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Hormel Foods 8-K 2005

Documents found in this filing:

  1. 8-K
  2. Ex-99
  3. Ex-99

Exhibit 99

 

INVESTOR CONTACT:

 

MEDIA CONTACT:

Fred Halvin

 

Julie Craven

(507) 437-5007

 

(507) 437-5345

fdhalvin@hormel.com

 

jhcraven@hormel.com

 

 

HORMEL FOODS REPORTS THIRD QUARTER RESULTS

 

AUSTIN, Minn., August 25, 2005 (BUSINESS WIRE) – Hormel Foods Corporation (NYSE: HRL) today reported its performance for the fiscal 2005 third quarter.

 

HIGHLIGHTS

 

                  Diluted EPS of $.37, up 16 percent from adjusted earnings from operations of $.32 per share in 2004 (2004 GAAP earnings were $.40 per share, which included a one-time $.08 per share gain from the sale of Vista International Packaging, Inc.)

                  Dollar sales of $1.4 billion increased 17 percent from 2004 (up 4 percent excluding acquisitions/divestitures)

                  Volume up 22 percent compared to last year (up 4 percent excluding acquisitions/divestitures)

                  Jennie-O Turkey Store operating profit up 226 percent; volume up 6 percent; dollar sales up 3 percent

                  Refrigerated Foods operating profit down 17 percent; volume up 39 percent (up 7 percent excluding acquisitions); dollar sales up 28 percent (up 2 percent excluding acquisitions)

                  Grocery Products operating profit up 8 percent; volume up 6 percent (down 1 percent excluding acquisitions); dollar sales up 10 percent (up 6 percent excluding acquisitions)

                  Specialty Foods operating profit up 10 percent; volume up 11 percent (down 2 percent excluding acquisitions); dollar sales up 16 percent (up 6 percent excluding acquisitions)

                  Acquisition integrations on target

 

Hormel Foods Corporation (NYSE: HRL-News), the multinational marketer of consumer-branded meat and food products, today reported fiscal 2005 third quarter net earnings of $51.4 million, up 15 percent from adjusted earnings from operations of $44.8 million a year earlier (last year GAAP earnings were $56.3 million, which includes $11.5 million after tax gain from the sale of Vista).  Diluted earnings per share were $.37 this year compared to $.32 per share from adjusted earnings from operations last year (GAAP earnings were $.40 per share, which includes $.08 per share gain from the sale of Vista).  Sales totaled $1.4 billion, up from $1.2 billion in fiscal 2004.

 

For the nine months ended July 31, 2005, net earnings were $171.7 million, or $1.23 per diluted share (up 14 percent), compared to $150.3 million from adjusted earnings from operations a year ago, or $1.07 per diluted share (GAAP earnings were $161.8 million and $1.15 per share, which includes $11.5 million after tax gain from Vista sale, or $.08 per share).  Sales totaled $3.9 billion, up 15 percent, from $3.4 billion in the same period last year.

 

1



 

COMMENTARY AND OUTLOOK

 

“Our turkey business delivered another outstanding quarter driven by continued value-added sales growth, lower grain markets and efficiencies in our production facilities.  Impressive growth from several of our value-added products in Refrigerated Foods and key categories in the Grocery Products segment benefited the bottom line as well,” said Joel W. Johnson, chairman of the board and chief executive officer.  “The acquisitions that were completed earlier in the year are gaining momentum and made positive contributions also,” Johnson said.

 

“The year-over-year improvement in both the top and bottom line reported by the Grocery Products segment is encouraging.  Two important areas of growth include the HORMEL microwave line of products and the SPAM family of products,” Johnson said.  “Chili shipments were down in the quarter versus last year, partially due to pipe line inventory gains last year as STAGG chili was expanded nationally. Looking forward, we have good commitments for the upcoming fall and winter chili season,” said Johnson.

 

“We continue to see very good demand for our value-added protein products that are sold through our Refrigerated Foods and
Jennie-O Turkey Store segments.  Items like our HORMEL fully cooked entrees, HORMEL party trays and JENNIE-O TURKEY STORE tray pack items reported double-digit growth.  Also, our case-ready business reported outstanding growth, with volume up 40 percent,” Johnson said.

 

“The integration of the four acquisitions that were completed this year, Farmer John, Mexican Accent, Mark-Lynn Foods and Lloyd’s Barbeque Company, continues to go well.  We are very pleased the way these businesses fit into the Hormel Foods organization and the contributