampering; and global economic conditions could impact the Companys · the possible unavailability and/or expense of liability insurance. operations as follows: · The financial stability of our customers and suppliers may be compromised, which could result in additional bad debts for the Company or non-performance by suppliers; and · The value of our investments in debt and equity securities may decline, including most significantly the Companys trading securities held as part of a rabbi trust to fund supplemental executive retirement plans and deferred income plans, and the Companys assets held in pension plans.

The Company also utilizes hedging programs to manage its exposure to various commodity market risks, which qualify for hedge accounting for financial reporting purposes. Volatile fluctuations in market conditions could cause these instruments to become ineffective, which could require any gains or losses associated with these instruments to be reported in the Companys earnings each period. These instruments may also limit the Companys ability to benefit from market gains if commodity prices become more favorable than those that have been secured under the Companys hedging programs. Most recently, due to market volatility the Company temporarily suspended the use of the special hedge accounting exemption for JOTS corn futures contracts in the third quarter of fiscal 2016. During the time of suspension, all gains or losses related to these contracts were recognized as ineffectiveness in earnings as incurred.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Additionally, if a highly pathogenic disease outbreak developed in the United States, it may negatively impact the national economy, 32 demand for Company products, and/or the Companys workforce availability, and the Companys financial results could suffer. The Company has developed contingency plans to address infectious disease scenarios and the potential impact on its operations, and necessary. There can be no assurance given, however, that these will continue to update these plans as plans will be effective in eliminating the negative effects of any (FMD), Porcine Epidemic Diarrhea Virus (PEDv), and Highly such diseases on the Companys operating results. Pathogenic Avian Influenza (HPAI). The outbreak of disease could adversely affect the Companys supply of raw materials, increase Fluctuations in commodity prices and availability of pork, the cost of production, reduce utilization of the Companys harvest poultry, beef, feed grains, avocados, peanuts, energy, and whey facilities, and reduce operating margins. Additionally, the outbreak could harm the Companys earnings. The Companys results of of disease may hinder the Companys ability to market and sell operations and financial condition are largely dependent upon the products both domestically and internationally. Most recently, cost and supply of pork, poultry, beef, feed grains, avocados, HPAI impacted the Companys operations and several of the peanuts, and whey as well as energy costs and the selling prices for Companys independent turkey suppliers. The impact of HPAI in many of our products, which are determined by constantly the industry reduced volume through the Companys turkey changing market forces of supply and demand. facilities through the first part of fiscal 2016. The Company has developed business continuity plans for various disease scenarios The live hog industry has evolved to large, vertically-integrated and will continue to update these plans as necessary. There can be operations using long-term supply agreements. This has resulted in no assurance given, however, that these plans will be effective in fewer hogs being available on the cash spot market. Consequently, eliminating the negative effects of any such diseases on the the Company uses long-term supply contracts based on market- Companys operating results. based formulas or the cost of production to ensure a stable supply of raw materials while minimizing extreme fluctuations in costs Market demand for the Companys products may fluctuate. over the long-term. This may result, in the short-term, in costs for The Company faces competition from producers of alternative live hogs that are higher than the cash spot market depending on meats and protein sources, including pork, beef, turkey, chicken, the relationship of the cash spot market to contract prices. Market- fish, peanut butter, and whey. The bases on which the Company based pricing on certain product lines, and lead time required to competes include: implement pricing adjustments, may prevent all or part of these · price; cost increases from being recovered, and these higher costs could · product quality and attributes; adversely affect our short-term financial results. · brand identification; · breadth of product line; and JOTS raises turkeys and also contracts with turkey growers to meet · customer service. its raw material requirements for whole birds and processed turkey products. Additionally, the Company owns various hog raising Demand for the Companys products is also affected by facilities that supplement its supply of raw materials. Results in competitors promotional spending and the effectiveness of the these operations are affected by the cost and supply of feed grains, Companys advertising and marketing programs, and consumer which fluctuate due to climate conditions, production forecasts, perceptions. Failure to identify and react to changes in food trends and supply and demand conditions at local, regional, national, and such as sustainability of product sources and animal welfare could worldwide levels. The Company attempts to manage some of its lead to, among other things, reduced demand for the Companys short-term exposure to fluctuations in feed prices by forward brands and products. The Company may be unable to compete buying, using futures contracts, and pursuing pricing advances. successfully on any or all of these bases in the future. However, these strategies may not be adequate to overcome sustained increases in market prices due to alternate uses for feed The Companys operations are subject to the general risks grains or other changes in these market conditions. associated with acquisitions. The Company has made several acquisitions in recent years, most recently the acquisitions of The supply of natural and organic proteins may impact the Justins and Applegate, and regularly reviews opportunities for Companys ability to ensure a continuing supply of these products. strategic growth through acquisitions. Potential risks associated

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document To manage this risk, the Company partners with multiple long-term with acquisitions include the inability to integrate new operations suppliers. successfully, the diversion of managements attention from other 33business concerns, the potential loss of key employees and International trade barriers and other restrictions could result in customers of the acquired companies, the possible assumption of less foreign demand and increased domestic supply of proteins unknown liabilities, potential disputes with the sellers, potential which could lower prices. The Company occasionally utilizes in- impairment charges if purchase assumptions are not achieved or country production to limit this exposure. market conditions decline, and the inherent risks in entering markets or lines of business in which the Company has limited or Outbreaks of disease among livestock and poultry flocks could no prior experience. Any or all of these risks could impact the harm the Companys revenues and operating margins. The Companys financial results and business reputation. In addition, Company is subject to risks associated with the outbreak of disease acquisitions outside the United States may present unique in pork and beef livestock, and poultry flocks, including Bovine challenges and increase the Companys exposure to the risks Spongiform Encephalopathy (BSE), pneu-mo-virus, Porcine associated with foreign operations. Circovirus 2 (PCV2), Porcine Reproduction & Respiratory The Companys operations are subject to the general risks of Syndrome (PRRS), Foot-and-Mouth Disease litigation. The Company is involved on an ongoing basis in litigation arising in the ordinary course of business. Trends in litigation may include class actions involving employees, consumers, competitors, suppliers, shareholders, or injured persons, and claims relating to product liability, contract disputes, intellectual property, advertising, labeling, wage and hour laws, employment practices, or environmental matters. Litigation trends and the outcome of litigation cannot be predicted with certainty and adverse litigation trends and outcomes could adversely affect the Companys financial results.

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

Government regulation, present and future, exposes the Company to potential sanctions and compliance costs that could adversely affect the Companys business. The Companys operations are subject to extensive regulation by the U.S. Department of Homeland Security, the U.S. Department of Agriculture, the U.S. Food and Drug Administration, federal and state taxing authorities, and other state and local authorities that oversee workforce immigration laws, tax regulations, animal welfare, food safety standards, and the processing, packaging, storage, distribution, advertising, and labeling of the Companys products. The Companys manufacturing facilities and products are subject to continuous inspection by federal, state, and local authorities. Claims or enforcement proceedings could be brought against the Company in the future. The availability of government inspectors due to a government furlough could also cause disruption to the Companys manufacturing facilities. Additionally, the Company is subject to new or modified laws, regulations, and accounting standards. The Companys failure or inability to comply with such requirements could subject the

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Company to civil remedies, including fines, injunctions, recalls, or Companys business. New matters or sites may be identified in the seizures, as well as potential criminal sanctions. future that will require additional investigation, assessment, or expenditures. In addition, some of the Companys facilities have The Company is subject to stringent environmental regulation been in operation for many years and, over time, the Company and and potentially subject to environmental litigation, other prior operators of these facilities may have generated and proceedings, and investigations. The Companys past and disposed of wastes that now may be considered hazardous. Future present business operations and ownership and operation of real discovery of contamination of property underlying or in the property are subject to stringent federal, state, and local vicinity of the Companys present or former properties or environmental laws and regulations pertaining to the discharge of manufacturing facilities and/or waste disposal sites could require materials into the environment and the handling and disposition of the Company to incur additional expenses. The occurrence of any wastes (including solid and hazardous wastes) or otherwise relating of these events, the implementation of new laws and regulations, or to protection of the environment. Compliance with these laws and stricter interpretation of existing laws or regulations could regulations, and the ability to comply with any modifications to adversely affect the Companys financial results. these laws and regulations, is material to the The Companys foreign operations pose additional risks to the Companys business. The Company operates its business and markets its products internationally. The Companys foreign operations are subject to the risks described above, as well as risks related to fluctuations in currency values, foreign currency exchange controls, compliance with foreign laws, compliance with applicable U.S. laws, including the Foreign Corrupt Practices Act, and other economic or political uncertainties. International sales are subject to risks related to general economic conditions, imposition of tariffs, quotas, trade barriers and other restrictions, enforcement of remedies in foreign jurisdictions and compliance with applicable foreign laws, and other economic and political uncertainties. All of these risks could result in increased costs or decreased revenues, which could adversely affect the Companys financial results.

The Company may be adversely impacted if the Company is unable to protect information technology systems against, or effectively respond to, cyber-attacks or security breaches. Information technology systems are an important part of the Companys business operations. Attempted cyber-attacks and other cyber incidents are occurring more frequently and are being made by groups and individuals with a wide range of motives and expertise. In an attempt to mitigate this risk, the Company has implemented and continues to evaluate security initiatives and disaster recovery plans.

Deterioration of labor relations or increases in labor costs could harm the Companys business. As of October 30, 2016, the Company had approximately 21,100 employees worldwide, of which approximately 5,500 were represented by labor unions, principally the United Food and Commercial Workers Union. A significant increase in labor costs or a deterioration of labor relations at any of the Companys facilities or contracted hog

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document processing facilities resulting in work slowdowns or stoppages could harm the Companys financial results. 34

Quantitative and Qualitative Disclosure of the Companys open futures contracts as of October 30, 2016, About Market Risks was $(3.2) million compared to $(2.9) million, before tax, as of October 25, 2015.

Hog Markets: The Companys earnings are affected by The Company measures its market risk exposure on its grain fluctuations in the live hog market. To minimize the impact on futures contracts using a sensitivity analysis, which considers a earnings, and to ensure a steady supply of quality hogs, the hypothetical 10 percent change in the market prices for grain. A 10 Company has entered into contracts with producers for the percent decrease in the market price for grain would have purchase of hogs at formula-based prices over periods of up to 10 negatively impacted the fair value of the Companys October 30, years. Purchased hogs under contract accounted for 94 percent of 2016, open grain contracts by $8.6 million, which in turn would the total hogs purchased by the Company in both fiscal 2016 and lower the Companys future cost on purchased grain by a similar 2015. The majority of these contracts use market-based formulas amount. based on hog futures, hog primal values, or industry reported hog markets. Other contracts use a formula based on the cost of Long-Term Debt: A principal market risk affecting the Company production, which can fluctuate independently from hog markets. is the exposure to changes in interest rates on the Companys The Companys value-added branded portfolio helps mitigate fixed-rate, long-term debt. Market risk for fixed-rate, long-term changes in hog and pork market prices. Therefore, a hypothetical debt is estimated as the potential increase in fair value, resulting 10 percent change in the cash hog market would have had an from a hypothetical 10 percent decrease in interest rates, and immaterial effect on the Companys results of operations. amounts to approximately $2.1 million. The fair value of the Companys long-term debt was estimated using discounted future Certain procurement contracts allow for future hog deliveries (firm cash flows based on the Companys incremental borrowing rates commitments) to be forward priced. The Company generally for similar types of borrowing arrangements. hedges these firm commitments by using hog futures contracts. These futures contracts are designated and accounted for as fair Investments: The Company holds trading securities as part of a value hedges. The change in the market value of such futures rabbi trust to fund certain supplemental executive retirement plans contracts is highly effective at offsetting changes in price and deferred income plans. As of October 30, 2016, the balance of movements of the hedged item, and the Company evaluates the these securities totaled $122.3 million compared to $119.7 million effectiveness of the contracts at least quarterly. Changes in the fair as of October 25, 2015. A majority of these securities represent value of the futures contracts, along with the gain or loss on the fixed income funds. The Company is subject to market risk due to firm commitment, are marked-to-market through earnings and are fluctuations in the value of the remaining investments, as recorded on the Consolidated Statements of Financial Position as a unrealized gains and losses associated with these securities are current asset and liability, respectively. The fair value of the included in the Companys net earnings on a mark-to-market basis. Companys open futures contracts as of October 30, 2016, was A 10 percent decline in the value of the investments not held in $1.4 million compared to $1.2 million as of October 25, 2015. fixed income funds would have a direct negative impact to the Companys pre-tax earnings of approximately $4.0 million, while The Company measures its market risk exposure on its hog futures a 10 percent increase in value would have a positive impact of the contracts using a sensitivity analysis, which considers a same amount. hypothetical 10 percent change in market prices. A 10 percent increase in market prices would have negatively impacted the fair International Assets: The fair values of certain Company assets value of the Companys October 30, 2016, open contracts by $1.2 are subject to fluctuations in foreign currencies. The Companys million, which in turn would lower the Companys future cost of net asset position in foreign currencies as of October 30, 2016, was purchased hogs by a similar amount. $443.1 million, compared to $277.5 million as of October 25, 2015, with most of the exposure existing in Chinese yuan and

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Turkey and Hog Production Costs: The Company raises or Philippine pesos. Changes in currency exchange rates impact the contracts for live turkeys and hogs to meet some of its raw material fair values of Company assets either currently through the supply requirements. Production costs in raising turkeys and hogs 35Consolidated Statements of Operations as currency gains/losses, or are subject primarily to fluctuations in feed prices and, to a lesser by affecting other comprehensive loss. extent, fuel costs. Under normal, long-term market conditions, changes in the cost to produce turkeys and hogs are offset by The Company measures its foreign currency exchange risk by proportional changes in their respective markets. using a 10 percent sensitivity analysis on the Companys primary foreign net asset position, the Chinese yuan, as of October 30, To reduce the Companys exposure to changes in grain prices, the 2016. A 10 percent strengthening in the value of the yuan relative Company utilizes a hedge program to offset the fluctuation in the to the U.S. dollar would result in other comprehensive income of Companys future direct grain purchases. This program currently approximately $38.3 million pre-tax. A 10 percent weakening in utilizes corn futures for JOTS, and these contracts are accounted the value of the yuan relative to the U.S. dollar would result in for under cash flow hedge accounting. The fair value other comprehensive loss of approximately $31.3 million pre-tax. Report of Management

Managements Responsibility for Financial Statements Managements Report on Internal Control Over Financial Reporting The accompanying financial statements were prepared by the management of Hormel Foods Corporation which is responsible Management of Hormel Foods Corporation is responsible for for their integrity and objectivity. These statements have been establishing and maintaining adequate internal control over prepared in accordance with U.S. generally accepted accounting financial reporting for the Company, as such term is defined in principles appropriate in the circumstances and, as such, include Exchange Act Rule 13a-15(f). The Companys internal control amounts that are based on our best estimates and judgments. system is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial Hormel Foods Corporation has developed a system of internal statements for external purposes in accordance with generally controls designed to assure that the records reflect the transactions accepted accounting standards. Under the supervision, and with the of the Company and that the established policies and procedures participation of management, including the Chief Executive are adhered to. This system is augmented by well-communicated Officer and Chief Financial Officer, we conducted an evaluation of written policies and procedures, a strong program of internal audit, the effectiveness of our internal control over financial reporting and well-qualified personnel. based on the framework in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations These financial statements have been audited by Ernst & Young of the Treadway Commission (2013 framework). LLP, an independent registered public accounting firm, and their report is included herein. The audit was conducted in accordance Based on our evaluation under the framework in Internal Control - with the standards of the Public Company Accounting Oversight Integrated Framework, we concluded that our internal control over Board (United States) and includes a review of the Companys financial reporting was effective as of October 30, 2016. Our accounting and financial controls and tests of transactions. internal control over financial reporting as of October 30, 2016, has been audited by Ernst & Young LLP, an independent registered The Audit Committee of the Board of Directors, composed solely public accounting firm, as stated in their report which is included of outside directors, meets periodically with the independent herein. auditors, management, and the internal auditors to assure that each is carrying out its responsibilities. Both Ernst & Young LLP and our internal auditors have full and free access to the Audit Committee, with or without the presence of management, to discuss the results of their audit work and their opinions on the adequacy of internal controls and the quality of financial reporting. James P. Snee James N. Sheehan

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document President, Chief Executive Senior Vice President Officer, and Director and Chief Financial Officer 36

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders Hormel Foods Because of its inherent limitations, internal control over financial Corporation reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are We have audited Hormel Foods Corporations internal control over subject to the risk that controls may become inadequate because of financial reporting as of October 30, 2016, based on criteria changes in conditions, or that the degree of compliance with the established in Internal ControlIntegrated Framework issued by policies or procedures may deteriorate. the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), (the COSO criteria). Hormel In our opinion, Hormel Foods Corporation maintained, in all Foods Corporations management is responsible for maintaining material respects, effective internal control over financial reporting effective internal control over financial reporting, and for its as of October 30, 2016, based on the COSO criteria. assessment of the effectiveness of internal control over financial reporting included in the accompanying Report of Management We also have audited, in accordance with the standards of the entitled Managements Report on Internal Control over Financial Public Company Accounting Oversight Board (United States), the Reporting. Our responsibility is to express an opinion on the consolidated statements of financial position of Hormel Foods companys internal control over financial reporting based on our Corporation at October 30, 2016 and October 25, 2015 and the audit. related statements of operations, comprehensive income, changes in stockholders investment and cash flows for each of the three We conducted our audit in accordance with the standards of the years in the period ended October 30, 2016 and our report dated Public Company Accounting Oversight Board (United States). December 21, 2016 expressed an unqualified opinion thereon. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and Minneapolis, Minnesota performing such other procedures as we considered necessary in December 21, 2016 the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A companys internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companys internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only 37 in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material Report of Independent Registered effect on the financial statements. Public Accounting Firm

The Board of Directors and Shareholders Hormel Foods In our opinion, the financial statements referred to above present Corporation fairly, in all material respects, the consolidated financial position of 38 Hormel Foods Corporation at October 30, 2016 and October 25, We have audited the accompanying consolidated statements of 2015, and the consolidated results of its operations and its cash financial position of Hormel Foods Corporation as of October 30, flows for each of the three years in the period ended October 30, 2016 and October 25, 2015, and the related consolidated 2016, in conformity with U.S. generally accepted accounting statements of operations, comprehensive income, changes in principles. shareholders investment, and cash flows for each of the three years in the period ended October 30, 2016. These financial We also have audited, in accordance with the standards of the statements are the responsibility of the Companys management. Public Company Accounting Oversight Board (United States), Our responsibility is to express an opinion on these financial Hormel Food Corporations internal control over financial statements based on our audits. reporting as of October 30, 2016, based on criteria established in Internal Control-Integrated Framework issued by the Committee We conducted our audits in accordance with the standards of the of Sponsoring Organizations of the Treadway Commission (2013 Public Company Accounting Oversight Board (United States). framework) and our report dated December 21, 2016 expressed an Those standards require that we plan and perform the audit to unqualified opinion thereon. obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis Minneapolis, Minnesota for our opinion. December 21, 2016 Consolidated Statements of Financial Position

October 30, October 25, (in thousands, except share and per share amounts) 2016 2015

Assets Current Assets Cash and cash equivalents $ 415,143 $ 347,239 Accounts receivable (net of allowance for doubtful accounts of $4,045 at October 30, 2016, and $4,086 at October 25, 2015) 591,310 605,689

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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

2,767,315 2,645,899 Less allowance for depreciation (1,661,866) (1,634,160)

1,105,449 1,011,739 Total Assets $ 6,370,067 $ 6,139,831

Liabilities and Shareholders Investment 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 $0.01 a share authorized 160,000,000 shares; issued none Common stock, nonvoting, par value $0.01 a share authorized 400,000,000 shares; issued none

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Common stock, par value $0.01465 a share authorized 1,600,000,000 shares; issued 528,483,868 shares October 30, 2016 issued 528,411,628 shares October 25, 2015 7,742 7,741 Additional paid-in capital 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

* Shares and par values have been restated, as appropriate, to reflect the two-for-one stock split distributed on February 9, 2016. See Notes to Consolidated Financial Statements.

Consolidated Statements of Operations

Fiscal Year Ended

October 30, October 25, October 26, (in thousands, except per share amounts) 2016 2015* 2014*

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 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:

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Basic $ 1.68 $ 1.30 $ 1.14 Diluted $ 1.64 $ 1.27 $ 1.12 Weighted-Average Shares Outstanding:

Basic 529,290 528,143 527,624 Diluted 542,473 541,002 540,431

* Shares and par values have been restated, as appropriate, to reflect the two-for-one stock split distributed on February 9, 2016. See Notes to Consolidated Financial Statements.

Consolidated Statements of Comprehensive Income

Fiscal Year Ended

October 30, October 25, October 26, (in thousands) 2016 2015 2014

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

See Notes to Consolidated Financial Statements.

Consolidated Statements of Changes in Shareholders Investment

Hormel Foods Corporation Shareholders

Accumulated

Additional Other Non- Total

(in thousands, Common Stock Treasury Stock Paid-In Retained Comprehensive controlling Shareholders

except per share amounts) Shares* Amount Shares* Amount Capital Earnings Income (Loss) Interest Investment

Balance at October 27, 2013 527,316 $7,725 $ $ $3,452,529 $(149,214) $5,539 $3,316,579

Net earnings 602,677 3,349 606,026

Purchases of common stock (2,514) (58,937) (58,937)

Stock-based compensation

expense 1 14,392 14,393

Exercise of stock options/

nonvested shares 2,424 35 6,068 6,103

Shares retired (2,514) (37) 2,514 58,937 (20,460) (38,440)

Distribution to noncontrolling

interest (2,500) (2,500)

Declared cash dividends

$0.40 per share* (211,112) (211,112)

Balance at October 26, 2014 527,226 $7,724 $ $ $3,805,654 $(207,700) $6,378 $3,612,056

Net earnings 686,088 1,176 687,264

Other comprehensive loss (18,363) (229) (18,592)

Purchases of common stock (800) (24,928) (24,928)

Stock-based compensation

expense 1 15,716 15,716

Exercise of stock options/

nonvested shares 1,986 28 9,527 9,555

Purchase of additional

ownership from

noncontrolling interest (11,881) 395 (2,549) (14,035)

Shares retired (800) (12) 800 24,928 (13,362) (11,554)

Distribution to noncontrolling

interest (1,581) (1,581)

Declared cash dividends

$0.50 per share* (264,063) (264,063)

Balance at October 25, 2015 528,412 $7,741 $ $ $4,216,125 $(225,668) $3,195 $4,001,393

Net earnings 890,052 465 890,517

Other comprehensive loss (70,635) (260) (70,895)

Purchases of common stock (2,386) (87,885) (87,885)

Stock-based compensation

expense 1 17,828 17,829

Exercise of stock options/

nonvested shares 2,458 35 7,476 7,511

Shares retired (2,386) (35) 2,386 87,885 (25,304) (62,546)

Declared cash dividends

$0.58 per share (307,064) (307,064)

Balance at October 30, 2016 528,484 $7,742 $ $ $4,736,567 $(296,303) $3,400 $4,451,406

* 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 Flows

Fiscal Year Ended October 30, October 25, October 26, (in thousands) 2016 2015 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 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)

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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) Payments 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

See Notes to Consolidated Financial Statements.

Notes to Consolidated Financial Statements October 30, 2016

price that would be received to sell an asset or paid to transfer a Note A liability in an orderly transaction between market participants at the measurement date (an exit price). ASC 820 establishes a fair Summary of Significant Accounting value hierarchy which requires assets and liabilities measured at fair value to be categorized into one of three levels based on the Policies inputs used in the valuation. The Company classifies assets and liabilities in their entirety based on the lowest level of input Principles of Consolidation: The consolidated financial significant to the fair value measurement. The three levels are statements include the accounts of Hormel Foods Corporation (the defined as follows: Company) and all of its majority-owned subsidiaries after elimination of intercompany accounts, transactions, and profits. Level 1: Observable inputs based on quoted prices (unadjusted) in active markets for identical assets or liabilities. Stock Split: On November 23, 2015, the Companys Board of Directors authorized a two-for-one split of the Companys voting Level 2: Observable inputs, other than those included in Level common stock, which was subsequently approved by shareholders 1, based on quoted prices for similar assets and liabilities in at the Companys Annual Meeting on January 26, 2016, and active markets, or quoted prices for identical assets and effected on January 27, 2016. The Companys voting common liabilities in inactive markets. stock was reclassified by reducing the par value from $.0293 per share to $.01465 per share and the number of authorized shares Level 3: Unobservable inputs that reflect an entitys own was increased from 800 million to 1.6 billion shares, in order to assumptions about what inputs a market participant would use effect the two-for-one stock split. The Company distributed the in pricing the asset or liability based on the best information additional shares of $.01465 par value common stock on February available in the circumstances. 9, 2016, and the shares began trading at the post-split price on February 10, 2016. See additional discussion regarding the Companys fair value measurements in Notes G, H, and M. Unless otherwise noted, all prior year share amounts and per share calculations throughout this Annual Report have been restated to Investments: The Company maintains a rabbi trust to fund certain reflect the impact of this split and to provide data on a comparable supplemental executive retirement plans and deferred income basis. Such restatements include calculations regarding the plans, which is included in other assets on the Consolidated

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Companys weighted-average shares, earnings per share, and Statements of Financial Position. The securities held by the trust dividends per share, as well as disclosures regarding the are classified as trading securities and consist mainly of fixed Companys stock-based compensation plans and share repurchase 43return investments. Therefore, unrealized gains and losses activity. associated with these investments are included in the Companys earnings. Securities held by the trust generated gains of $2.6 Use of Estimates: The preparation of financial statements in million, $2.4 million, and $2.9 million for fiscal years 2016, 2015, conformity with U.S. generally accepted accounting principles and 2014, respectively. (U.S. GAAP) requires management to make estimates and assumptions that affect the amounts reported in the financial Inventories: Inventories are stated at the lower of cost or market. statements and accompanying notes. Actual results could differ Cost is determined principally under the average cost method. from those estimates. Adjustments to the Companys lower of cost or market inventory reserve are reflected in cost of products sold in the Consolidated Fiscal Year: The Companys fiscal year ends on the last Sunday in Statements of Operations. October. Fiscal year 2016 consisted of 53 weeks and fiscal years 2015 and 2014 consisted of 52 weeks. Property, Plant and Equipment: Property, plant and equipment are stated at cost. The Company uses the straight-line method in Cash and Cash Equivalents: The Company considers all computing depreciation. The annual provisions for depreciation investments with an original maturity of three months or less on have been computed principally using the following ranges of asset their acquisition date to be cash equivalents. The Companys cash lives: buildings 20 to 40 years, machinery and equipment 5 to 10 equivalents as of October 30, 2016, and October 25, 2015, years. consisted primarily of bank deposits, money market funds rated AAA, or other highly liquid investment accounts. The Net Asset Internal-use software development and implementation costs are Value (NAV) of the Companys money market funds is based on expensed until the Company has determined that the software will the market value of the securities in their portfolio. result in probable future economic benefits, and management has committed to funding the project. Thereafter, all material Fair Value Measurements: Pursuant to the provisions of development and implementation costs, and purchased software Accounting Standards Codification (ASC) 820, Fair Value costs, are capitalized as part of machinery and equipment and Measurements and Disclosures (ASC 820), the Company measures amortized using the straight-line method over the remaining certain assets and liabilities at fair value or discloses the fair value estimated useful lives. of certain assets and liabilities recorded at cost in the consolidated financial statements. Fair value is calculated as the 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.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document In conducting the initial qualitative assessment, the Company In conducting the annual impairment test for its indefinite-lived analyzes actual and projected growth trends for net sales, gross intangible assets, the Company first performs a qualitative margin, and segment profit for each reporting unit, as well as assessment to determine whether it is more likely than not (> 50% historical performance versus plan and the results of prior likelihood) that an indefinite-lived intangible asset is impaired. If quantitative tests performed. Additionally, the Company assesses the Company concludes that this is the case, then a quantitative test critical areas that may impact its business, including for impairment must be performed. Otherwise, the Company does macroeconomic conditions and the related impact, market-related not need to perform a quantitative test. exposures, any plans to market all or a portion of their business, competitive changes, new or discontinued product lines, changes in In conducting the initial qualitative assessment, the Company key personnel, or any other potential risks to their projected analyzes growth rates for historical and projected net sales and the financial results. results of prior quantitative tests performed. Additionally, each reporting unit assesses critical areas that may impact their If performed, the quantitative goodwill impairment test is a two- intangible assets or the applicable royalty rates to determine if step process performed at the reporting unit level. First, the fair there are factors that could indicate impairment of the asset. value of each reporting unit is compared to its corresponding carrying value, including goodwill. The fair value of each reporting If performed, the quantitative impairment test compares the fair unit is estimated using discounted cash flow valuations (Level 3), value and carrying value of the indefinite-lived intangible asset. which incorporate assumptions regarding future growth rates, The fair value of indefinite-lived intangible assets is primarily terminal values, and discount rates. The estimates and assumptions determined on the basis of estimated discounted value, using the used consider historical performance and are consistent with the relief from royalty method (Level 3), which incorporates assumptions used in determining future profit plans for each assumptions regarding future sales projections and discount rates. reporting unit, which are approved by the Companys Board of If the carrying value exceeds fair value, the indefinite-lived Directors. If the first step results in the carrying value exceeding intangible asset is considered impaired and an impairment charge is the fair value of any reporting unit, then a second step must be recorded for the difference. Even if not required, the Company completed in order to determine the amount of goodwill periodically elects to perform the quantitative test in order to impairment that should be recorded. In the second step, the implied confirm the qualitative assessment. fair value of the reporting units goodwill is determined by allocating the reporting units fair value to all of its assets and Based on the qualitative assessment conducted in fiscal year 2016, liabilities other than goodwill in a manner similar to a purchase performance of the quantitative test was not required for any of the price allocation. The implied fair value of the goodwill that results Companys indefinite-lived intangible assets. No impairment from the application of this second step is then compared to the charges were recorded for indefinite-lived intangible assets for carrying amount of the goodwill and an impairment charge is fiscal years 2016, 2015, or 2014. recorded for the difference. Impairment of Long-Lived Assets and Definite-Lived During fiscal years 2016, 2015, and 2014, as a result of the Intangible Assets: Definite-lived intangible assets are amortized qualitative testing performed, no impairment charges were over their estimated useful lives. The Company reviews long-lived recorded other than for the Companys Diamond Crystal Brands assets and definite-lived intangible assets for impairment annually, (DCB) assets held for sale. See additional discussion regarding the or more frequently when events or changes in circumstances Companys assets held for sale in Note E. 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,

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document less costs to sell. See additional discussion regarding the Companys assets held for sale in Note E.

44 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 and losses are amortized when the net gain or loss exceeds 10.0% experience different from that assumed and from changes in assumptions are deferred and amortized over future periods. For of the greater of the projected benefit obligation or the fair value of the defined benefit pension plans, the unrecognized gains plan assets at the beginning of the year. For the other post- retirement plans, the unrecognized gains and losses are amortized The Company regularly monitors and evaluates the fair value of when the net gain or loss exceeds 10.0% of the accumulated our equity investments. If events and circumstances indicate that a pension benefit obligation at the beginning of the year. For plans decline in the fair value of these assets has occurred and is other with active employees, net gains or losses in excess of the corridor than temporary, the Company will record a charge in equity in are amortized over the average remaining service period of earnings of affiliates in the Consolidated Statements of Operations. participating employees expected to receive benefits under those The Companys equity investments do not have a readily plans. For plans with only retiree participants, net gains or losses in determinable fair value as none of them are publicly traded. The excess of the corridor are amortized over the average remaining fair values of the Companys private equity investments are life of the retirees receiving benefits under those plans. determined by discounting the estimated future cash flows of each entity. These cash flow estimates include assumptions on growth Contingent Liabilities: The Company may be subject to rates and future currency exchange rates (Level 3). Excluding investigations, legal proceedings, or claims related to the on-going charges related to the exit from international joint venture operation of its business, including claims both by and against the businesses in fiscal year 2015, there were no other charges on any Company. Such proceedings typically involve claims related to of the Companys equity investments in fiscal years 2016, 2015, or product liability, contract disputes, wage and hour laws, 2014. See additional discussion regarding the Companys equity employment practices, or other actions brought by employees, method investments in Note I. consumers, competitors, or suppliers. The Company establishes accruals for its potential exposure, as appropriate, for claims Revenue Recognition: The Company recognizes sales when title against the Company when losses become probable and reasonably passes upon delivery of its products to customers, net of applicable estimable. Where the Company is able to reasonably estimate a provisions for discounts, returns, and allowances. Products are range of potential losses, the Company records the amount within delivered upon receipt of customer purchase orders with acceptable that range which constitutes the Companys best estimate. The terms, including price and reasonably assured collectability. Company also discloses the nature of and range of loss for claims against the Company when losses are reasonably possible and The Company offers various sales incentives to customers and material. consumers. Incentives that are offered off-invoice include prompt pay allowances, will call allowances, spoilage allowances, and Foreign Currency Translation: Assets and liabilities temporary price reductions. These incentives are recognized as denominated in foreign currency are translated at the current reductions of revenue at the time title passes. Coupons are used as exchange rate as of the statement of financial position date, and an incentive for consumers to purchase various products. The amounts in the statement of operations are translated at the average coupons reduce revenues at the time they are offered, based on monthly exchange rate. Translation adjustments resulting from estimated redemption rates. Promotional contracts are performed fluctuations in exchange rates are recorded as a component of by customers to promote the Companys products to consumers. accumulated other comprehensive loss in shareholders These incentives reduce revenues at the time of performance investment. through direct payments and accrued promotional funds. Accrued promotional funds are unpaid liabilities for promotional contracts When calculating foreign currency translation, the Company in process or completed at the end of a quarter or fiscal year. deemed its foreign investments to be permanent in nature and has Promotional contract accruals are based on a review of the unpaid not provided for taxes on currency translation adjustments arising outstanding contracts on which performance has taken place. from converting the investment in a foreign currency to U.S. Estimates used to determine the revenue reduction include the level dollars.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document of customer performance and the historical spend rate versus Derivatives and Hedging Activity: The Company uses contracted rates. commodity and currency positions to manage its exposure to price 45 fluctuations in those markets. The contracts are recorded at fair Allowance for Doubtful Accounts: The Company estimates the value on the Consolidated Statements of Financial Position within allowance for doubtful accounts based on a combination of factors, other current assets or accounts payable. Additional information on including the age of its accounts receivable balances, customer hedging activities is presented in Note H. history, collection experience, and current market factors. Additionally, a specific reserve may be established if the Company Equity Method Investments: The Company has a number of becomes aware of a customers inability to meet its financial investments in joint ventures where its voting interests are in obligations. excess of 20 percent but not greater than 50 percent and for which there are no other indicators of control. The Company accounts for Advertising Expenses: Advertising costs are expensed when such investments under the equity method of accounting, and its incurred. Advertising expenses include all media advertising but underlying share of each investees equity is reported in the exclude the costs associated with samples, demonstrations, and Consolidated Statements of Financial Position as part of market research. Advertising costs for fiscal years 2016, 2015, and investments in and receivables from affiliates. 2014 were $204.1 million, $145.3 million, and $114.4 million, respectively. Shipping and Handling Costs: The Companys shipping and earnings and are presented in the Consolidated Statements of handling expenses are included in cost of products sold. Operations as either interest and investment income or interest expense, as appropriate. Research and Development Expenses: Research and development costs are expensed as incurred and are included in On March 16, 2015, the Company purchased the remaining selling, general and administrative expenses. Research and 19.29% ownership interest in its Shanghai Hormel Foods development expenses incurred for fiscal years 2016, 2015, and Corporation joint venture from the minority partner Shanghai 2014 were $34.7 million, $32.0 million, and $29.9 million, Shangshi Meat Products Co. Ltd., resulting in 100.0% ownership respectively. of that business. The interest was purchased with $11.7 million in cash, along with the transfer of land use rights and buildings held Income Taxes: The Company records income taxes in accordance by the joint venture. The difference between the fair value of the with the liability method of accounting. Deferred taxes are consideration given and the reduction in the noncontrolling interest recognized for the estimated taxes ultimately payable or was recognized as an $11.9 million reduction in additional paid-in recoverable based on enacted tax law. Changes in enacted tax rates capital attributable to the Company. The Company will continue to are reflected in the tax provision as they occur. manufacture at the Shanghai facility by leasing the land use rights and buildings from the previous minority partner. In accordance with ASC 740, Income Taxes, the Company recognizes a tax position in its financial statements when it is more Accounting Changes and Recent Accounting Pronouncements: likely than not that the position will be sustained upon examination In January 2014, the Financial Accounting Standards Board based on the technical merits of the position. That position is then (FASB) updated the guidance within ASC 323, Investments-Equity measured at the largest amount of benefit that is greater than 50 Method and Joint Ventures. The update provides guidance on percent likely of being realized upon ultimate settlement. accounting for investments by a reporting entity in flow-through limited liability entities that manage or invest in affordable housing Employee Stock Options: The Company records stock-based projects qualifying for the low-income housing tax credit. The compensation expense in accordance with ASC 718, Compensation amendments modify the conditions a reporting entity must meet to - Stock Compensation. For options subject to graded vesting, the be eligible to use a method other than the equity or cost methods to Company recognizes stock-based compensation expense ratably account for qualified affordable housing project investments. If the over the shorter of the vesting period or requisite service period. modified conditions are met, the amendments permit an entity to Stock-based compensation expense for grants made to retirement- make an accounting policy election to amortize the initial cost of eligible employees is recognized on the date of grant. 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

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Share Repurchases: On January 29, 2013, the Companys Board (benefit). Additionally, the amendments introduce new recurring of Directors authorized the repurchase of 10.0 million shares of its disclosures about all investments in qualified affordable housing common stock with no expiration date. On a pre-split basis, 0.4 46 projects irrespective of the method used to account for the million shares were purchased from The Hormel Foundation under investments. The updated guidance is to be applied retrospectively this authorization at the average closing price for the three days of and is effective for fiscal years, and interim periods within those September 15, September 16, and September 17, 2015, or $62.32. years, beginning after December 15, 2014, with early adoption The Company purchased 1.3 million shares at an average price of permitted. The Company adopted the new provisions of this $46.87 during fiscal year 2014 on a pre-split basis. accounting standard at the beginning of fiscal year 2016, and adoption did not have a material impact on its consolidated On November 23, 2015, the Companys Board of Directors financial statements. authorized a two-for-one split of the Companys voting common stock. As part of the Boards approval of that stock split, the In May 2014, the FASB issued ASC 606, Revenue from Contracts number of shares remaining to be repurchased was adjusted with Customers. This topic converges the guidance within U.S. proportionately. On a post-split basis, 2.4 million shares at an GAAP and international financial reporting standards and average price of $36.84 were purchased during fiscal year 2016 supersedes ASC 605, Revenue Recognition. The new standard under the current authorization in place. requires companies to recognize revenue to depict the transfer of goods or services to customers in amounts that reflect the Supplemental Cash Flow Information: Non-cash investment consideration to which the company expects to be entitled in activities presented on the Consolidated Statements of Cash Flows exchange for those goods or services. The new standard will generally consist of unrealized gains or losses on the Companys also result in enhanced disclosures about revenue, provide rabbi trust. The noted investments are included in other assets or guidance for transactions which were not previously addressed short-term marketable securities on the Consolidated Statements of comprehensively, and improve guidance for multiple-element Financial Position. Changes in the value of these investments are arrangements. On July 8, 2015, the FASB approved a one-year included in the Companys net 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.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document fiscal year ends that do not coincide with a calendar month end to make an accounting policy election to measure defined benefit plan In November 2015, the FASB updated the guidance within ASC assets and obligations as of the end of the month closest to their 740, Balance Sheet Classification of Deferred Taxes. The update fiscal year ends. The updated guidance is effective for fiscal years requires all deferred tax assets and liabilities, along with any beginning after December 15, 2015, and interim periods within related valuation allowance, be classified as noncurrent on the those fiscal years, with early adoption permitted. The Company balance sheet. The updated guidance is effective for fiscal years adopted the new provisions of this accounting standard at the beginning after December 15, 2016, and interim periods within beginning of fiscal year 2016, with no accounting policy change those fiscal years, with early adoption permitted. The Company elected. adopted the new provisions of this accounting standard prospectively at the beginning of fiscal year 2016, and adoption did In May 2015, the FASB updated the guidance within ASC 820, not have a material impact on its consolidated financial statements. Fair Value Measurements and Disclosures. The update provides guidance on the disclosures for investments in certain entities that In February 2016, the FASB updated the guidance within ASC calculate NAV per share (or its equivalent). The amendments 842, Leases. The update requires lessees to put most leases on their remove the requirement to categorize within the fair value balance sheets while recognizing expenses on their income hierarchy all investments for which fair value is measured using statements in a manner similar to current U.S. GAAP. The the NAV per share (or its equivalent) as a practical expedient. The guidance also eliminates current real estate-specific provisions for updated guidance is to be applied retrospectively and is effective all entities. For lessors, the guidance modifies the classification for annual reporting periods beginning after December 15, 2015, criteria and the accounting for sales-type and direct financing and interim periods within those fiscal years, with early adoption leases. The updated guidance is effective for fiscal years, and permitted. The Company expects to adopt the new provisions of interim periods within those fiscal years, beginning after this accounting standard at the beginning of fiscal year 2017, and December 15, 2018. The Company is currently assessing the adoption is not expected to have a material impact on its timing and impact of adopting the updated provisions. consolidated financial statements as it will impact year-end disclosures only. 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.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The Company is currently assessing the timing and impact of adopting the updated provisions. 47

In August 2016, the FASB updated the guidance within ASC 230, Statement of Cash Flows. The update makes eight targeted changes Applegate® is the No. 1 brand in natural and organic value-added to how cash receipts and cash payments are presented and prepared meats and this acquisition will allow the Company to classified in the statement of cash flows. The updated guidance is expand the breadth of its protein offerings to provide consumers effective for fiscal years, and interim periods within those fiscal more choice in this fast growing category. years, beginning after December 15, 2017, with early adoption permitted provided all amendments are adopted in the same period. The acquisition was accounted for as a business combination using The guidance requires application using a retrospective transition the acquisition method. The Company obtained an independent method. The Company is currently assessing the timing and impact appraisal. A final allocation of the purchase price to the acquired of adopting the updated provisions. assets, liabilities, and goodwill is presented in the table below.

In October 2016, the FASB updated the guidance within ASC

740, Income Taxes. The updated guidance requires the recognition (in thousands) of the income tax consequences of an intra-entity asset transfer, Accounts receivable $ 25,574 other than transfers of inventory, when the transfer occurs. For Inventory 22,212 intra-entity transfers of inventory, the income tax effects will continue to be deferred until the inventory has been sold to a third Prepaid and other assets 2,987 party. The updated guidance is effective for reporting periods Property, plant and equipment 3,463 beginning after December 15, 2017, with early adoption permitted Intangible assets 275,900 only within the first interim period of a fiscal year. The guidance is Goodwill 488,235 required to be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the Current liabilities (23,420) beginning of the period of adoption. The Company is currently Deferred taxes (20,888) assessing the timing and impact of adopting the updated Purchase price $774,063 provisions.

Goodwill is calculated as the excess of the purchase price over the fair value of the net assets recognized. The goodwill recorded as Note B part of the acquisition primarily reflects the value of the potential to expand product distribution. A portion of the goodwill balance is Acquisitions expected to be deductible for income tax purposes. The goodwill and intangible assets have been allocated to the Refrigerated Foods On May 26, 2016, the Company acquired Justins, LLC (Justins) segment. of Boulder, Colorado, for a preliminary purchase price of $280.9 million. The transaction provides a cash flow benefit resulting from The Company recognized approximately $9.0 million of the amortization of the tax basis of assets, the net present value of transaction costs in fiscal year 2015 related to the acquisition and which is approximately $70.0 million. The purchase price is the charges were reported in selling, general and administrative preliminary pending final purchase accounting adjustments, and expense in the Companys Consolidated Statements of Operations. was funded by the Company with cash on hand and by utilizing Operating results for this acquisition have been included in the short-term financing. Primary assets acquired include goodwill of Companys Consolidated Statements of Operations from the date $186.4 million and intangibles of $89.9 million. of acquisition and are reflected in the Refrigerated Foods segment.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Justins is a pioneer in nut butter-based snacking and this On August 11, 2014, the Company acquired CytoSport acquisition allows the Company to enhance its presence in the Holdings, Inc. (CytoSport) of Benicia, California, for a final specialty natural and organic nut butter category, complementing 48 purchase price of $420.9 million in cash. The purchase price was SKIPPY® peanut butter products. funded by the Company with cash on hand and by utilizing funds from its revolving line of credit. The agreement provides for a Operating results for this acquisition have been included in the potential additional payment of up to $20.0 million subject to Companys Consolidated Statements of Operations from the date meeting specific financial performance criteria over the two years of acquisition and are reflected in the Grocery Products segment. subsequent to the year of acquisition. The Company recorded adjustments to income to recognize the liability at its fair value as On July 13, 2015, the Company acquired Applegate Farms, LLC of October 30, 2016, and October 25, 2015, of $1.4 million in (Applegate) of Bridgewater, New Jersey, for a final purchase price fiscal year 2016 and $8.9 million in fiscal year 2015. of $774.1 million in cash. The purchase price was funded by the CytoSport is the maker of Muscle Milk® products and is a leading Company with cash on hand and by utilizing short-term financing. provider of premium protein products in the sports nutrition category. CytoSports brands align with the Companys focus on protein while further diversifying the Companys 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 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

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.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document expected to be deductible for income tax purposes. The goodwill and intangible assets have been allocated to the Specialty Foods On November 26, 2013, the Company acquired the China-based and International & Other segments. SKIPPY ® peanut butter business, for a final purchase price of $41.9 million in cash. This acquisition included the Weifang, The Company recognized approximately $4.8 million of China, manufacturing facility and all sales in Mainland China. The transaction costs in fiscal year 2014 related to the acquisition and purchase price was funded by the Company with cash on hand. 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 Companys Consolidated Statements of Operations from the date Operating results for this acquisition have been included in the of acquisition and are reflected in the International & Other Companys Consolidated Statements of Operations from the date reporting segment. of acquisition and are reflected in the Specialty Foods and International & Other segments. 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 Companys balanced product portfolio. The acquisition also provides the opportunity to strengthen the Companys 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. Note C

Inventories

Principal components of inventories are:

October 30, October 25,

(in thousands) 2016 2015

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

Note D

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 Justins 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 Companys 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 $322,942 $ 96,643 $203,214 $470,857 $132,750 $1,226,406

Goodwill acquired 488,476 488,476

Purchase adjustments 7,096 7,096

Impairment charge (21,537) (21,537)

Product line disposal (521) (435) (1) (957)

Balance as of October 25, 2015 $322,421 $584,684 $203,214 $456,416 $132,749 $1,699,484

Goodwill acquired 186,379 186,379

Purchase adjustments (241) (241)

Goodwill sold (50,134) (50,134)

Impairment charge (991) (991)

Balance as of October 30, 2016 $508,800 $584,443 $203,214 $405,291 $132,749 $1,834,497

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 Justins. 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 $88,240 $(20,737) 12.2 $ 83,190 $(13,939) 12.1

Formulas and recipes 1,950 (1,796) 10.0 7,490 (6,865) 7.2

Proprietary software and technology N/A 7,010 (6,901) 8.1

Other intangibles 3,520 (1,677) 6.3 2,370 (1,195) 7.5

Total $93,710 $(24,210) 11.9 $100,060 $(28,900) 11.3

Amortization expense for the last three fiscal years was as follows: The carrying amounts for indefinite-lived intangible assets are in the following table. The increases represent the fair value of the

(in millions) tradenames acquired with Justins in fiscal year 2016 and Applegate in fiscal year 2015.

2015 8.1 October 30, October 25, 50 2014 9.4 (in thousands) 2016 2015 Brands/tradenames/trademarks $825,774 $748,075

Estimated annual amortization expense for the five fiscal years Other intangibles 7,984 7,984 after October 30, 2016, is as follows: Total $833,758 $756,059

(in millions) During the fourth quarter of fiscal years 2016, 2015, and 2014, the 2017 $8.3 Company completed the required annual impairment tests of 2018 7.8 indefinite-lived intangible assets and goodwill. No impairment

2019 7.6 charges were recorded as a result of this test. Upon disposition of the Companys DCB assets held for sale, the Company recorded a 2020 7.4 $1.0 million impairment in the second quarter of fiscal 2016. See 2021 7.4 additional discussion regarding the Companys assets held for sale in Note E. Useful lives of intangible assets were also reviewed during this process, with no changes identified. Note E Amounts classified as assets and liabilities held for sale on October 25, 2015, were presented on the Companys Consolidated Assets Held for Sale Statement of Financial Position within their respective accounts, and include the following: At the end of fiscal year 2016, the Company was actively marketing Clougherty Packing, LLC, parent company of Farmer Assets held for sale (in thousands)

John and Saags Specialty Meats, along with PFFJ, LLC farm Current assets $ 26,057 operations in California, Arizona, and Wyoming. Through this Goodwill 51,811 process, the Company identified the specific assets and liabilities to Intangibles 5,389 be sold and allocated goodwill based on the relative fair values of Property, plant and equipment 31,678 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 Total assets held for sale $114,935 year, the Company entered into an agreement for the sale. The assets held for sale are reported within the Companys Liabilities held for sale (in thousands) Refrigerated Foods segment. The assets held for sale are not Total current liabilities held for sale $ 3,191 material to the Companys annual net sales, net earnings, or earnings per share.

Amounts classified as assets and liabilities held for sale on Note F October 30, 2016, are presented on the Companys Consolidated Statement of Financial Position within their respective accounts, Long-term Debt and Other Borrowing and include the following: Arrangements

Assets held for sale (in thousands) Long-term debt consists of: Current assets $ 80,861

Goodwill 12,703 October 30, October 25,

Intangibles 14,321 (in thousands) 2016 2015

Property, plant and equipment 74,812 Senior unsecured notes, with interest Total assets held for sale $182,697 at 4.125%, interest due semi- annually through April 2021 maturity date $250,000 $250,000

Total current liabilities held for sale $ 44,066 Total $250,000 $250,000 51

In fiscal year 2015, the Company began actively marketing a The Company has a $400.0 million unsecured revolving line of portion of DCB. Through this process, the Company identified the credit which was extended by one year during fiscal year 2016 at specific assets and liabilities to be sold and allocated goodwill the Companys discretion and matures in June 2021. The based on the relative fair values of the assets held for sale and the Company retains an option in 2017 to extend the facility for an assets that will be retained by the Company. In the second quarter additional year. The unsecured revolving line of credit bears of fiscal year 2016, the Company entered into an agreement for the interest at a variable rate based on LIBOR, and a fixed fee is paid sale and recorded a $1.0 million impairment charge based on the for the availability of this credit line. As of October 30, 2016, and valuation of the assets as implied by the agreed-upon sales price. October 25, 2015, the Company had no outstanding draws from During the fourth quarter of fiscal year 2015, a $21.5 million this line of credit. goodwill impairment charge was recorded for the portion of DCB held for sale. The fair value of the net assets to be sold was The Company also has a $300.0 million term loan facility expiring determined using Level 2 inputs utilizing a market participant bid in December 2016. As of October 30, 2016, the Company had no along with internal valuations of the business. Impairment charge outstanding draws from this line of credit. As of October 25, 2015, was recorded on the Companys Consolidated Statements of the Company had $185.0 million outstanding on the term loan Operations on the line item Goodwill impairment charge. The facility. transaction closed on May 9, 2016, resulting in proceeds, net of selling costs, of a preliminary closing price of $110.1 million, The Company is required by certain covenants in its debt pending working capital adjustments. DCB was reported within the agreements to maintain specified levels of financial ratios and Companys Specialty Foods segment. DCB provided financial position. At the end of the current fiscal year, the approximately $256 million of net sales in fiscal year 2015. Net Company was in compliance with all of these covenants. earnings and earnings per share were not material to the consolidated Company. Total interest paid in the last three fiscal years is as follows:

(in millions) Note G 2016 $12.9 2015 13.1 Pension and Other Post-retirement 2014 12.7 Benefits Payment Program and may change each year as the cost to provide coverage is determined. Eligible employees hired after January 1, The Company has several defined benefit plans and defined 1990, may receive post-retirement medical coverage but must pay contribution plans covering most employees. Total costs associated the full cost of the coverage. On October 17, 2012, the plan was with the Companys defined contribution benefit plans in fiscal amended, effective April 1, 2013, to terminate coverage for certain years 2016, 2015, and 2014 were $33.5 million, $31.7 million, and nonunion retirees who retired on or after August 1, 2002, and who $30.1 million, respectively. Benefits for defined benefit pension are or will be Medicare eligible. If the cost of the nonunion retiree plans covering hourly employees are provided based on stated coverage is currently subsidized by the Company for the affected amounts for each year of service, while plan benefits covering retirees, credits will be established in a health reimbursement salaried employees are based on final average compensation. The account to help reimburse the retiree for the cost of purchasing Companys funding policy is to make annual contributions of not coverage in the individual market. Actuarial gains and losses and less than the minimum required by applicable regulations. any adjustments resulting from plan amendments are deferred and Actuarial gains and losses and any adjustments resulting from plan amortized to expense over periods ranging from 5-24 years. amendments are deferred and amortized to expense over periods ranging from 9-23 years. In fiscal year 2011, an amendment was enacted for a defined benefit plan which included a change in the pension formula Certain groups of employees are eligible for post-retirement health effective January 1, 2017. The amended formula remains a defined or welfare benefits. Benefits for retired employees vary for each benefit formula, but will base the accrued benefit credit on age and

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document group depending on respective retirement dates and applicable plan service and define the benefit as a lump sum. Effective October 31, coverage in effect. Contribution requirements for retired employees 2016, the 401(k) match for these participants was increased. are governed by the Retiree Health Care 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 55,728 52,522 53,030 13,346 13,479 15,279

Expected return on plan assets (88,681) (88,792) (83,702)

Amortization of prior service cost (4,120) (4,878) (4,971) (4,282) (1,337) (1,337)

Recognized actuarial loss (gain) 20,318 18,476 12,697 1,617 (2) (2)

Curtailment (gain) charge (4,438)

Net periodic cost $ 5,758 $ 6,123 $ 2,989 $11,978 $13,935 $15,903

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 (464,091) (360,949) (44,258) (40,590)

The following amounts are expected to be recognized in net periodic benefit expense in fiscal year 2017: 52

Post-

Pension retirement

(in thousands) Benefits Benefits 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 Amortized prior service credit $(3,000) $(4,274) the plans as of the October 30, 2016, and the October 25, 2015, Recognized actuarial losses 26,166 2,424 measurement dates:

Pension Benefits Post-retirement Benefits

(in thousands) 2016 2015 2016 2015

Change in benefit obligation:

Benefit obligation at beginning of year $1,248,209 $1,235,769 $334,544 $330,841

Service cost 26,951 28,795 1,297 1,795

Interest cost 55,728 52,522 13,346 13,479

Actuarial loss (gain) 112,208 (16,872) 5,285 10,339

Plan amendments 6,884 (15,283)

Curtailment (gain) loss (674)

Participant contributions 2,959 2,798

Medicare Part D subsidy 2,090 1,313

Benefits paid (54,436) (52,005) (26,766) (26,021)

Pension Benefits Post-retirement Benefits

(in thousands) 2016 2015 2016 2015

Change 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

Participant contributions 2,959 2,798

Employer contributions 30,529 27,147 23,807 23,223

Benefits paid (54,436) (52,005) (26,766) (26,021)

Fair value of plan assets at end of year $1,232,626 $1,179,777 $ $

Funded status at end of year $ (162,244) $ (68,432) $(317,472) $(334,544)

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 (5,425) (4,931) (20,836) (21,645)

Pension and post-retirement benefits (225,720) (196,362) (296,636) (312,899)

Net amount recognized $(162,244) $ (68,432) $(317,472) $(334,544)

The following table provides information for pension plans with Weighted-average assumptions used to determine net periodic accumulated benefit obligations in excess of plan assets: benefit costs are as follows: 53

(in thousands) 2016 2015 2016 2015 2014

Projected benefit obligation $231,145 $201,293 Discount rate 4.50% 4.31% 4.89%

Accumulated benefit obligation 225,364 193,913 Rate of future compensation For Fair value of plan assets increase (for plans that base benefits on final compensation level) 3.92% 3.94% 3.91% Weighted-average assumptions used to determine benefit obligations are as follows: Expected long-term return on plan assets 7.60% 7.70% 7.80%

2016 2015 The expected long-term rate of return on plan assets is based on Discount rate 3.94% 4.50% fair value and is developed in consultation with outside advisors. A Rate of future compensation increase range is determined based on the composition of the asset (for plans that base benefits on final portfolio, historical long-term rates of return, and estimates of compensation level) 3.96% 3.92% future performance. 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.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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 $(14,259) $16,745 $(181,910) $230,150

Expected long-term rate of return on plan assets (12,125) 12,125

Rate of future compensation increase 2,577 (2,263) 1,421 (1,332)

Post-retirement Benefits:

Discount rate $ (1,011) $ 4,710 $ (31,075) $ 37,551

Health care cost trend rate 1,575 (1,347) 33,249 (28,432)

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 58,466 21,393

2019 61,024 21,519

2020 63,940 21,461

2021 66,871 21,384

2022-2026 378,191 101,662

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 Companys 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 21.7% 12-22% 38.8% 15-35%

Small Capitalization Equity 5.2% 3-13% 5.4% 5-15%

International Equity 13.7% 10-20% 14.0% 15-25%

Private Equity 5.5% 0-15% 6.1% 0-15%

Total Equity Securities 56.6% 50-75% 64.3% 50-75%

Fixed Income 36.4% 25-45% 34.3% 25-45%

Real Estate 5.0% 0-10% 0-10%

Cash and Cash Equivalents 2.0% 1.4%

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 Companys 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) $ 24,412 $ 24,412 $ $

Large Capitalization Equity(2)

Domestic $ 234,633 $156,495 $ 78,138 $

Foreign 32,795 32,795

Total Large Capitalization Equity $ 267,428 $189,290 $ 78,138 $

Small Capitalization Equity(3)

Domestic $ 52,599 $ 52,599 $ $

Foreign 11,173 11,173

Total Small Capitalization Equity $ 63,772 $ 63,772 $ $

International Equity(4)

Mutual fund $ 99,635 $ $ 99,635 $

Collective trust 69,184 69,184

Total International Equity $ 168,819 $ $168,819 $

Global Equity Mutual Fund(5) $ 129,014 $ $129,014 $

Private Equity(6)

Domestic $ 54,613 $ $ $ 54,613

International 13,489 13,489

Total Private Equity $ 68,102 $ $ $ 68,102

Total Equity $ 697,135 $253,062 $375,971 $ 68,102

US government issues $ 153,333 $126,673 $ 26,660 $

Municipal issues 21,451 21,451

Corporate issues domestic 224,963 224,963

Corporate issues foreign 48,328 48,328

Total Fixed Income $ 448,075 $126,673 $321,402 $

Real Estate Domestic(8) $ 63,004 $ $ $ 63,004

Total Investments at Fair Value $1,232,626 $404,147 $697,373 $131,106

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) $ 16,551 $ 16,551 $ $

Large Capitalization Equity(2)

Domestic $ 300,735 $175,206 $125,529 $

Foreign 36,637 36,637

World 120,206 120,206

Total Large Capitalization Equity $ 457,578 $211,843 $245,735 $

Small Capitalization Equity(3)

Domestic $ 55,513 $ 55,513 $ $

Foreign 8,246 8,246

Total Small Capitalization Equity $ 63,759 $ 63,759 $ $

International Equity(4)

Mutual fund $ 101,062 $ $101,062 $

Collective trust 63,861 63,861

Total International Equity $ 164,923 $ $164,923 $

Private Equity(6)

Domestic $ 54,748 $ $ $54,748

International 17,027 17,027

Total Private Equity $ 71,775 $ $ $71,775

Total Equity $ 758,035 $275,602 $410,658 $71,775

Fixed Income(7)

US government issues $ 130,456 $104,460 $ 25,996 $

Municipal issues 20,211 20,211

Corporate issues domestic 210,035 210,035

Total Fixed Income $ 405,191 $104,460 $300,731 $

Total Investments at Fair Value $1,179,777 $396,613 $711,389 $71,775

(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 upcoming fiscal years. As of October 30, 2016, and October 25, inputs (Level 3) is as follows: 2015, the Company had the following outstanding commodity

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (in thousands) 2016 2015 futures contracts that were entered into to hedge forecasted purchases: Beginning Balance $ 71,775 $58,723

Purchases, issuances, and 52,891 (3,574) settlements (net) Volume

Unrealized (losses) gains (5,177) 7,741 Commodity October 30, 2016 October 25, 2015

Realized gains 4,276 7,623 Corn 22.4 million bushels 20.1 million bushels Interest and dividend income 7,341 1,262

Ending Balance $131,106 $71,775 As of October 30, 2016, the Company has included in AOCL hedging gains of $9.2 million (before tax) relating to its positions, The Company has commitments totaling $85.0 million for the compared to gains of $1.0 million (before tax) as of October 25, private equity investments within the pension plans. The unfunded 2015. The Company expects to recognize the majority of these private equity commitment balance for each investment category as gains over the next 12 months. of October 30, 2016, and October 25, 2015, is as follows: Fair Value Hedges: The Company utilizes futures to minimize the price risk assumed when fixed forward priced contracts are offered (in thousands) 2016 2015 to the Companys commodity suppliers. The intent of the program Domestic equity $ 4,696 $ 9,264 is to make the forward priced commodities cost nearly the same as International equity 7,873 9,514 cash market purchases at the date of delivery. The futures contracts Unfunded commitment balance $12,569 $18,778 are designated and accounted for as fair value hedges, and the Company measures the effectiveness of the hedges at least Funding for future private equity capital calls will come from quarterly. Changes in the fair value of the futures contracts, along existing pension plan asset investments and not from additional with the gain or loss on the hedged purchase commitment, are cash contributions into the Companys pension plans. 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 Note H 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 Derivatives and Hedging in the current period cost of products sold. As of October 30, 2016, and October 25, 2015, the Company had the following outstanding The Company uses hedging programs to manage price risk commodity futures contracts designated as fair value hedges: associated with commodity purchases. These programs utilize futures contracts, options, and swaps to manage the Companys Volume exposure to price fluctuations in the commodities markets. The Company has determined its programs which are designated as Commodity October 30, 2016 October 25, 2015 hedges are highly effective in offsetting the changes in fair value or Corn 3.6 million bushels 5.3 million bushels cash flows generated by the items hedged. Lean hogs 0.2 million cwt 0.4 million cwt

Cash Flow Hedges: The Company utilizes corn futures to offset Other Derivatives: The Company holds certain futures and price fluctuations in the Companys future direct grain purchases. options contract positions as part of a merchandising program and The financial instruments are designated and accounted for as cash to manage the Companys exposure to fluctuations in commodity flow hedges, and the Company measures the effectiveness of the markets. The Company has not applied hedge accounting to these hedges at least quarterly. Effective gains or losses related to these positions. cash flow hedges are reported in accumulated other comprehensive loss (AOCL) and reclassified into earnings, through cost of As of October 30, 2016, and October 25, 2015, the Company had products sold, in the period or periods in which the hedged the following outstanding futures and options contracts related to transactions affect earnings. Any gains or losses related to hedge these programs: ineffectiveness are recognized in the current period cost of

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document products sold. The Company typically does not hedge its grain exposure beyond the next two Volume 57 Commodity October 30, 2016 October 25, 2015

Corn 4.0 million bushels 2.6 million bushels

Fair Values: The fair values of the Companys derivative instruments as of Soybean meal 11,000 tons 11,500 tons 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 $(194) $305

Derivatives Not Designated as Hedges:

Commodity contracts Other current assets 144 248

Total Asset Derivatives $ (50) $553

(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 Companys 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 $6,852 $3,409 Cost of products sold $(1,310) $(12,369) $(14,591) $(6,127)

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 $1,796 $(4,297) $4,849 $2,547

Gain/(Loss)

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 $(796) $(269)

(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. 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%) 59,153 58,888

Total $ 239,590 $ 258,998

Equity in earnings of affiliates consists of the following:

(in thousands) Segment 2016 2015 2014

Foreign Joint Ventures International & Other 8,034 (2,962) 3,170

Total $ 38,685 $23,887 $ 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. 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 $(153,001) $ (5,604) $(149,214)

Unrecognized gains (losses):

Gross (1,911) (91,684) (16,701) (110,296)

Tax effect 34,737 6,305 41,042

Reclassification into net earnings:

Gross 6,387(1) 10,925(2) 17,312

Tax effect (2,425) (4,119) (6,544)

Net of tax amount (1,911) (52,985) (3,590) (58,486)

Balance at October 26, 2014 $ 7,480 $(205,986) $ (9,194) $(207,700)

Unrecognized gains (losses):

Gross (6,906) (46,389) 3,409 (49,886)

Tax effect 17,492 (1,285) 16,207

Reclassification into net earnings:

Gross 12,259(1) 12,369(2) 24,628

Tax effect (4,642) (4,670) (9,312)

Net of tax amount (6,906) (21,280) 9,823 (18,363)

Purchase of additional ownership of noncontrolling interest 395 395

Balance at October 25, 2015 $ 969 $(227,266) $ 629 $(225,668)

Unrecognized gains (losses):

Gross (6,458) (124,783) 6,852 (124,389)

Reclassification into net earnings:

Gross 13,533(1) 1,310(2) 14,843

Tax effect (5,104) (261) (5,365)

Net of tax amount (6,458) (69,286) 5,109 (70,635)

Balance at October 30, 2016 $ (5,489) $(296,552) $ 5,738 $(296,303)

(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.

Reconciliation of the statutory federal income tax rate to the Note K Companys effective tax rate is as follows:

Income Taxes 2016 2015 2014 U.S. statutory rate 35.0% 35.0% 35.0%

The components of the provision for income taxes are as follows: State taxes on income, net of federal tax benefit 2.1 2.7 2.8

(in thousands) 2016 2015 2014 Domestic production

Current: activities deduction (2.8) (2.6) (2.7)

U.S. Federal $341,799 $299,557 $264,533 Foreign tax credit (0.9)

State 33,753 39,817 34,034 All other, net (1.0) (0.1) (0.8)

Foreign 6,819 10,526 7,759 Effective tax rate 32.4% 35.0% 34.3%

Total current 382,371 349,900 306,326 In fiscal year 2016, the Company approved a repatriation of $38.0 Deferred: million of foreign earnings related to an international entity U.S. Federal 40,456 18,451 8,756 restructuring which generated a U.S. tax benefit of $12.1 million. State 3,770 1,070 873 The Company recorded a favorable discrete tax event related to Foreign 101 458 171 this transaction.

Total deferred 44,327 19,979 9,800 Undistributed earnings of the Companys foreign subsidiaries and Total provision for joint ventures, aggregating to approximately $62.5 million at income taxes $426,698 $369,879 $316,126 October 30, 2016, are considered to be permanently reinvested, and accordingly, no provision for U.S. income taxes has been provided Deferred income taxes reflect the net tax effects of temporary thereon. It is not practicable to determine the deferred tax liability differences between the carrying amounts of assets and liabilities for temporary differences related to these foreign earnings. for financial reporting purposes and the amounts used for income tax purposes. The Company believes that, based upon its lengthy Total income taxes paid during fiscal years 2016, 2015, and 2014 and consistent history of profitable operations, it is more likely were $372.0 million, $296.5 million, and $285.8 million, than not the net deferred tax assets of $6.2 million will be realized respectively. 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:

October 30, October 25, benefits, excluding interest and penalties, for fiscal years 2015 and 60 2016. (in thousands) 2016 2015

Deferred tax liabilities: (in thousands) Goodwill and intangible assets $(250,330) $ (213,312) Balance as of October 26, 2014 $ 22,608 Tax over book depreciation and basis Tax positions related to the current period: differences (98,628) (94,496) Increases 2,920 Other, net (18,295) (18,788) Tax positions related to prior periods: Deferred tax assets: Increases 1,629 Pension and post-retirement benefits 182,444 154,306 Decreases (796) Employee compensation related 107,343 109,061 (2,839) liabilities Settlements

Marketing and promotional accruals 36,844 37,603 Decreases related to a lapse of applicable statute of limitations (2,185) Other, net 46,845 48,432 Balance as of October 25, 2015 $ 21,337 Net deferred tax assets $ 6,223 $ 22,806 Tax positions related to the current period:

Increases 3,587

The amount of unrecognized tax benefits, including interest and Tax positions related to prior periods: penalties is recorded in other long-term liabilities. If recognized as Increases 9,723 of October 30, 2016, and October 25, 2015, $19.5 million and Decreases (3,913) $16.0 million, respectively, would impact the Companys effective (1,273) tax rate. The Company includes accrued interest and penalties Settlements related to uncertain tax positions in income tax expense, with gains Decreases related to a lapse of applicable statute of of $0.5 million included in expense for fiscal year 2016. The limitations (2,072) amount of accrued interest and penalties at October 30, 2016, and Balance as of October 30, 2016 $ 27,389 October 25, 2015, associated with unrecognized tax benefits was $2.6 million and $3.2 million, respectively. A reconciliation of the number of options outstanding and exercisable (in thousands) as of October 30, 2016, and changes The Company is regularly audited by federal and state taxing during the fiscal year then ended, is as follows: authorities. The United States Internal Revenue Service (I.R.S.) concluded their examination of fiscal years 2013 and 2014 in the Weighted- third quarter of fiscal year 2016. The Company has elected to participate in the Compliance Assurance Process (CAP) for fiscal Weighted- Average years 2015 and 2016. The objective of CAP is to Average Remaining Aggregate contemporaneously work with the I.R.S. to achieve federal tax Exercise Contractual Intrinsic compliance and resolve all or most of the issues prior to filing of Shares Price Term Value the tax return. The Company may elect to continue participating in Outstanding at 34,397 $13.83 CAP for future tax years; the Company may withdraw from the October 25, 2015 program at any time. Granted 2,128 38.31

The Company is in various stages of audit by several state taxing Exercised 4,502 9.60 authorities on a variety of fiscal years, as far back as 2011. While it Forfeited 25 22.03 is reasonably possible that one or more of these audits may be Outstanding at completed within the next 12 months and the related unrecognized October 30, 2016 31,998 $16.05 4.8 yrs $710,346 tax benefits may change based on the status of the examinations, it

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document is not possible to reasonably estimate the effect of any amount of Exercisable at such change to previously recorded uncertain tax positions. October 30, 2016 25,112 $12.88 3.9 yrs $636,449 61

The weighted-average grant date fair value of stock options Note L granted and the total intrinsic value of options exercised (in thousands) during each of the past three fiscal years is as follows: Stock-Based Compensation Fiscal Year Ended

The Company issues stock options and nonvested shares as part of October 30, October 25, October 26, its stock incentive plans for employees and non-employee 2016 2015 2014 directors. The Companys policy is to grant options with the exercise price equal to the market price of the common stock on Weighted-average grant the date of grant. Options typically vest over four years and expire date fair value $ 7.82 $ 4.92 $ 4.85 ten years after the date of the grant. The Company recognizes Intrinsic value of exercised stock-based compensation expense ratably over the shorter of the options $135,593 $67,516 $74,972 requisite service period or vesting period. The fair value of stock- based compensation granted to retirement-eligible individuals is The fair value of each option award is calculated on the date of expensed at the time of grant. grant using the Black-Scholes valuation model utilizing the The dividend yield is set based on the dividend rate approved by following weighted-average assumptions: the Companys Board of Directors and the stock price on the grant date. The expected volatility assumption is set based primarily on Fiscal Year Ended historical volatility. As a reasonableness test, implied volatility October 30, October 25, October 26, from exchange traded options is also examined to validate the volatility range obtained from the historical analysis. The expected 2016 2015 2014 life assumption is set based on an analysis of past exercise Risk-free interest rate 2.1% 2.1% 2.5% behavior by option holders. In performing the valuations for option Dividend yield 1.5% 1.9% 1.8% grants, the Company has not stratified option holders as exercise Stock price volatility 19.0% 19.0% 20.0% behavior has historically been consistent across all employee and Expected option life 8 years 8 years 8 years non-employee director groups.

Nonvested shares vest on the earlier of the day before the As part of the annual valuation process, the Company reassesses Companys next annual meeting date or one year. A reconciliation the appropriateness of the inputs used in the valuation models. The of the nonvested shares (in thousands) as of October 30, 2016, and Company establishes the risk-free interest rate using stripped U.S. changes during the fiscal year then ended, is as follows: Treasury yields as of the grant date where the remaining term is approximately the expected life of the option. Stock-based compensation expense, along with the related income Weighted- tax benefit, for each of the past three fiscal years is presented in the Average table below: Grant Date

Shares Fair Value Fiscal Year Ended

Nonvested at October 25, 2015 74 $25.87 October 30, October 25, October 26,

Granted 47 41.01 (in thousands) 2016 2015 2014

Vested 74 25.87 Stock-based compensation Nonvested at October 30, 2016 47 $41.01 expense recognized $17,829 $ 15,717 $14,393

Income tax benefit recognized (6,764) (5,967) (5,469)

The weighted-average grant date fair value of nonvested shares After-tax stock-based granted, the total fair value (in thousands) of nonvested shares compensation expense $11,065 $ 9,750 $ 8,924

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document granted, and the fair value (in thousands) of shares that have vested during each of the past three fiscal years is as follows: At October 30, 2016, there was $9.9 million of total unrecognized 62 compensation expense from stock-based compensation

Fiscal Year Ended arrangements granted under the plans. This compensation is expected to be recognized over a weighted-average period of October 30, October 25, October 26, approximately 2.5 years. During fiscal years 2016, 2015, and 2014, 2016 2015 2014 cash received from stock option exercises was $12.1 million, $10.5 Weighted-average grant date million, and $10.5 million, respectively. The total tax benefit to be fair value $41.01 $25.87 $22.06 realized for tax deductions from these option exercises was $51.6 Fair value of nonvested shares million, $25.6 million, and $28.4 million, respectively. granted $1,920 $1,920 $1,760 Shares issued for option exercises and nonvested shares may be Fair value of shares vested $1,920 $2,347 $2,085 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, Note M 50.1 million at October 25, 2015, and 53.2 million at October 26, 2014. Fair Value Measurements

Pursuant to the provisions of ASC 820, the Companys 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) $415,143 $415,143 $ $

Other trading securities(2) 122,305 39,903 82,402

Commodity derivatives(3) 3,094 3,094

Total Assets at Fair Value $540,542 $458,140 $82,402 $

Liabilities at Fair Value:

Deferred compensation(2) $ 60,949 $ 28,768 $32,181 $

Total Liabilities at Fair Value $ 60,949 $ 28,768 $32,181 $

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 $ $

Commodity derivatives(3) 6,485 6,485

Total Assets at Fair Value $ 473,392 $ 393,053 $80,339 $

Liabilities at Fair Value:

Deferred compensation(2) $ 57,869 $ 25,272 $32,597 $

Total Liabilities at Fair Value $ 57,869 $ 25,272 $32,597 $

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

(1) The Companys 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 participants 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 Companys 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 Companys commodity suppliers. The Companys 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 Companys financial assets and liabilities also include three years. Under these contracts, the Company is committed at accounts receivable, accounts payable, and other liabilities, for October 30, 2016, to make purchases, assuming current price which carrying value approximates fair value. The Company does levels, as follows: not carry its long-term debt at fair value in its Consolidated

Statements of Financial Position. Based on borrowing rates (in thousands)

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document available to the Company for long-term financing with similar 2017 $ 957,418 terms and average maturities, the fair value of long-term debt, 2018 636,239 utilizing discounted cash flows (Level 2), was $274.9 million as of 2019 378,857 October 30, 2016, and $268.4 million as of October 25, 2015. 2020 247,295

In accordance with the provisions of ASC 820, the Company also 2021 150,233 measures certain nonfinancial assets and liabilities at fair value that Later Years 75,572 are recognized or disclosed on a nonrecurring basis (e.g. goodwill, Total $2,445,614 intangible assets, and property, plant and equipment). In the second quarter of fiscal year 2016, the Company entered into an agreement Purchases under these contracts for fiscal years 2016, 2015, and for the sale of DCB and recorded a $1.0 million impairment charge 2014 were $1.6 billion, $1.6 billion, and $2.2 billion, respectively. 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 The Company has noncancelable operating lease commitments on million goodwill impairment charge was recorded for the portion facilities and equipment at October 30, 2016, as follows: 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 (in thousands) discussion regarding the Companys assets held for sale in Note E. 2017 $11,085

During fiscal years 2016, 2015, and 2014, there were no other 2018 7,700 material remeasurements of assets or liabilities at fair value on a 2019 5,717 nonrecurring basis subsequent to their initial recognition. 2020 4,294

2021 3,128 Note N Later Years 4,154 Total $36,078 Commitments and Contingencies The Company expensed $21.6 million, $22.4 million, and $21.1 In order to ensure a steady supply of hogs and turkeys, and to keep million for rent in fiscal years 2016, 2015, and 2014, respectively. the cost of products stable, the Company has entered into contracts with producers for the purchase of hogs and turkeys at formula- The Company has commitments to expend approximately $165.4 based prices over periods up to 10 years. The Company has also million to complete construction in progress at various locations as entered into grow-out contracts with independent farmers to raise of October 30, 2016. turkeys for the Company for periods up to 25 years. Under these arrangements, the Company owns the livestock, feed, and other The Company also has purchase obligations not reflected in the supplies while the independent farmers provide facilities and labor. consolidated statements of financial position, representing open The Company has also contracted for the purchase of corn, purchase orders and contracts related to the procurement of raw soybean meal, and other feed ingredients from independent materials, supplies, and various services. As of October 30, 2016, suppliers for periods up to 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 $ 589,298

2018 140,924

2019 74,438

2021 55,273 64 Later Years 134,010

Total $1,058,542

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 Note P are primarily related to the Companys self-insured workers compensation programs. However, that amount also includes Segment Reporting revocable standby letters of credit totaling $4.0 million for obligations of an affiliated party that may arise under workers The Company develops, processes, and distributes a wide array of compensation claims. Letters of credit are not reflected in the food products in a variety of markets. The Company reports its Companys Consolidated Statements of Financial Position. results in the following five segments: Grocery Products, Refrigerated Foods, Jennie-O Turkey Store, Specialty Foods, and The Company is involved in litigation on an ongoing basis arising International & Other. in the ordinary course of business. In the opinion of management, the outcome of litigation currently pending will not materially The Grocery Products segment consists primarily of the affect the Companys results of operations, financial condition, or processing, marketing, and sale of shelf-stable food products sold liquidity. predominantly in the retail market. This segment also includes the results from the Companys MegaMex Foods, LLC joint venture.

Note O The Refrigerated Foods segment consists primarily of the processing, marketing, and sale of branded and unbranded pork, Earnings Per Share Data beef, chicken, and turkey products for retail, foodservice, and fresh product customers. The reported net earnings attributable to the Company were used when computing basic and diluted earnings per share for all years The Jennie-O Turkey Store segment consists primarily of the presented. A reconciliation of the shares used in the computation is processing, marketing, and sale of branded and unbranded turkey as follows: products for retail, foodservice, and fresh product customers.

(in thousands) 2016 2015 2014 The Specialty Foods segment consists of the processing, marketing, and sale of nutritional and private label shelf-stable Basic weighted-average shares products to retail, foodservice, and industrial customers. outstanding 529,290 528,143 527,624

Dilutive potential common The International & Other segment includes Hormel Foods shares 13,183 12,859 12,807 International which manufactures, markets, and sells Company Diluted weighted-average products internationally. This segment also includes the results shares outstanding 542,473 541,002 540,431 from the Companys international joint ventures.

For fiscal years 2016, 2015, and 2014, a total of 1.1 million, 0.9 Intersegment sales are recorded at prices that approximate cost and million, and 0.8 million weighted-average outstanding stock are eliminated in the Consolidated Statements of Operations. The options, respectively, were not included in the computation of Company does not allocate investment income, interest expense, dilutive potential common shares since their inclusion would have and interest income to its segments when measuring performance. had an antidilutive effect on earnings per share. 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 Companys noncontrolling interests are excluded. These items are

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document included below as net interest and investment expense (income), general corporate expense, and noncontrolling interest when 65reconciling to earnings before income taxes.

Sales and operating profits for each of the Companys 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 (in thousands) 2016 2015 2014 allocations, and sharing of assets. Therefore, the Company does not Net Sales (to unaffiliated represent that these segments, if operated independently, would customers) report the operating profit and other financial information shown Grocery Products $1,684,756 $1,617,680 $1,558,265 below.

Refrigerated Foods 4,647,173 4,372,347 4,644,179 (in thousands) 2016 2015 2014

Jennie-O Turkey Store 1,740,968 1,635,776 1,672,452 Assets

Specialty Foods 939,134 1,103,359 907,120 Grocery Products $1,472,316 $1,214,988 $1,249,631

International & Other 511,193 534,701 534,240 Refrigerated Foods 1,999,821 1,973,424 1,215,694

Total $9,523,224 $9,263,863 $9,316,256 Jennie-O Turkey Store 882,812 811,693 857,697

Intersegment Sales Specialty Foods 837,107 988,455 1,013,420

Grocery Products $ $ $ International & Other 479,394 446,164 406,249

Refrigerated Foods 11,341 13,058 23,163 Corporate 698,617 705,107 712,928

Jennie-O Turkey Store 120,742 128,195 144,137 Total $6,370,067 $6,139,831 $5,455,619

Specialty Foods 26 64 122 Additions to Property, International & Other Plant and Equipment

Total 132,109 141,317 167,422 Grocery Products $ 15,830 $ 18,104 $ 31,741

Intersegment Refrigerated Foods 93,430 54,074 61,183

elimination (132,109) (141,317) (167,422) Jennie-O Turkey Store 61,340 32,250 25,761

Total $ $ $ Specialty Foods 5,372 5,309 3,266

Segment Net Sales International & Other 44,407 18,576 4,896

Grocery Products $1,684,756 $1,617,680 $1,558,265 Corporate 35,145 15,750 32,291

Refrigerated Foods 4,658,514 4,385,405 4,667,342 Total $ 255,524 $ 144,063 $ 159,138

Jennie-O Turkey Store 1,861,710 1,763,971 1,816,589 Depreciation and Specialty Foods 939,160 1,103,423 907,242 Amortization

International & Other 511,193 534,701 534,240 Grocery Products $ 29,725 $ 26,972 $ 25,883

Intersegment Refrigerated Foods 53,229 53,325 57,709

elimination (132,109) (141,317) (167,422) Jennie-O Turkey Store 29,225 28,262 27,091

Total $9,523,224 $9,263,863 $9,316,256 Specialty Foods 5,165 11,075 8,999

Segment Operating International & Other 3,969 3,372 3,541

Profit Corporate 10,655 10,428 6,821

Grocery Products $ 268,461 $ 228,582 $ 195,064 Total $ 131,968 $ 133,434 $ 130,044 Refrigerated Foods 585,652 424,968 338,020 Jennie-O Turkey Store 329,427 276,217 272,362 The Companys products primarily consist of meat and other food Specialty Foods 110,917 93,258 71,514 products. The Perishable category includes fresh meats, frozen items, refrigerated meal solutions, sausages, hams, guacamole, and International & Other 78,409 78,318 84,745

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Total segment operating bacon (excluding JOTS products). The Poultry category is profit $1,372,866 $1,101,343 $ 961,705 composed primarily of JOTS products. Shelf-stable includes 66 canned luncheon meats, peanut butter, chilies, shelf-stable Net interest and microwaveable meals, hash, stews, salsas, flour and corn tortillas, investment expense tortilla chips, and other items that do not require refrigeration. The (income) 6,680 10,177 9,468 Miscellaneous category primarily consists of nutritional food General corporate products and supplements, sugar and sugar expense 49,436 35,199 33,434 substitutes, dessert and drink mixes, and industrial gelatin Noncontrolling interest 465 1,176 3,349 products. The percentages of total revenues contributed by classes Earnings Before Income of similar products for the last three fiscal years are as follows: Taxes $1,317,215 $1,057,143 $ 922,152

Fiscal Year Ended

October 30, October 25, October 26,

2016 2015 2014

Perishable 53.1% 53.0% 54.5%

Poultry 20.5 18.6 18.4

Shelf-stable 18.2 18.4 19.0

Miscellaneous 8.2 10.0 8.1

100.0% 100.0% 100.0%

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 Companys 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 Note Q follows: Fiscal Year Ended

Quarterly Results of Operations (Unaudited) October 30, October 25, October 26,

(in thousands) 2016 2015 2014 The following tabulations reflect the unaudited quarterly results of United States $9,012,797 $8,721,722 $8,708,042 operations for the years ended October 30, 2016, and October 25, 2015. Foreign 510,427 542,141 608,214

$9,523,224 $9,263,863 $9,316,256

In fiscal year 2016, sales to Wal-Mart Stores, Inc. (Wal-Mart) represented $1.45 billion or 13.7 percent of the Companys 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 Companys consolidated revenues. Wal-Mart is a customer for all five segments of the Company.

Net Earnings

Attributable to Basic Diluted

(in thousands, except per share data) Net Sales Profit Earnings Corporation(1) Per Share Per Share

2016

First quarter $2,292,672 $558,011 $235,167 $235,061 $0.44 $0.43

Second quarter 2,300,235 526,359 215,384 215,397 0.41 0.40

Third quarter 2,302,376 475,285 195,776 195,654 0.37 0.36

Fourth quarter 2,627,941 598,520 244,190 243,940 0.46 0.45

2015

First quarter $2,395,073 $444,605 $172,430 $171,718 $0.33 $0.32

Second quarter 2,279,345 459,556 180,435 180,201 0.34 0.33

Third quarter 2,188,587 409,390 146,956 146,938 0.28 0.27

Fourth quarter 2,400,858 495,030 187,443 187,231 0.35 0.35

(1)Excludes net earnings attributable to the Companys noncontrolling interests.

Shareholder Information

Independent Auditors For the convenience of stockholders, a toll free number (1-877-536-3559) can be used whenever questions arise regarding Ernst & Young LLP changes in registered ownership, lost or stolen certificates, address 220 South Sixth Street, Ste. 1400 changes, or other matters pertaining to the transfer of stock or Minneapolis, MN 55402-4509 stockholder records. When requesting information, stockholders must provide their Wells Fargo account number or tax Stock Listing identification number, the name(s) in which their stock is registered, and their record address.

Hormel Foods Corporations common stock is traded on The company participates in the Direct Registration Profile the New York Stock Exchange under the symbol HRL. Modification System (DRPMS). Transfers or issuances of shares The CUSIP number is 440452100. are now issued in book-entry form, unless you specifically request a stock certificate. A statement will be delivered to you reflecting There are approximately 12,300 record stockholders and any transactions processed in your account. 89,000 stockholders whose shares are held in street name by brokerage firms and financial institutions. The transfer agent makes stockholder account data available to stockholders of record via the Internet. This service allows Common Stock Data stockholders to view various account details, such as certificate information, dividend payment history, and/or dividend The high and low prices of the companys common stock and the reinvestment plan records, over a secure Internet connection with dividends per share declared (as adjusted for the two-for-one stock the required entry of an account number and authentication ID. split distributed on February 9, 2016) for each fiscal quarter of Information is available 24 hours per day, 7 days a week. If you are 2016 and 2015, respectively, are shown below: interested, you may use the web site www.shareowneronline. com and access Sign Up Now! to arrange for setup. 2016 High Low Dividend

Second Quarter 45.720 37.490 0.145 68 Hormel Foods Corporations Dividend Reinvestment Plan, Third Quarter 40.535 33.700 0.145 available to record stockholders, allows for full dividend Fourth Quarter 40.000 35.870 0.145 reinvestment and voluntary cash purchases with brokerage commissions or other service fees paid by the Company. Automatic 2015 High Low Dividend debit for cash contribution is also available. This is a convenient First Quarter $27.700 $25.030 $0.125 method to have money automatically withdrawn each month from

Second Quarter 29.490 25.065 0.125 a checking or savings account and invested in your Dividend Reinvestment Plan account. To enroll in the plan or obtain Third Quarter 29.680 27.075 0.125 additional information, contact Wells Fargo Shareowner Services, Fourth Quarter 34.483 28.443 0.125 using the address or telephone number provided, listed previously in this section as Company transfer agent and registrar. Enrollment Transfer Agent and Registrar in the plan is also available on the Internet at www.shareowneronline.com. Wells Fargo Shareowner Services 1110 Centre Pointe Curve, Suite 101 An optional direct dividend deposit service offers stockholders a MAC N9173-010 convenient method of having quarterly dividend payments Mendota Heights, MN 55120 electronically deposited into their personal checking or savings www.shareowneronline.com account. The dividend payment is made in the account each Dividends payment date, providing stockholders with immediate use of their money. For information about the service and how to participate, The declaration of dividends and all dates related to the declaration contact Wells Fargo Shareowner Services, transfer agent. You may of dividends are subject to the judgment and discretion of the also activate this feature on the Internet at Board of Directors of Hormel Foods Corporation. Quarterly www.shareowneronline.com. dividends are typically paid on the 15th of February, May, August, Consumer Response and November. Postal delays may cause receipt dates to vary. Inquiries regarding products of Hormel Foods Corporation should Reports and Publications be addressed:

Consumer Response Copies of the Companys Form 10-K (annual report) and Hormel Foods Corporation Form 10-Q (quarterly report) to the Securities and Exchange 1 Hormel Place Commission (SEC), proxy statement, all news releases and other Austin, MN 55912-3680 corporate literature are available free upon request by calling (507) or call 1-800-523-4635 437-5345 or by accessing the information on the Internet at www.hormelfoods.com. Notice and access to the Companys Annual Report is mailed approximately one month before the Trademarks Annual Meeting. The Annual Report can be viewed at the Web site named above or a hard copy will be available free upon request via References to the Companys brands or products in italics within email, mail, or by calling (507) 437-5571. this report represent valuable trademarks owned or licensed by Hormel Foods, LLC or other subsidiaries of Hormel Foods Corporation. Annual Meeting

The Annual Meeting of Stockholders will be held on Tuesday, January 31, 2017, in the Richard L. Knowlton Auditorium at Austin (Minn.) High School. The meeting will convene at 8:00 p.m. (CT).

Stockholder Inquiries 69 (507) 437-5944

Analyst/Investor Inquiries Corporate Officers (507) 437-5248

Media Inquiries (507) 437-5345 James P. Snee* Lawrence C. Lyons Gary L. Jamison President and Senior Vice President, Vice President and Chief Executive Officer Human Resources Treasurer (effective 10/31/2016) Lori J. Marco Brian D. Johnson Steven G. Binder Senior Vice President, Vice President and Executive Vice President; External Affairs and General Counsel Corporate Secretary President, Hormel Business Units Kevin L. Myers, Ph.D. Kurt F. Mueller James N. Sheehan Senior Vice President, Vice President, Senior Vice President and Research and Development Senior Vice President, Sales Chief Financial Officer Consumer Products Sales (effective 10/31/2016) D. Scott Aakre Vice President, Swen Neufeldt Jeffrey R. Baker Corporate Innovation Vice President, Group Vice President, and New Product Development Meat Products Marketing Foodservice (effective 10/31/2016) Richard A. Carlson Deanna T. Brady Vice President, Mark J. Ourada Group Vice President; Quality Management Vice President, President, Consumer Products Sales Foodservice Sales Mark A. Coffey Thomas R. Day Vice President, Patrick J. Schwab Group Vice President, Affiliated Business Units Vice President, Refrigerated Foods Refrigerated Foods Senior Vice President, Sales Consumer Products Sales Donald H. Kremin Patrick J. Connor Group Vice President, Vice President, Donald J. Temperley Specialty Foods Senior Vice President, Sales Vice President, Consumer Products Sales Refrigerated Foods Operations Glenn R. Leitch Group Vice President; Timothy J. Fritz Mark D. Vaupel President, Jennie-O Turkey Store, Inc. Vice President, Vice President, Grocery Products Operations Information Technology Services Luis G. Marconi Group Vice President, Jeffrey A. Grev Steven J. Venenga Grocery Products Vice President, Vice President, (effective 10/31/2016) Legislative Affairs Grocery Products Marketing (effective 10/31/2016)

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document James M. Splinter Fred D. Halvin Group Vice President, Vice President, Wendy A. Watkins Corporate Strategy Corporate Development Vice President, (effective 10/31/2016) Corporate Communications Jana L. Haynes Larry L. Vorpahl Vice President and David F. Weber Group Vice President; Controller Vice President, President, Hormel Foods Foodservice Marketing International Corporation Tyler L. Hulsebus Vice President, James T. Anderson Bryan D. Farnsworth Engineering Assistant Controller Senior Vice President, Supply Chain *Director

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SUBSIDIARIES OF HORMEL FOODS CORPORATION

The Company owns the indicated percentage of the issued and outstanding stock or other equity interests of the following entities:

State or Country of Ownership Name of Subsidiary Incorporation Percentage Alma Foods, LLC Delaware 100% Applegate Farms, LLC Delaware 100% Applegate Investment Corporation Delaware 100% Beijing Hormel Business Management Co. Ltd. China 100% Beijing Hormel Foods Co. Ltd. China 80% Burke Marketing Corporation Iowa 100% Campoco, Inc. Minnesota 100% Century Foods International, LLC Delaware 100% Century Foods Land Development, LLC Delaware 100% Champ, LLC (1) Delaware 100% ChampBEV, Inc(1) California 100% Clougherty Packing, LLC(1) Delaware 100% Creative Contract Packaging, LLC Delaware 100% CytoSport, Inc. California 100% CytoSport Holdings, Inc. Delaware 100% Dans Prize, Inc. Minnesota 100% Diversified Foods Insurance Company, LLC Vermont 100% Dold Foods, LLC Delaware 100% FJ Foodservice, LLC (1) Delaware 100% Fort Dodge Foods, LLC Delaware 100% GMP Manufacturing, Inc. California 100% HF International Holdings C.V. Netherlands 100% Hormel Canada, Ltd. Canada 100% Hormel (China) Investments Co. Ltd. China 100% Hormel Financial Services Corporation Minnesota 100% Hormel Foods Australia Pty Limited Australia 100% Hormel Foods Corporate Services, LLC Delaware 100% Hormel Foods International Corporation Delaware 100% Hormel Foods Japan K.K. Japan 100% Hormel Foods, LLC Minnesota 100% Hormel Foods Sales, LLC Delaware 100% Hormel Health Labs, LLC Minnesota 100% Hormel International Investments, LLC Delaware 100% Hormel MM Holding Corporation Delaware 100% Hormel Netherlands B.V. Netherlands 100% Jennie-O Turkey Store, Inc. Minnesota 100% Jennie-O Turkey Store International, Inc. Minnesota 100% Jennie-O Turkey Store, LLC Minnesota 100%

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Jennie-O Turkey Store Sales, LLC Delaware 100% Jiaxing Hormel Foods Co. Ltd. China 100% JJOTS, LLC Minnesota 100% Justins, LLC Delaware 100% Lloyds Barbeque Company, LLC Delaware 100% Logistic Service, LLC Delaware 100% Melting Pot Foods, LLC Delaware 100% Mespil, Inc. Delaware 100% Mexican Accent, LLC Delaware 100% Mountain Prairie, LLC Colorado 100% Osceola Food, LLC Delaware 100% PFFJ, LLC (1) Delaware 100% Progressive Processing, LLC Delaware 100% Provena Foods Inc. California 100%

State or Country of Ownership Name of Subsidiary (continued) Incorporation Percentage Rochelle Foods, LLC Delaware 100% Saags Products, LLC(1) Delaware 100% Shanghai Hormel Foods Co. Ltd. China 100% Skippy Foods, LLC Minnesota 100% Stagg Foods, LLC Delaware 100% Valley Fresh, Inc. Delaware 100% West Central Turkeys, LLC Delaware 100%

(1) Subsidiaries included in the businesses sold subsequent to the end of fiscal year 2016 as disclosed in Item 1 under General Development of Business.

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in this Annual Report (Form 10-K) of Hormel Foods Corporation of our reports dated December 21, 2016, with respect to the consolidated financial statements of Hormel Foods Corporation, and the effectiveness of internal control over financial reporting of Hormel Foods Corporation, included in the 2016 Annual Report to Shareholders of Hormel Foods Corporation.

Our audits also included the financial statement schedules of Hormel Foods Corporation listed in Item 15(a). These schedules are the responsibility of Hormel Foods Corporations management. Our responsibility is to express an opinion based on our audits. In our opinion, as to which the date is December 21, 2016 the financial statement schedules referred to above, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein.

We also consent to the incorporation by reference in Registration Statement Number 33-14615 on Form S-8 dated May 27, 1987, in Post-Effective Amendment Number 1 to Registration Statement Number 33-29053 on Form S-8 dated January 26, 1990, in Registration Statement Number 333-44178 on Form S-8 dated August 21, 2000, in Registration Statement Numbers 333-102805, 333-102806, 333-102808, and 333-102810 on Forms S-8 dated January 29, 2003, in Registration Statement Number 333-110776 on Form S-8 dated November 26, 2003, in Registration Statement Number 333-131625 on Form S-8 dated February 7, 2006, in Registration Statement Number 333-136642 on Form S-8 dated August 15, 2006, in Registration Statement Number 333-162405 on Form S-8 dated October 9, 2009, in Registration Statement Number 333-173284 on Form S-3ASR dated April 4, 2011, in Registration Statement Number 333-190714 on Form S-8 dated August 19, 2013, in Registration Statement Numbers 333-191719 and 333-191720 on Forms S-8 dated October 15, 2013, and in Registration Statement Number 333-195916 on Form S-3ASR dated May 13, 2014, of our report dated December 21, 2016, with respect to the consolidated financial statements of Hormel Foods Corporation incorporated herein by reference, our report dated December 21, 2016, with respect to the effectiveness of internal control over financial reporting of Hormel Foods Corporation incorporated herein by reference, and our report included in the preceding paragraph with respect to the financial statement schedule included in this Annual Report (Form 10-K) of Hormel Foods Corporation for the fiscal year ended October 30, 2016.

/s/ Ernst & Young LLP

Minneapolis, Minnesota

December 21, 2016

POWER OF ATTORNEY

Each person whose signature appears below hereby constitutes and appoints each of James N. Sheehan, Jana L. Haynes, Gary L. Jamison, and James T. Anderson with full power to each to act without the other, his or her true and lawful attorney-in-fact and agent with full power of substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign the Annual Report on Form 10-K of Hormel Foods Corporation (Hormel) for Hormels fiscal year ended October 30, 2016, and any or all amendments to said Annual Report, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, and to file the same with such other authorities as necessary, granting unto each such attorney-in- fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that each such attorney-in-fact and agent, or his substitute, may lawfully do or cause to be done by virtue hereof.

Signature Title Date /s/ Jeffrey M. Ettinger Chairman of the Board and Director November 21, 2016 Jeffrey M. Ettinger

/s/ James P. Snee President, Chief Executive Officer, and Director November 21, 2016 James P. Snee (Principal Executive Officer)

/s/ James N. Sheehan Senior Vice President and Chief Financial Officer November 21, 2016 James N. Sheehan (Principal Financial Officer)

/s/ Jana L. Haynes Vice President and Controller November 21, 2016 Jana L. Haynes (Principal Accounting Officer)

/s/ Gary C. Bhojwani Director November 21, 2016 Gary C. Bhojwani

/s/ Terrell K. Crews Director November 21, 2016 Terrell K. Crews

/s/ Glenn S. Forbes Director November 21, 2016 Glenn S. Forbes

/s/ Stephen M. Lacy Director November 21, 2016 Stephen M. Lacy

/s/ John L. Morrison Director November 21, 2016 John L. Morrison

/s/ Elsa A. Murano Director November 21, 2016 Elsa A. Murano

/s/ Robert C. Nakasone Director November 21, 2016

/s/ Susan K. Nestegard Director November 21, 2016 Susan K. Nestegard

/s/ Dakota A. Pippins Director November 21, 2016 Dakota A. Pippins

/s/ Christopher J. Policinski Director November 21, 2016 Christopher J. Policinski

/s/ Sally J. Smith Director November 21, 2016 Sally J. Smith

/s/ Steven A. White Director November 21, 2016 Steven A. White

CERTIFICATION REQUIRED UNDER SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, James P. Snee, certify that:

1. I have reviewed this Annual Report on Form 10-K of Hormel Foods Corporation for the fiscal year ended October 30, 2016;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and

5. The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.

Dated: December 21, 2016 Signed: /s/ JAMES P. SNEE JAMES P. SNEE

CERTIFICATION REQUIRED UNDER SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, James N. Sheehan, certify that:

1. I have reviewed this Annual Report on Form 10-K of Hormel Foods Corporation for the fiscal year ended October 30, 2016;

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.

Dated: December 21, 2016 Signed: /s/ JAMES N. SHEEHAN JAMES N. SHEEHAN

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report on Form 10-K of Hormel Foods Corporation (the Company) for the period ended October 30, 2016, as filed with the Securities and Exchange Commission (the Report), the undersigned hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities and Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: December 21, 2016 /s/ JAMES P. SNEE JAMES P. SNEE President and Chief Executive Officer

Dated: December 21, 2016 /s/ JAMES N. SHEEHAN JAMES N. SHEEHAN Senior Vice President and Chief Financial Officer

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Document and Entity 12 Months Ended Information - USD ($) Oct. 30, 2016 Dec. 02, 2016 Apr. 24, 2016 Entity Registrant Name HORMEL FOODS CORP /DE/ Entity Central Index Key 0000048465 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 2016 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

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Consolidated Statements of Oct. 30, Oct. 25, Financial Position - USD ($) 2016 2015 $ in Thousands 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

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Consolidated Statements of Oct. 30, 2016 Oct. 25, 2015 Financial Position USD ($) USD ($) (Parenthetical) $ / shares $ / shares $ in Thousands shares shares 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.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Consolidated Statements of 12 Months Ended Operations - USD ($) Oct. 30, Oct. 25, Oct. 26, shares in Thousands, $ in 2016 2015 2014 Thousands 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 $ 890,052 $ 686,088 $ 602,677 CORPORATION 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.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Consolidated Statements of Feb. 09, 2016 Operations (Parenthetical) Common Stock Authorized stock split ratio 2

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Consolidated Statements of 12 Months Ended Comprehensive Income - USD ($) Oct. 30, 2016Oct. 25, 2015Oct. 26, 2014 $ in Thousands 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

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Consolidated Statements of 3 Months Ended 12 Months Ended Changes in Shareholders' Investment - USD ($) Oct. 30, Jan. 24, Oct. 25, Jan. 25, Oct. 30, Oct. 25, Oct. 26, shares in Thousands, $ in 2016 2016 2015 2015 2016 2015 2014 Thousands Increase (Decrease) in Shareholders' Investment Balance $ $ $ $ $ 4,001,393 3,612,0564,001,3933,612,056 3,316,579 Net earnings $ 244,190235,167 $ 187,443 172,430 890,517 687,264 606,026 Other comprehensive income (70,895) (18,592) (58,496) (loss) Purchases of common stock (87,885) (24,928) (58,937) Stock-based compensation 17,829 15,717 14,393 expense Exercise of stock options/ 7,511 9,555 6,103 nonvested shares Purchase of additional ownership from (14,035) noncontrolling interest Distribution to noncontrolling (1,581) (2,500) interest Declared cash dividends - $0.40 per share, $0.50 per share and $0.58 per share for the years ended October 30, (307,064) (264,063) (211,112) 2016, October 25, 2015 and October 26, 2014, respectively Balance 4,451,406 4,001,393 4,451,4064,001,393 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 $ 1 $ 1 $ 1 expense Exercise of stock options/ $ 35 $ 28 $ 35 nonvested shares Exercise of stock options/ 2,458 1,986 [1] 2,424 [1] nonvested shares, shares 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]

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Treasury Stock Increase (Decrease) in Shareholders' Investment Purchases of common stock $ $ $ (87,885) (24,928) (58,937) Purchases of common stock, (2,386) (800) [1] (2,514) [1] shares 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 $ 17,828 $ 15,716 $ 14,392 expense Exercise of stock options/ 7,476 9,527 6,068 nonvested shares Shares retired (25,304) (13,362) (20,460) Purchase of additional ownership from (11,881) noncontrolling interest Retained Earnings Increase (Decrease) in Shareholders' Investment Balance $ $ 4,216,1253,805,654 3,452,529 4,216,125 3,805,654 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, (307,064) (264,063) (211,112) 2016, October 25, 2015 and October 26, 2014, respectively Balance $ $ 4,736,5674,216,125 3,805,654 4,736,567 4,216,125 Accumulated Other Comprehensive Income (Loss) Increase (Decrease) in Shareholders' Investment Balance (225,668) (207,700) (225,668) (207,700) (149,214) Other comprehensive income (70,635) (18,363) (58,486) (loss)

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Purchase of additional ownership from 395 noncontrolling interest 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 (260) (229) (10) (loss) Purchase of additional ownership from (2,549) noncontrolling interest Distribution to noncontrolling (1,581) (2,500) interest 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.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Consolidated Statements of 12 Months Ended Changes in Shareholders' Oct. 30, 2016 Oct. 25, 2015 Oct. 26, 2014 Investment (Parenthetical) $ / shares $ / shares $ / 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.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Consolidated Statements of 12 Months Ended Cash Flows - USD ($) Oct. 30, Oct. 25, Oct. 26, $ in Thousands 2016 2015 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)

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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 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.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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.

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.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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 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.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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 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

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.

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 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

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.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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.

(in thousands) 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

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.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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

Principal components of inventories are:

October 30, October 25, (in thousands) 2016 2015 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

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Goodwill and Intangible 12 Months Ended Assets 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 $ 322,942 $ 96,643 $ 203,214 $ 470,857 $ 132,750 $ 1,226,406 Goodwill acquired – 488,476 – – – 488,476 Purchase adjustments – – – 7,096 – 7,096 Impairment charge – – – (21,537) – (21,537) Product line disposal (521) (435) – – (1) (957) Balance as of October 25, 2015 $ 322,421 $ 584,684 $ 203,214 $ 456,416 $ 132,749 $1,699,484 Goodwill acquired 186,379 – – – – 186,379 Purchase adjustments – (241) – – – (241) Goodwill sold – – – (50,134) – (50,134) Impairment charge – – – (991) – (991) Balance as of October 30, 2016 $ 508,800 $ 584,443 $ 203,214 $ 405,291 $ 132,749 $1,834,497

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- CarryingAccumulated Avg Life CarryingAccumulated Avg Life (in thousands) Amount Amortization (in Years) AmountAmortization (in Years) Customer lists/relationships $ 88,240 $ (20,737) 12.2 $ 83,190$ (13,939) 12.1 Formulas and recipes 1,950 (1,796) 10.0 7,490 (6,865) 7.2 Proprietary software and – – N/A 7,010 (6,901) 8.1 technology Other intangibles 3,520 (1,677) 6.3 2,370 (1,195) 7.5 Total $ 93,710 $ (24,210) 11.9 $ 100,060 $ (28,900) 11.3

Amortization expense for the last three fiscal years was as follows:

(in millions)

2016 $ 8.4

Estimated annual amortization expense for the five fiscal years after October 30, 2016, is as follows:

(in millions)

2017 $ 8.3 2018 7.8 2019 7.6 2020 7.4 2021 7.4

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) 2016 2015 Brands/tradenames/trademarks $ 825,774 $ 748,075 Other intangibles 7,984 7,984 Total $ 833,758 $ 756,059

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.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 Months Ended Assets Held for Sale 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 12,703 Intangibles 14,321 Property, plant and equipment 74,812 Total assets held for sale $ 182,697

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 51,811 Intangibles 5,389 Property, plant and equipment 31,678 Total assets held for sale $ 114,935

Total current liabilities held for sale $ 3,191

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Long-term Debt and Other 12 Months Ended Borrowing Arrangements 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) 2016 2015 Senior unsecured notes, with interest at 4.125%, interest due semi-annually through April 2021 maturity date $ 250,000 $ 250,000 Less current maturities – – Total $ 250,000 $ 250,000

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 $ 12.9 2015 13.1 2014 12.7

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Pension and Other Post- 12 Months Ended retirement Benefits 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 55,728 52,522 53,030 13,346 13,479 15,279 Expected return on plan assets (88,681) (88,792) (83,702) – – – Amortization of prior service (4,120) (4,878) (4,971) (4,282) (1,337) (1,337) cost Recognized actuarial loss (gain) 20,318 18,476 12,697 1,617 (2) (2) Curtailment (gain) charge (4,438) – – – – – Net periodic cost $ 5,758 $ 6,123 $ 2,989 $11,978 $13,935 $15,903

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 (464,091) (360,949) (44,258) (40,590)

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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 $ (3,000) $ (4,274) Recognized actuarial losses 26,166 2,424

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 $1,248,209 $1,235,769 $ 334,544 $ 330,841 Service cost 26,951 28,795 1,297 1,795 Interest cost 55,728 52,522 13,346 13,479 Actuarial loss (gain) 112,208 (16,872) 5,285 10,339 Plan amendments 6,884 – (15,283) – Curtailment (gain) loss (674) – – – Participant contributions – – 2,959 2,798 Medicare Part D subsidy – – 2,090 1,313 Benefits paid (54,436) (52,005) (26,766) (26,021) Benefit obligation at end of year $1,394,870 $1,248,209 $ 317,472 $ 334,544

Pension Benefits Post-retirement Benefits

(in thousands) 2016 2015 2016 2015 Change 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 – – Participant contributions – – 2,959 2,798 Employer contributions 30,529 27,147 23,807 23,223 Benefits paid (54,436) (52,005) (26,766) (26,021) Fair value of plan assets at end of year $1,232,626 $1,179,777 $ – $ – Funded status at end of year $ (162,244) $ (68,432) $ ) $ (334,544) (317,472

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 (5,425) (4,931) (20,836) (21,645) Pension and post-retirement benefits (225,720) (196,362) (296,636) (312,899) Net amount recognized $ ) $ (68,432) $ ) $ (162,244 (317,472 (334,544)

The following table provides information for pension plans with accumulated benefit obligations in excess of plan assets:

(in thousands) 2016 2015 Projected benefit obligation $ 231,145 $ 201,293

Weighted-average assumptions used to determine benefit obligations are as follows:

2016 2015 Discount rate 3.94% 4.50% Rate of future compensation increase (for plans that base benefits on final compensation level) 3.96% 3.92%

Weighted-average assumptions used to determine net periodic benefit costs are as follows:

2016 2015 2014 Discount rate 4.50% 4.31% 4.89% Rate of future compensation increase (for plans that base benefits on final compensation level) 3.92% 3.94% 3.91% Expected long-term return on plan assets 7.60% 7.70% 7.80%

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 $ (14,259) $ 16,745 $ $ (181,910) 230,150 Expected long-term rate of return on plan assets (12,125) 12,125 – – Rate of future compensation increase 2,577 (2,263) 1,421 (1,332) Post-retirement Benefits: Discount rate $ (1,011) $ 4,710 $ (31,075) $ 37,551 Health care cost trend rate 1,575 (1,347) 33,249 (28,432)

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 58,466 21,393 2019 61,024 21,519 2020 63,940 21,461 2021 66,871 21,384 2022-2026 378,191 101,662

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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 Actual Target Range Range Large Capitalization Equity 21.7% 12-22% 38.8% 15-35% Small Capitalization Equity 5.2% 3-13% 5.4% 5-15% International Equity 13.7% 10-20% 14.0% 15-25% Global Equity 10.5% 5-20% – – Private Equity 5.5% 0-15% 6.1% 0-15% Total Equity Securities 56.6% 50-75% 64.3% 50-75% Fixed Income 36.4% 25-45% 34.3% 25-45% Real Estate 5.0% 0-10% – 0-10% Cash and Cash Equivalents 2.0% – 1.4% –

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 Significant Other Markets for Observable Unobservable Total Identical Inputs Inputs Assets (in thousands) Fair Value (Level 1) (Level 2) (Level 3) Investments at Fair Value: Cash Equivalents(1) $ 24,412 $ 24,412 $ – $ –

Large Capitalization Equity(2) Domestic $ 234,633 $ 156,495 $ 78,138 $ – Foreign 32,795 32,795 – – Total Large Capitalization Equity $ 267,428 $ 189,290 $ 78,138 $ –

Small Capitalization Equity(3) Domestic $ 52,599 $ 52,599 $ – $ – Foreign 11,173 11,173 – – Total Small Capitalization Equity $ 63,772 $ 63,772 $ – $ –

International Equity(4) Mutual fund $ 99,635 $ – $ 99,635 $ – Collective trust 69,184 – 69,184 – Total International Equity $ 168,819 $ – $ 168,819 $ –

Global Equity – Mutual Fund(5) $ 129,014 $ – $ 129,014 $ –

Private Equity(6) Domestic $ 54,613 $ – $ – $ 54,613 International 13,489 – – 13,489 Total Private Equity $ 68,102 $ – $ – $ 68,102 Total Equity $ 697,135 $ 253,062 $ 375,971 $ 68,102

Fixed Income(7) US government issues $ 153,333 $ 126,673 $ 26,660 $ – Municipal issues 21,451 – 21,451 – Corporate issues – domestic 224,963 – 224,963 – Corporate issues – foreign 48,328 – 48,328 –

Real Estate – Domestic(8) $ 63,004 $ – $ – $ 63,004 Total Investments at Fair Value $ $ 404,147 $ 697,373 $ 131,106 1,232,626

Fair Value Measurements at October 25, 2015 Quoted Prices in Active Significant Significant Other Markets for Observable Unobservable Total Identical Inputs Inputs) Assets (in thousands) Fair Value (Level 1) (Level 2) (Level 3) Investments at Fair Value: Cash Equivalents(1) $ 16,551 $ 16,551 $ – $ –

Large Capitalization Equity(2) Domestic $ 300,735 $ 175,206 $ 125,529 $ – Foreign 36,637 36,637 – – World 120,206 – 120,206 – Total Large Capitalization Equity $ 457,578 $ 211,843 $ 245,735 $ –

Small Capitalization Equity(3) Domestic $ 55,513 $ 55,513 $ – $ – Foreign 8,246 8,246 – – Total Small Capitalization Equity $ 63,759 $ 63,759 $ – $ –

International Equity(4) Mutual fund $ 101,062 $ – $ 101,062 $ – Collective trust 63,861 – 63,861 – Total International Equity $ 164,923 $ – $ 164,923 $ –

Private Equity(6) Domestic $ 54,748 $ – $ – $ 54,748 International 17,027 – – 17,027 Total Private Equity $ 71,775 $ – $ – $ 71,775 Total Equity $ 758,035 $ 275,602 $ 410,658 $ 71,775

Fixed Income(7) US government issues $ 130,456 $ 104,460 $ 25,996 $ – Municipal issues 20,211 – 20,211 – Corporate issues – domestic 210,035 – 210,035 – Corporate issues – foreign 44,489 – 44,489 – Total Fixed Income $ 405,191 $ 104,460 $ 300,731 $ – Total Investments at Fair Value $ $ 396,613 $ 711,389 $ 71,775 1,179,777

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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 $ 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 Ending Balance $ 131,106 $ 71,775

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 7,873 9,514 Unfunded commitment balance $ 12,569 $ 18,778

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.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 Months Ended Derivatives and Hedging 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:

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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 $ (194) $ 305 Derivatives Not Designated as Hedges: Commodity contracts Other current assets 144 248 Total Asset Derivatives $ (50) $ 553

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 in Earnings 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 October 30, October 25, October 30, October 25, Consolidated Cash Flow Hedges: 2016 2015 Statements of 2016 2015 2016 2015 Operations Commodity contracts $ 6,852 $ 3,409 Cost of products $ (1,310) $ $ $ (6,127) sold (12,369) (14,591)

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 October 30, October 25, October 30, October 25, Consolidated Fair Value Hedges: Statements of 2016 2015 2016 2015 Operations Cost of products Commodity contracts $ 1,796 $ (4,297) $ 4,849 $ 2,547 sold

Gain/(Loss) Recognized in Earnings

Fiscal Year Ended Location on Derivatives Not October 30, October 25, Consolidated Statements of 2016 2015 Designated as Hedges: Operations

(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 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%) 59,153 58,888

Total $ 239,590 $ 258,998

Equity in earnings of affiliates consists of the following:

(in thousands) Segment 2016 2015 2014 MegaMex Foods, LLC Grocery Products $ 30,651 $ 26,849 $ 14,415 Foreign Joint Ventures International & Other 8,034 (2,962) 3,170 Total $ 38,685 $ 23,887 $ 17,585

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 $ (153,001) $ (5,604) $ (149,214) Unrecognized gains (losses): Gross (1,911) (91,684) (16,701) (110,296) Tax effect – 34,737 6,305 41,042 Reclassification into net earnings:

Gross – 6,387(1) 10,925(2) 17,312 Tax effect – (2,425) (4,119) (6,544) Net of tax amount (1,911) (52,985) (3,590) (58,486) Balance at October 26, 2014 $ 7,480 $ (205,986) $ (9,194) $ (207,700) Unrecognized gains (losses): Gross (6,906) (46,389) 3,409 (49,886) Tax effect – 17,492 (1,285) 16,207 Reclassification into net earnings:

Gross – 12,259(1) 12,369(2) 24,628 Tax effect – (4,642) (4,670) (9,312) Net of tax amount (6,906) (21,280) 9,823 (18,363) Purchase of additional ownership of noncontrolling interest 395 – – 395 Balance at October 25, 2015 $ 969 $ (227,266) $ 629 $ (225,668) Unrecognized gains (losses): Gross (6,458) (124,783) 6,852 (124,389) Tax effect – 47,068 (2,792) 44,276 Reclassification into net earnings:

Gross – 13,533(1) 1,310(2) 14,843 Tax effect – (5,104) (261) (5,365) Net of tax amount (6,458) (69,286) 5,109 (70,635) Balance at October 30, 2016 $ (5,489) $ (296,552) $ 5,738 $ (296,303)

(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

The components of the provision for income taxes are as follows:

(in thousands) 2016 2015 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 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:

October 30, October 25, (in thousands) 2016 2015 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 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%

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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 $ 22,608 Tax positions related to the current period: Increases 2,920 Tax positions related to prior periods: Increases 1,629 Decreases (796) Settlements (2,839) Decreases related to a lapse of applicable statute of limitations (2,185) Balance as of October 25, 2015 $ 21,337 Tax positions related to the current period: Increases 3,587 Tax positions related to prior periods: Increases 9,723 Decreases (3,913) Settlements (1,273) Decreases related to a lapse of applicable statute of limitations (2,072) Balance as of October 30, 2016 $ 27,389

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.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 Months Ended Stock-Based Compensation 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 34,397 $ 13.83 Granted 2,128 38.31 Exercised 4,502 9.60 Forfeited 25 22.03 Outstanding at October 30, 2016 31,998 $ 16.05 4.8 yrs $ 710,346 Exercisable at October 30, 2016 25,112 $ 12.88 3.9 yrs $ 636,449

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 $ 135,593 $ 67,516 $ 74,972

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 2.1% 2.1% 2.5% Dividend yield 1.5% 1.9% 1.8% Stock price volatility 19.0% 19.0% 20.0% 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.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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 $ 25.87 Granted 47 41.01 Vested 74 25.87 Nonvested at October 30, 2016 47 $ 41.01

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 $ 41.01 $ 25.87 $ 22.06 Fair value of nonvested shares granted $ 1,920 $ 1,920 $ 1,760 Fair value of shares vested $ 1,920 $ 2,347 $ 2,085

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 $ 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

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.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 Months Ended Fair Value Measurements 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 Significant Other October 30, for Identical Observable Unobservable (in thousands) 2016 Assets (Level Inputs (Level Inputs (Level 1) 2) 3) Assets at Fair Value:

Cash and cash equivalents(1) $ 415,143 $ 415,143 $ – $ –

Other trading securities(2) 122,305 39,903 82,402 –

Commodity derivatives(3) 3,094 3,094 – – Total Assets at Fair Value $ 540,542 $ 458,140 $ 82,402 $ – Liabilities at Fair Value:

Deferred compensation(2) $ 60,949 $ 28,768 $ 32,181 $ – Total Liabilities at Fair Value $ 60,949 $ 28,768 $ 32,181 $ –

Fair Value Measurements at October 25, 2015 Quoted Prices in Significant Fair Value at Active Markets Significant Other October 25, for Identical Observable Unobservable (in thousands) Assets (Level Inputs (Level Inputs (Level 2015 1) 2) 3) Assets at Fair Value:

Cash and cash equivalents(1) $ 347,239 $ 347,239 $ – $ –

Other trading securities(2) 119,668 39,329 80,339 –

Commodity derivatives(3) 6,485 6,485 – – Total Assets at Fair Value $ 473,392 $ 393,053 $ 80,339 $ – Liabilities at Fair Value:

Deferred compensation(2) $ 57,869 $ 25,272 $ 32,597 $ – Total Liabilities at Fair Value $ 57,869 $ 25,272 $ 32,597 $ –

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Commitments and 12 Months Ended Contingencies 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 $ 957,418 2018 636,239 2019 378,857 2020 247,295 2021 150,233 Later Years 75,572 Total $ 2,445,614

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 $ 11,085 2018 7,700 2019 5,717 2020 4,294 2021 3,128 Later Years 4,154 Total $ 36,078

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.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (in thousands) 2017 $ 589,298 2018 140,924 2019 74,438 2020 64,599 2021 55,273 Later Years 134,010 Total $ 1,058,542

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.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 Months Ended Earnings Per Share Data 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 529,290 528,143 527,624 Dilutive potential common shares 13,183 12,859 12,807 Diluted weighted-average shares outstanding 542,473 541,002 540,431

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.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 Months Ended Segment Reporting 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 $ 1,684,756 $ 1,617,680 $ 1,558,265 Refrigerated Foods 4,647,173 4,372,347 4,644,179 Jennie-O Turkey Store 1,740,968 1,635,776 1,672,452 Specialty Foods 939,134 1,103,359 907,120 International & Other 511,193 534,701 534,240 Total $ 9,523,224 $ 9,263,863 $ 9,316,256 Intersegment Sales Grocery Products $ – $ – $ – Refrigerated Foods 11,341 13,058 23,163 Jennie-O Turkey Store 120,742 128,195 144,137 Specialty Foods 26 64 122 International & Other – – –

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Total 132,109 141,317 167,422 Intersegment elimination (132,109) (141,317) (167,422) Total $ – $ – $ – Segment Net Sales Grocery Products $ 1,684,756 $ 1,617,680 $ 1,558,265 Refrigerated Foods 4,658,514 4,385,405 4,667,342 Jennie-O Turkey Store 1,861,710 1,763,971 1,816,589 Specialty Foods 939,160 1,103,423 907,242 International & Other 511,193 534,701 534,240 Intersegment elimination (132,109) (141,317) (167,422) Total $ 9,523,224 $ 9,263,863 $ 9,316,256 Segment Operating Profit Grocery Products $ 268,461 $ 228,582 $ 195,064 Refrigerated Foods 585,652 424,968 338,020 Jennie-O Turkey Store 329,427 276,217 272,362 Specialty Foods 110,917 93,258 71,514 International & Other 78,409 78,318 84,745 Total segment operating profit $ 1,372,866 $ 1,101,343 $ 961,705 Net interest and investment expense (income) 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

(in thousands) 2016 2015 2014 Assets Grocery Products $ 1,472,316 $ 1,214,988 $ 1,249,631 Refrigerated Foods 1,999,821 1,973,424 1,215,694 Jennie-O Turkey Store 882,812 811,693 857,697 Specialty Foods 837,107 988,455 1,013,420 International & Other 479,394 446,164 406,249 Corporate 698,617 705,107 712,928 Total $ 6,370,067 $ 6,139,831 $ 5,455,619 Additions to Property, Plant and Equipment Grocery Products $ 15,830 $ 18,104 $ 31,741 Refrigerated Foods 93,430 54,074 61,183 Jennie-O Turkey Store 61,340 32,250 25,761 Specialty Foods 5,372 5,309 3,266 International & Other 44,407 18,576 4,896 Corporate 35,145 15,750 32,291 Total $ 255,524 $ 144,063 $ 159,138 Depreciation and Amortization Grocery Products $ 29,725 $ 26,972 $ 25,883 Refrigerated Foods 53,229 53,325 57,709 Jennie-O Turkey Store 29,225 28,262 27,091 Specialty Foods 5,165 11,075 8,999 International & Other 3,969 3,372 3,541 Corporate 10,655 10,428 6,821 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:

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Fiscal Year Ended October 30, October 25, October 26, 2016 2015 2014 Perishable 53.1% 53.0% 54.5% Poultry 20.5 18.6 18.4 Shelf-stable 18.2 18.4 19.0 Miscellaneous 8.2 10.0 8.1 100.0% 100.0% 100.0%

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 $ 9,012,797 $ 8,721,722 $ 8,708,042 Foreign 510,427 542,141 608,214 $ 9,523,224 $ 9,263,863 $ 9,316,256

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.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Quarterly Results of 12 Months Ended Operations (Unaudited) 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 $ $ $ $ $ 0.44 $ 0.43 2,292,672 558,011 235,167 235,061 Second quarter 2,300,235 526,359 215,384 215,397 0.41 0.40 Third quarter 2,302,376 475,285 195,776 195,654 0.37 0.36 Fourth quarter 2,627,941 598,520 244,190 243,940 0.46 0.45 2015 First quarter $ $ $ $ $ 0.33 $ 0.32 2,395,073 444,605 172,430 171,718 Second quarter 2,279,345 459,556 180,435 180,201 0.34 0.33 Third quarter 2,188,587 409,390 146,956 146,938 0.28 0.27 Fourth quarter 2,400,858 495,030 187,443 187,231 0.35 0.35

(1) Excludes net earnings attributable to the Company’s noncontrolling interests.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document SCHEDULE II - 12 Months Ended VALUATION AND QUALIFYING ACCOUNTS Oct. 30, 2016 AND RESERVES SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES SCHEDULE II - VALUATION AND SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES QUALIFYING ACCOUNTS HORMEL FOODS CORPORATION AND RESERVES (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 deduction from assets account:

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.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Summary of Significant 12 Months Ended Accounting Policies (Policies) 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.

Use of Estimates 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 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 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 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.

See additional discussion regarding the Company’s fair value measurements in Notes G, H, and M. Investments 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

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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: 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: 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.

Goodwill and Other Indefinite- Goodwill and Other Indefinite-Lived Intangibles: Indefinite-lived intangible assets are originally Lived Intangibles 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.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document then a quantitative test for impairment must be performed. Otherwise, the Company does not need to perform a quantitative test.

Impairment of Long-lived and Impairment of Long-Lived Assets and Definite-Lived Intangible Assets: Definite-lived intangible 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 Assets 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 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 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 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 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

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document from fluctuations in exchange rates are recorded as a component of accumulated other comprehensive loss in shareholders’ investment.

Derivatives and Hedging Derivatives and Hedging Activity: The Company uses commodity and currency positions to manage Activity 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 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.

Revenue Recognition 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.

Allowance for Doubtful Allowance for Doubtful Accounts: The Company estimates the allowance for doubtful accounts 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 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 Shipping and Handling Costs: The Company’s shipping and handling expenses are included in cost of products sold.

Research and Development Research and Development Expenses: Research and development costs are expensed as incurred and Expenses are included in selling, general and administrative expenses. Research and development expenses

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document incurred for fiscal years 2016, 2015, and 2014 were $34.7 million, $32.0 million, and $29.9 million, respectively.

Income Taxes 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.

Employee Stock Options 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 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.

Supplemental Cash Flow Supplemental Cash Flow Information: Non-cash investment activities presented on the Information 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.

Accounting Changes and Accounting Changes and Recent Accounting Pronouncements: In January 2014, the Financial Recent Accounting 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 Pronouncements 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

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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 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.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 Months Ended Acquisitions (Tables) Oct. 30, 2016 Applegate Schedule of allocation of the purchase price to the acquired (in thousands) 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

CytoSport Holdings Schedule of allocation of the purchase price to the acquired (in thousands) 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

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 Months Ended Inventories (Tables) Oct. 30, 2016 Inventories Principal components of inventories October 30, October 25, (in thousands) 2016 2015 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

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Goodwill and Intangible 12 Months Ended Assets (Tables) 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 $ 322,942 $ 96,643 $ 203,214 $ 470,857 $ 132,750 $ 1,226,406 Goodwill acquired – 488,476 – – – 488,476 Purchase adjustments – – – 7,096 – 7,096 Impairment charge – – – (21,537) – (21,537) Product line disposal (521) (435) – – (1) (957) Balance as of October 25, 2015 $ 322,421 $ 584,684 $ 203,214 $ 456,416 $ 132,749 $ 1,699,484 Goodwill acquired 186,379 – – – – 186,379 Purchase adjustments – (241) – – – (241) Goodwill sold – – – (50,134) – (50,134) Impairment charge – – – (991) – (991) Balance as of October 30, 2016 $ 508,800 $ 584,443 $ 203,214 $ 405,291 $ 132,749 $ 1,834,497

Schedule of gross carrying amount and accumulated October 30, 2016 October 25, 2015 amortization for definite-lived Gross Weighted- Gross Weighted- intangible assets Carrying Accumulated Avg Life Carrying Accumulated Avg Life (in thousands) Amount Amortization (in Years) Amount Amortization (in Years) Customer lists/relationships $ 88,240 $ (20,737) 12.2 $ 83,190$ (13,939) 12.1 Formulas and recipes 1,950 (1,796) 10.0 7,490 (6,865) 7.2 Proprietary software and technology – – N/A 7,010 (6,901) 8.1 Other intangibles 3,520 (1,677) 6.3 2,370 (1,195) 7.5 Total $ 93,710 $ (24,210) 11.9 $ 100,060 $ (28,900) 11.3

Schedule of amortization expense (in millions) 2016 $ 8.4 2015 8.1 2014 9.4

Schedule of estimated annual Estimated annual amortization expense for the five fiscal years after October 30, 2016, is as follows: amortization expense (in millions)

2017 $ 8.3 2018 7.8 2019 7.6 2020 7.4 2021 7.4

Schedule of carrying amounts for indefinite-lived intangible October 30, October 25, assets (in thousands) 2016 2015 Brands/tradenames/trademarks $ 825,774 $ 748,075 Other intangibles 7,984 7,984 Total $ 833,758 $ 756,059

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 Months Ended Assets Held for Sale (Tables) Oct. 30, 2016 Assets Held for Sale Schedule of assets and Amounts classified as assets and liabilities held for sale on October 30, 2016, are presented on the Company’s Consolidated Statement of Financial Position liabilities held for sale within their respective accounts, and include the following: Assets held for sale (in thousands)

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 (in thousands)

Total current liabilities held for sale $ 44,066

Assets held for sale (in thousands)

Current assets $ 26,057 Goodwill 51,811 Intangibles 5,389 Property, plant and equipment 31,678 Total assets held for sale $ 114,935

Liabilities held for sale (in thousands)

Total current liabilities held for sale $ 3,191

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Long-term Debt and Other 12 Months Ended Borrowing Arrangements Oct. 30, 2016 (Tables) Long-term Debt and Other Borrowing Arrangements Schedule of long-term debt October 30, October 25, (in thousands) 2016 2015 Senior unsecured notes, with interest at 4.125%, interest due semi-annually through April 2021 maturity date $ 250,000 $ 250,000 Less current maturities – – Total $ 250,000 $ 250,000

Schedule of interest paid (in millions)

2016 $ 12.9 2015 13.1 2014 12.7

Schedule of amounts that have not been recognized in net Pension Benefits Post-retirement Benefits periodic pension cost and are (in thousands) 2016 2015 2016 2015 included in accumulated other Unrecognized prior service credit $ 17,049 $ 32,490 $ 13,845 $ 2,844 ) ) ) ) comprehensive loss Unrecognized actuarial losses (464,091 (360,949 (44,258 (40,590

Schedule of amounts that are The following amounts are expected to be recognized in net periodic benefit expense in fiscal year 2017: expected to be recognized in Post- net periodic benefit expense in Pension retirement fiscal year 2016 (in thousands) Benefits Benefits Amortized prior service credit $ (3,000) $ (4,274) Recognized actuarial losses 26,166 2,424

Schedule of reconciliation of the beginning and ending Pension Benefits Post-retirement Benefits balances of the benefit (in thousands) 2016 2015 2016 2015 obligation, the fair value of Change in benefit obligation: plan assets, and the funded Benefit obligation at beginning of year $ 1,248,209 $ 1,235,769 $ 334,544 $ 330,841 Service cost 26,951 28,795 1,297 1,795 status of the plans Interest cost 55,728 52,522 13,346 13,479 Actuarial loss (gain) 112,208 (16,872) 5,285 10,339 Plan amendments 6,884 – (15,283) – Curtailment (gain) loss (674) – – – Participant contributions – – 2,959 2,798 Medicare Part D subsidy – – 2,090 1,313 Benefits paid (54,436) (52,005) (26,766) (26,021) Benefit obligation at end of year $ 1,394,870 $ 1,248,209 $ 317,472 $ 334,544

Pension Benefits Post-retirement Benefits

(in thousands) 2016 2015 2016 2015 Change 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 – – Participant contributions – – 2,959 2,798 Employer contributions 30,529 27,147 23,807 23,223 Benefits paid (54,436) (52,005) (26,766) (26,021) Fair value of plan assets at end of year $ 1,232,626 $ 1,179,777 $ – $ – Funded status at end of year $ (162,244) $ (68,432) $ (317,472) $ (334,544)

Schedule of amounts recognized in the Consolidated Pension Benefits Post-retirement Benefits Statements of Financial (in thousands) 2016 2015 2016 2015 Position Pension assets $ 68,901 $ 132,861 $ – $ – Employee related expenses (5,425) (4,931) (20,836) (21,645) Pension and post-retirement benefits (225,720) (196,362) (296,636) (312,899) Net amount recognized $ (162,244) $ (68,432) $ (317,472) $ (334,544)

Schedule of information for pension plans with (in thousands) 2016 2015 accumulated benefit Projected benefit obligation $ 231,145 $ 201,293 obligations in excess of plan Accumulated benefit obligation 225,364 193,913 Fair value of plan assets – – assets

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Schedule of weighted-average Weighted-average assumptions used to determine benefit obligations are as follows: assumptions used to determine 2016 2015 benefit obligations and net Discount rate 3.94% 4.50% periodic benefit costs Rate of future compensation increase (for plans that base benefits on final compensation level) 3.96% 3.92%

Weighted-average assumptions used to determine net periodic benefit costs are as follows:

Schedule of effects of one- percentage-point change in 1-Percentage-Point Expense Benefit Obligation assumed discount rate, (in thousands) Increase Decrease Increase Decrease expected long-term rate of Pension Benefits: $ (14,259) $ 16,745 $ (181,910) $ 230,150 return on plan assets, rate of Discount rate Expected long-term rate of return on plan assets (12,125) 12,125 – – future compensation increase, Rate of future compensation increase 2,577 (2,263) 1,421 (1,332) and health care cost trend rate Post-retirement Benefits: Discount rate $ (1,011) $ 4,710 $ (31,075) $ 37,551 Health care cost trend rate 1,575 (1,347) 33,249 (28,432)

Schedule of benefits expected Post- to be paid over the next ten Pension retirement fiscal years (in thousands) Benefits Benefits 2017 $ 56,099 $ 21,227 2018 58,466 21,393 2019 61,024 21,519 2020 63,940 21,461 2021 66,871 21,384 2022-2026 378,191 101,662

Schedule of actual and target weighted-average asset 2016 2015 allocations for pension plan Asset Category Actual Target Range Actual Target Range assets Large Capitalization Equity 21.7% 12-22% 38.8% 15-35% Small Capitalization Equity 5.2% 3-13% 5.4% 5-15% International Equity 13.7% 10-20% 14.0% 15-25% Global Equity 10.5% 5-20% – – Private Equity 5.5% 0-15% 6.1% 0-15% Total Equity Securities 56.6% 50-75% 64.3% 50-75% Fixed Income 36.4% 25-45% 34.3% 25-45% Real Estate 5.0% 0-10% – 0-10% Cash and Cash Equivalents 2.0% – 1.4% –

Schedule of fair values of the Fair Value Measurements at October 30, 2016 defined benefit pension plan Quoted Prices investments 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) $ 24,412 $ 24,412 $ – $ –

Large Capitalization Equity(2) Domestic $ 234,633 $ 156,495 $ 78,138 $ – Foreign 32,795 32,795 – – Total Large Capitalization Equity $ 267,428 $ 189,290 $ 78,138 $ –

Small Capitalization Equity(3) Domestic $ 52,599 $ 52,599 $ – $ – Foreign 11,173 11,173 – – Total Small Capitalization Equity $ 63,772 $ 63,772 $ – $ –

International Equity(4) Mutual fund $ 99,635 $ – $ 99,635 $ – Collective trust 69,184 – 69,184 – Total International Equity $ 168,819 $ – $ 168,819 $ –

Global Equity – Mutual Fund(5) $ 129,014 $ – $ 129,014 $ –

Private Equity(6) Domestic $ 54,613 $ – $ – $ 54,613 International 13,489 – – 13,489 Total Private Equity $ 68,102 $ – $ – $ 68,102 Total Equity $ 697,135 $ 253,062 $ 375,971 $ 68,102

Real Estate – Domestic(8) $ 63,004 $ – $ – $ 63,004 Total Investments at Fair Value $ 1,232,626 $ 404,147 $ 697,373 $ 131,106

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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) $ 16,551 $ 16,551 $ – $ –

Small Capitalization Equity(3) Domestic $ 55,513 $ 55,513 $ – $ – Foreign 8,246 8,246 – – Total Small Capitalization Equity $ 63,759 $ 63,759 $ – $ –

International Equity(4) Mutual fund $ 101,062 $ – $ 101,062 $ – Collective trust 63,861 – 63,861 – Total International Equity $ 164,923 $ – $ 164,923 $ –

Private Equity(6) Domestic $ 54,748 $ – $ – $ 54,748 International 17,027 – – 17,027 Total Private Equity $ 71,775 $ – $ – $ 71,775 Total Equity $ 758,035 $ 275,602 $ 410,658 $ 71,775

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 (in thousands) 2016 2015 Beginning Balance $ 71,775 $ 58,723 balance of the investments Purchases, issuances, and settlements (net) 52,891 (3,574) measured at fair value using Unrealized (losses) gains (5,177) 7,741 significant unobservable inputs Realized gains 4,276 7,623 Interest and dividend income 7,341 1,262 (Level 3) Ending Balance $ 131,106 $ 71,775

Schedule of unfunded private equity commitment balance (in thousands) 2016 2015 for each investment category Domestic equity $ 4,696 $ 9,264 International equity 7,873 9,514 Unfunded commitment balance $ 12,569 $ 18,778

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Derivatives and Hedging 12 Months Ended (Tables) 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 $ (194) $ 305 Derivatives Not Designated as Hedges: Commodity contracts Other current assets 144 248 Total Asset Derivatives $ (50) $ 553

Schedule of gains or losses (before tax) related to Gain/(Loss) Recognized Gain/(Loss) Reclassified Gain/(Loss) Recognized derivative instruments 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 $ 6,852 $ 3,409 Cost of products sold $ (1,310) $ (12,369) $ (14,591) $ (6,127)

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 $ 1,796 $ (4,297) $ 4,849 $ 2,547

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 $ (796) $ (269)

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

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Investments In and 12 Months Ended Receivables from Affiliates Oct. 30, 2016 (Tables) 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%) 59,153 58,888

Total $ 239,590 $ 258,998

Schedule of equity in earnings of affiliates (in thousands) Segment 2016 2015 2014 MegaMex Foods, LLC Grocery Products $ 30,651 $ 26,849 $ 14,415 Foreign Joint Ventures International & Other 8,034 (2,962) 3,170 Total $ 38,685 $ 23,887 $ 17,585

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Accumulated Other 12 Months Ended Comprehensive Loss Oct. 30, 2016 (Tables) Accumulated Other Comprehensive Loss Schedule of components of accumulated other Accumulated comprehensive loss Foreign Deferred Other Currency Pension & Gain (Loss) Comprehensive (in thousands) Translation Other Benefits – Hedging Loss Balance at October 27, 2013 $ 9,391 $ (153,001) $ (5,604) $ (149,214) Unrecognized gains (losses): Gross (1,911) (91,684) (16,701) (110,296) Tax effect – 34,737 6,305 41,042 Reclassification into net earnings:

Gross – 13,533(1) 1,310(2) 14,843 Tax effect – (5,104) (261) (5,365) Net of tax amount (6,458) (69,286) 5,109 (70,635) Balance at October 30, 2016 $ (5,489) $ (296,552) $ 5,738 $ (296,303)

(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.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 Months Ended Income Taxes (Tables) Oct. 30, 2016 Income Taxes Schedule of components of provision for income taxes (in thousands) 2016 2015 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

Schedule of significant October 30, October 25, components of the deferred (in thousands) 2016 2015 income tax liabilities and Deferred tax liabilities: assets 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

Schedule of reconciliation of the statutory federal income 2016 2015 2014 U.S. statutory rate 35.0% 35.0% 35.0% tax rate to the effective tax rate 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, (in thousands) Balance as of October 26, 2014 $ 22,608 excluding interest and Tax positions related to the current period: penalties Increases 2,920 Tax positions related to prior periods: Increases 1,629 Decreases (796) Settlements (2,839) Decreases related to a lapse of applicable statute of limitations (2,185) Balance as of October 25, 2015 $ 21,337 Tax positions related to the current period: Increases 3,587 Tax positions related to prior periods: Increases 9,723 Decreases (3,913) Settlements (1,273) Decreases related to a lapse of applicable statute of limitations (2,072) Balance as of October 30, 2016 $ 27,389

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Stock-Based Compensation 12 Months Ended (Tables) Oct. 30, 2016 Stock-Based Compensation Schedule of reconciliation of the number of options 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: outstanding and exercisable Weighted- Weighted- Average Average Remaining Aggregate Exercise Contractual Intrinsic Shares Price Term Value Outstanding at October 25, 2015 34,397 $ 13.83 Granted 2,128 38.31 Exercised 4,502 9.60 Forfeited 25 22.03 Outstanding at October 30, 2016 31,998 $ 16.05 4.8 yrs $ 710,346 Exercisable at October 30, 2016 25,112 $ 12.88 3.9 yrs $ 636,449

Schedule of weighted-average grant date fair value of stock 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: options granted, and the total intrinsic value of options Fiscal Year Ended exercised 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 $ 135,593 $ 67,516 $ 74,972

Schedule of weighted-average assumptions used to calculate Fiscal Year Ended October 30, October 25, October 26, fair value of each option award 2016 2015 2014 Risk-free interest rate 2.1% 2.1% 2.5% Dividend yield 1.5% 1.9% 1.8% Stock price volatility 19.0% 19.0% 20.0% Expected option life 8 years 8 years 8 years

Schedule of reconciliation of A reconciliation of the nonvested shares (in thousands) as of October 30, 2016, and changes during the fiscal year then ended, is as follows: the nonvested shares Weighted- Average Grant Date Shares Fair Value Nonvested at October 25, 2015 74 $ 25.87 Granted 47 41.01 Vested 74 25.87 Nonvested at October 30, 2016 47 $ 41.01

Schedule of the weighted- The weighted-average grant date fair value of nonvested shares granted, the total fair value (in thousands) of nonvested shares granted, and the fair average grant date fair value of value (in thousands) of shares that have vested during each of the past three fiscal years is as follows: nonvested shares granted, the Fiscal Year Ended total fair value of nonvested October 30, October 25, October 26, shares granted, and the fair 2016 2015 2014 value of shares that have Weighted-average grant date fair value $ 41.01 $ 25.87 $ 22.06 Fair value of nonvested shares granted vested $ 1,920 $ 1,920 $ 1,760 Fair value of shares vested $ 1,920 $ 2,347 $ 2,085

Schedule of stock-based compensation expense, along Fiscal Year Ended October 30, October 25, October 26, with the related income tax (in thousands) 2016 2015 2014 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

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Fair Value Measurements 12 Months Ended (Tables) Oct. 30, 2016 Fair Value Measurements Schedule of financial assets and liabilities carried at fair Fair Value Measurements at October 30, 2016 Quoted Prices in value on a recurring basis 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) $ 415,143 $ 415,143 $ – $ –

Other trading securities(2) 122,305 39,903 82,402 –

Commodity derivatives(3) 3,094 3,094 – – Total Assets at Fair Value $ 540,542 $ 458,140 $ 82,402 $ – Liabilities at Fair Value:

Deferred compensation(2) $ 60,949 $ 28,768 $ 32,181 $ – Total Liabilities at Fair Value $ 60,949 $ 28,768 $ 32,181 $ –

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) 119,668 39,329 80,339 –

Commodity derivatives(3) 6,485 6,485 – – Total Assets at Fair Value $ 473,392 $ 393,053 $ 80,339 $ – Liabilities at Fair Value:

Deferred compensation(2) $ 57,869 $ 25,272 $ 32,597 $ – Total Liabilities at Fair Value $ 57,869 $ 25,272 $ 32,597 $ –

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).

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Commitments and 12 Months Ended Contingencies (Tables) Oct. 30, 2016 Commitments and Contingencies Schedule of purchase Under these contracts, the Company is committed at October 30, 2016, to make purchases, assuming current price levels, as follows: commitments (in thousands) 2017 $ 957,418 2018 636,239 2019 378,857 2020 247,295 2021 150,233 Later Years 75,572 Total $ 2,445,614

Schedule of noncancelable The Company has noncancelable operating lease commitments on facilities and equipment at October 30, 2016, as follows: operating lease commitments

(in thousands) 2017 $ 11,085 2018 7,700 2019 5,717 2020 4,294 2021 3,128 Later Years 4,154 Total $ 36,078

Schedule of purchase As of October 30, 2016, commitments related to those purchase orders, and all known contracts exceeding $1.0 million, are shown below obligations that are not (in thousands) reflected in the consolidated 2017 $ 589,298 statements of financial 2018 140,924 position 2019 74,438 2020 64,599 2021 55,273 Later Years 134,010 Total $ 1,058,542

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Earnings Per Share Data 12 Months Ended (Tables) Oct. 30, 2016 Earnings Per Share Data Schedule of denominator for the computation of basic and (in thousands) 2016 2015 2014 diluted earnings per share Basic weighted-average shares outstanding 529,290 528,143 527,624 Dilutive potential common shares 13,183 12,859 12,807 Diluted weighted-average shares outstanding 542,473 541,002 540,431

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 Months Ended Segment Reporting (Tables) Oct. 30, 2016 Segment Reporting Schedule of sales and operating profits for each of (in thousands) 2016 2015 2014 Net Sales (to unaffiliated customers) the reportable segments and Grocery Products $ 1,684,756 $ 1,617,680 $ 1,558,265 reconciliation to earnings Refrigerated Foods 4,647,173 4,372,347 4,644,179 before income taxes Jennie-O Turkey Store 1,740,968 1,635,776 1,672,452 Specialty Foods 939,134 1,103,359 907,120 International & Other 511,193 534,701 534,240 Total $ 9,523,224 $ 9,263,863 $ 9,316,256 Intersegment Sales Grocery Products $ – $ – $ – Refrigerated Foods 11,341 13,058 23,163 Jennie-O Turkey Store 120,742 128,195 144,137 Specialty Foods 26 64 122 International & Other – – – Total 132,109 141,317 167,422 Intersegment elimination (132,109) (141,317) (167,422) Total $ – $ – $ – Segment Net Sales Grocery Products $ 1,684,756 $ 1,617,680 $ 1,558,265 Refrigerated Foods 4,658,514 4,385,405 4,667,342 Jennie-O Turkey Store 1,861,710 1,763,971 1,816,589 Specialty Foods 939,160 1,103,423 907,242 International & Other 511,193 534,701 534,240 Intersegment elimination (132,109) (141,317) (167,422) Total $ 9,523,224 $ 9,263,863 $ 9,316,256 Segment Operating Profit Grocery Products $ 268,461 $ 228,582 $ 195,064 Refrigerated Foods 585,652 424,968 338,020 Jennie-O Turkey Store 329,427 276,217 272,362 Specialty Foods 110,917 93,258 71,514 International & Other 78,409 78,318 84,745 Total segment operating profit $ 1,372,866 $ 1,101,343 $ 961,705 Net interest and investment expense (income) 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

Schedule of percentages of total revenues contributed by Fiscal Year Ended classes of similar products October 30, October 25, October 26, 2016 2015 2014 Perishable 53.1% 53.0% 54.5% Poultry 20.5 18.6 18.4 Shelf-stable 18.2 18.4 19.0 Miscellaneous 8.2 10.0 8.1 100.0% 100.0% 100.0%

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Schedule of total revenues attributable to U.S. and all Fiscal Year Ended foreign countries October 30, October 25, October 26, (in thousands) 2016 2015 2014 United States $ 9,012,797 $ 8,721,722 $ 8,708,042 Foreign 510,427 542,141 608,214 $ 9,523,224 $ 9,263,863 $ 9,316,256

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Quarterly Results of 12 Months Ended Operations (Unaudited) Oct. 30, 2016 (Tables) Quarterly Results of Operations (Unaudited) Schedule of unaudited Net Earnings quarterly results of operations 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 $ 2,292,672 $ 558,011 $ 235,167 $ 235,061 $ 0.44 $ 0.43 Second quarter 2,300,235 526,359 215,384 215,397 0.41 0.40 Third quarter 2,302,376 475,285 195,776 195,654 0.37 0.36 Fourth quarter 2,627,941 598,520 244,190 243,940 0.46 0.45 2015 First quarter $ 2,395,073 $ 444,605 $ 172,430 $ 171,718 $ 0.33 $ 0.32 Second quarter 2,279,345 459,556 180,435 180,201 0.34 0.33 Third quarter 2,188,587 409,390 146,956 146,938 0.28 0.27 Fourth quarter 2,400,858 495,030 187,443 187,231 0.35 0.35

(1) Excludes net earnings attributable to the Company’s noncontrolling interests.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Jan. 26, Oct. 25, Summary of Significant Feb. 09, Oct. 30, 2016 Jan. 27, 2016 2016 2015 Accounting Policies - Stock 2016 $ / shares [1] shares $ / shares $ / shares Split (Details) $ / shares shares shares shares Before stock split Common stock, par value (in dollars per $ 0.0293 share) | $ / shares Common stock, number of shares authorized 800,000,000 | shares After stock split Common stock, par value (in dollars per $ 0.01465 share) | $ / shares Common stock, number of shares authorized 1,600,000,000 | shares Common Stock Authorized stock split ratio 2 Common stock, par value (in dollars per $ 0.01465 $ 0.01465 share) | $ / shares Common stock, number of shares authorized 1,600,000,000 1,600,000,000 | shares [1]Shares and par values have been restated, as appropriate, to reflect the two-for-one stock split distributed on February 9, 2016.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Summary of Significant 12 Months Ended Accounting Policies - Fiscal Oct. 30, 2016Oct. 25, 2015Oct. 26, 2014 Year (Details) Summary of Significant Accounting Policies Fiscal year term 371 days 364 days 364 days

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Summary of Significant 12 Months Ended Accounting Policies - Investments (Details) - USD Oct. 30, 2016Oct. 25, 2015Oct. 26, 2014 ($) $ in Millions Rabbi trust Investments Gains related to securities held $ 2.6 $ 2.4 $ 2.9

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Summary of Significant 12 Months Ended Accounting Policies - Property, Plant and Oct. 30, 2016 Equipment (Details) 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

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Summary of Significant 12 Months Ended Accounting Policies - Goodwill and Other Indefinite-Lived Intangibles Oct. 30, 2016Oct. 25, 2015Oct. 26, 2014 (Details) - USD ($) $ in Thousands Goodwill and Other Indefinite-Lived Intangibles Goodwill impairment charges $ 991 $ 21,537 $ 0 Indefinite-lived intangible assets impairment charges$ 0 $ 0 $ 0

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Summary of Significant 12 Months Ended Accounting Policies - Advertising Expenses Oct. 30, 2016Oct. 25, 2015Oct. 26, 2014 (Details) - USD ($) $ in Millions Advertising Expenses Advertising costs $ 204.1 $ 145.3 $ 114.4

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Summary of Significant 12 Months Ended Accounting Policies - Research and Development Oct. 30, 2016Oct. 25, 2015Oct. 26, 2014 Expenses (Details) - USD ($) $ in Millions Research and Development Expenses Research and development expense $ 34.7 $ 32.0 $ 29.9

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Summary of Significant 12 Months Ended Accounting Policies - Share Oct. 30, Oct. 25, Oct. 26, Jan. 29, Repurchases (Details) - Feb. 09, 2016 2015 2014 2013 Common Stock 2016 $ / shares $ / shares $ / shares shares shares in Millions shares shares shares Shares Repurchases Authorized stock split ratio 2 2013 Program Shares Repurchases Number of shares authorized to be repurchased (in 10.0 shares) Stock repurchased (in shares) 2.4 0.4 1.3 Average price of shares repurchased (in dollars per $ 36.84 $ 62.32 $ 46.87 share) | $ / shares

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Summary of Significant 12 Months Ended Accounting Policies - Supplemental Cash Flow Mar. 16, 2015 Oct. 25, 2015 (Details) - USD ($) $ in Thousands 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

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 Months Ended Acquisitions (Detail) - USD May Aug. Nov. ($) Jul. 13, Oct. 30, Oct. 25, Oct. 26, 26, 11, 26, $ in Thousands 2015 2016 2015 2014 2016 2014 2013 Acquisitions Purchase price $ 280,889$ 770,587$ 466,204 Allocation of the purchase price to the acquired assets, liabilities, and goodwill Goodwill 1,834,4971,699,4841,226,406 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 70,000 of assets 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

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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 $ 4,800 expenses) related to the acquisition SKIPPY | China Acquisitions Purchase price $ 41,900

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Inventories (Details) - USD ($) Oct. 30, 2016Oct. 25, 2015 $ in Thousands 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

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Goodwill and Intangible 12 Months Ended Assets - Goodwill Rollforward (Details) - USD Oct. 30, 2016Oct. 25, 2015Oct. 26, 2014 ($) $ in Thousands 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

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Goodwill and Intangible 12 Months Ended Assets - Definite Lived Intangibles Assets (Details) - Oct. 26, Oct. 30, 2016 Oct. 25, 2015 USD ($) 2014 $ in Thousands 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 11 years 3 months months 24 days 18 days Amortization expense $ 8,387 $ 8,142 $ 9,352 Estimated amortization expense 2017 8,300 2018 7,800 2019 7,600 2020 7,400 2021 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 years 1 month 12 days 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

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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 7 years 2 months 10 years 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 7 years 6 months 18 days

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Goodwill and Intangible 3 Months 12 Months Ended Assets - Indefinite Lived Ended Intangible Assets (Details) - Oct. 30, Oct. 25, Oct. 26, USD ($) Apr. 24, 2016 2016 2015 2014 $ in Thousands 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

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Assets Held for Sale (Details) 3 Months Ended 12 Months Ended - USD ($) May 09, Apr. 24, Oct. 25, Oct. 30, Oct. 25, Oct. 26, $ in Thousands 2016 2016 2015 2016 2015 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

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Long-term Debt and Other 12 Months Ended Borrowing Arrangements (Detail) - USD ($) Oct. 30, 2016Oct. 25, 2015Oct. 26, 2014 $ in Thousands 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

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Pension and Other Post- 12 Months Ended retirement Benefits - Costs And Obligations (Details) - Oct. 30, Oct. 25, Oct. 26, USD ($) 2016 2015 2014 $ in Thousands 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 (3,000) comprehensive loss expected to be recognized during next year Amount of actuarial loss included in accumulated other comprehensive loss 26,166 expected to be recognized during next year Change in benefit obligation: Benefit obligation at beginning of year 1,248,2091,235,769 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 1,394,8701,248,2091,235,769 Changes in plan assets Fair value of plan assets at beginning of year 1,179,7771,168,765 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 1,232,6261,179,7771,168,765 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

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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 $ 225,364193,913 Pension Benefits | Minimum Accumulated benefit obligation in excess of plan assets Amortization period of actuarial gains and losses and any adjustments resulting 9 years from plan amendments Pension Benefits | Maximum Accumulated benefit obligation in excess of plan assets Amortization period of actuarial gains and losses and any adjustments resulting 23 years from plan amendments 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 (4,274) comprehensive loss expected to be recognized during next year Amount of actuarial loss included in accumulated other comprehensive loss 2,424 expected to be recognized during next year 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)

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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 5 years from plan amendments Post-retirement Benefits | Maximum Accumulated benefit obligation in excess of plan assets Amortization period of actuarial gains and losses and any adjustments resulting 24 years from plan amendments

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Pension and Other Post- 12 Months Ended retirement Benefits - Assumptions (Details) - USD Oct. 30, Oct. 25, Oct. 26, ($) 2016 2015 2014 $ in Thousands 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 (12,125) plan assets Effect of one-percentage-point decrease in expected long-term rate of return on 12,125 plan assets Effect of one-percentage-point increase in rate of future compensation increase 2,577 on expense Effect of one-percentage-point decrease in rate of future compensation increase (2,263) on expense Effect of one-percentage-point increase in rate of future compensation increase 1,421 on benefit obligation Effect of one-percentage-point decrease in rate of future compensation increase $ (1,332) on benefit obligation 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 8.00% fiscal year (as a percent) Expected ultimate pre-Medicare and post-Medicare rate (as a percent) 5.00% Year that reaches the ultimate trend rate 2022 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 1,575 expense

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Effect of one-percentage-point decrease in health care cost trend rate on (1,347) expense Effect of one-percentage-point increase in health care cost trend rate on benefit 33,249 obligation Effect of one-percentage-point decrease in health care cost trend rate on benefit $ (28,432) obligation

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Pension and Other Post- 12 Months retirement Benefits - Ended Contributions And Benefits Oct. 30, 2016 (Details) USD ($) $ in Thousands 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 26,800 year Expected future benefit payments 2017 56,099 2018 58,466 2019 61,024 2020 63,940 2021 66,871 2022 - 2026 378,191 Post-retirement Benefits Expected future benefit payments 2017 21,227 2018 21,393 2019 21,519 2020 21,461 2021 21,384 2022 - 2026 101,662 Expected federal subsidy receipts related to prescription drug benefits per year through 2024 $ 800

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Pension and Other Post- 12 Months Ended retirement Benefits - Plan Assets Allocations (Details) - Oct. 30, 2016Oct. 25, 2015 Pension Benefits 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

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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%

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Pension and Other Post- 12 Months retirement Benefits - Assets Ended Allocations (Details) - Oct. 30, Oct. 25, Oct. 26, Pension Benefits - USD ($) 2016 2015 2014 $ in Thousands Fair values of defined benefit pension plan investments by asset category and fair value hierarchy level Total Investments at Fair Value $ $ $ 1,232,626 1,179,7771,168,765 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

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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)

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Pension and Other Post- 12 Months Ended retirement Benefits - Changes In Fair Value (Details) - Pension Benefits - Oct. 30, 2016Oct. 25, 2015 USD ($) $ in Thousands 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

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Pension and Other Post- 12 Months Ended retirement Benefits - Commitments (Details) - Oct. 30, 2016Oct. 25, 2015 Pension Benefits - USD ($) $ in Thousands 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

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 Months Ended Derivatives and Hedging - Oct. 30, Oct. 25, Outstanding Contracts 2016 2015 (Details) USD ($) USD ($) item in Millions, bu in item item Millions, $ in Millions T T bu bu 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 $ 9.2 $ 1.0 qualifying as the effective portion of cash flow hedges | $ 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) 4.0 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

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Derivatives and Hedging - Fair Value Of Derivatives Oct. 30, 2016Oct. 25, 2015 (Details) - USD ($) $ in Thousands 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

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Derivatives and Hedging - 12 Months Ended Gains And Losses (Details) - Oct. 30, Oct. 25, USD ($) 2016 2015 $ in Thousands 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 0 0 as a fair value hedge 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

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Investments In and 12 Months Ended Receivables from Affiliates Oct. 30, Oct. 25, Oct. 26, Oct. 26, (Details) - USD ($) 2016 2015 2014 2009 $ in Thousands 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 15,300 $ 21,300 the joint venture 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%

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Accumulated Other 12 Months Ended Comprehensive Loss (Detail) - USD ($) Oct. 30, 2016Oct. 25, 2015Oct. 26, 2014 $ in Thousands 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):

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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)

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Income Taxes (Detail) - USD 12 Months Ended ($) Oct. 30, Oct. 25, Oct. 26, $ in Thousands 2016 2015 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

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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 19,500 16,000 recognized, would impact effective tax rate Interest and penalties expense related to uncertain tax positions recognized in 500 income tax expense Accrued interest and penalties, associated with unrecognized tax benefits $ 2,600 $ 3,200

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Stock-Based Compensation - 12 Months Ended Options (Details) - Stock options - USD ($) Oct. 25, Oct. 26, Oct. 30, 2016 $ / shares in Units, shares in 2015 2014 Thousands, $ in Thousands 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 $ 7.82 $ 4.92 $ 4.85 share) 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

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Stock-Based Compensation - 12 Months Ended Nonvested Shares (Details) - Nonvested shares - USD ($) Oct. 30, Oct. 25, Oct. 26, $ / shares in Units, shares in 2016 2015 2014 Thousands, $ in Thousands 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

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Stock-Based Compensation - 12 Months Ended Expense and Exercises (Details) - USD ($) Oct. 25, Oct. 26, Oct. 30, 2016 $ in Thousands, shares in 2015 2014 Millions 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 2 years 6 expense 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

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Fair Value Measurements 3 Months Ended 12 Months Ended (Details) - USD ($) Apr. 24, Oct. 25, Oct. 30, Oct. 25, Oct. 26, $ in Thousands 2016 2015 2016 2015 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

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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 1 year funds

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Commitments and 12 Months Ended Contingencies (Detail) - USD Oct. 30, Oct. 25, Oct. 26, ($) 2016 2015 2014 $ in Thousands Purchase commitments 2017 $ 957,418 2018 636,239 2019 378,857 2020 247,295 2021 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 2017 11,085 2018 7,700 2019 5,717 2020 4,294 2021 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 165,400 various locations 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 2017 589,298 2018 140,924 2019 74,438 2020 64,599 2021 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

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Corn, soybean meal and other feed | Maximum Purchase commitments Purchase commitments, time period 3 years

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Earnings Per Share Data 12 Months Ended (Details) - shares Oct. 30, Oct. 25, Oct. 26, shares in Thousands 2016 2015 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 1,100 900 800 potential common shares [1]Shares and par values have been restated, as appropriate, to reflect the two-for-one stock split distributed on February 9, 2016.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 3 Months Ended 12 Months Ended Segment Reporting - Oct. 30, Oct. 30, Jul. 24, Apr. 24, Jan. 24, Oct. 25, Jul. 26, Apr. 26, Jan. 25, Oct. 25, Oct. 26, Operating Profit (Details) 2016 2016 2016 2016 2016 2015 2015 2015 2015 2015 2014 $ in Thousands USD ($) USD ($) USD ($) USD ($) USD ($) USD ($) USD ($) USD ($) USD ($) USD ($) USD ($) segment Operating profit and other financial information Number of reportable business 5 segments | segment Sales $ $ $ $ $ $ $ $ $ $ $ 2,627,9412,302,3762,300,2352,292,6722,400,8582,188,5872,279,3452,395,0739,523,2249,263,8639,316,256 Segment Operating Profit 1,323,8951,067,320931,620 Net interest and investment 6,680 10,177 9,468 expense General corporate expense 49,436 35,199 33,434 Noncontrolling interest 465 1,176 3,349 EARNINGS BEFORE 1,317,2151,057,143922,152 INCOME TAXES Assets 6,370,067 6,139,831 6,370,0676,139,8315,455,619 Additions to Property, Plant 255,524 144,063 159,138 and Equipment 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 9,523,2249,263,8639,316,256 Segment Operating Profit 1,372,8661,101,343961,705 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 35,145 15,750 32,291 and Equipment Depreciation and Amortization 10,655 10,428 6,821 Grocery Products Operating profit and other financial information Sales 1,684,7561,617,6801,558,265 Assets 1,472,316 1,214,988 1,472,3161,214,9881,249,631 Additions to Property, Plant 15,830 18,104 31,741 and Equipment Depreciation and Amortization 29,725 26,972 25,883 Grocery Products | Operating segment Operating profit and other financial information Sales 1,684,7561,617,6801,558,265 Segment Operating Profit 268,461 228,582 195,064 Refrigerated Foods

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Operating profit and other financial information Sales 4,647,1734,372,3474,644,179 Assets 1,999,821 1,973,424 1,999,8211,973,4241,215,694 Additions to Property, Plant 93,430 54,074 61,183 and Equipment 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 4,658,5144,385,4054,667,342 Segment Operating Profit 585,652 424,968 338,020 Jennie-O Turkey Store Operating profit and other financial information Sales 1,740,9681,635,7761,672,452 Assets 882,812 811,693 882,812 811,693 857,697 Additions to Property, Plant 61,340 32,250 25,761 and Equipment 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 1,861,7101,763,9711,816,589 Segment Operating Profit 329,427 276,217 272,362 Specialty Foods Operating profit and other financial information Sales 939,134 1,103,359907,120 Assets 837,107 988,455 837,107 988,455 1,013,420 Additions to Property, Plant 5,372 5,309 3,266 and Equipment 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 1,103,423907,242 Segment Operating Profit 110,917 93,258 71,514 International & Other

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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 44,407 18,576 4,896 and Equipment 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

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Segment Reporting - 12 Months Ended Percentage Of Revenues By Oct. 30, 2016Oct. 25, 2015Oct. 26, 2014 Product (Details) - Revenues 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%

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Segment Reporting - 3 Months Ended 12 Months Ended Revenue By Geographic Oct. 30, Jul. 24, Apr. 24, Jan. 24, Oct. 25, Jul. 26, Apr. 26, Jan. 25, Oct. 30, Oct. 25, Oct. 26, Locations (Details) - USD ($) 2016 2016 2016 2016 2015 2015 2015 2015 2016 2015 2014 $ in Thousands Revenues attributable to U.S. and Foreign countries Revenue, Net $ $ $ $ $ $ $ $ $ $ $ 2,627,9412,302,3762,300,2352,292,6722,400,8582,188,5872,279,3452,395,0739,523,2249,263,8639,316,256 United States Revenues attributable to U.S. and Foreign countries Revenue, Net 9,012,7978,721,7228,708,042 Foreign Revenues attributable to U.S. and Foreign countries Revenue, Net $ 510,427$ 542,141$ 608,214

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Segment Reporting - 12 Months Ended Concentration Revenue By Customer (Details) - Oct. 30, 2016Oct. 25, 2015Oct. 26, 2014 Revenues - USD ($) $ in Millions 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%

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Quarterly Results of 3 Months Ended 12 Months Ended Operations (Unaudited) (Details) - USD ($) Oct. 30, Jul. 24, Apr. 24, Jan. 24, Oct. 25, Jul. 26, Apr. 26, Jan. 25, Oct. 30, Oct. 25, Oct. 26, $ / shares in Units, $ in 2016 2016 2016 2016 2015 2015 2015 2015 2016 2015 2014 Thousands Quarterly Results of Operations (Unaudited) Net sales $ $ $ $ $ $ $ $ $ $ $ 2,627,9412,302,3762,300,2352,292,6722,400,8582,188,5872,279,3452,395,0739,523,2249,263,863 9,316,256 Gross Profit 598,520 475,285 526,359 558,011 495,030 409,390 459,556 444,605 2,158,1751,808,581 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 $ 243,940$ 195,654$ 215,397$ 235,061$ 187,231$ 146,938$ 180,201$ 171,718$ 890,052$ 686,088 $ 602,677 Hormel Foods Corporation Basic Earnings Per Share (in $ 0.46 $ 0.37 $ 0.41 $ 0.44 $ 0.35 $ 0.28 $ 0.34 $ 0.33 $ 1.68 $ 1.30 [1] $ 1.14 [1] dollars per share) Diluted Earnings Per Share (in $ 0.45 $ 0.36 $ 0.40 $ 0.43 $ 0.35 $ 0.27 $ 0.33 $ 0.32 $ 1.64 $ 1.27 [1] $ 1.12 [1] dollars per share) [1]Shares and par values have been restated, as appropriate, to reflect the two-for-one stock split distributed on February 9, 2016.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document SCHEDULE II - 12 Months Ended VALUATION AND QUALIFYING ACCOUNTS AND RESERVES (Details) - Oct. 30, 2016Oct. 25, 2015Oct. 26, 2014 USD ($) $ in Thousands 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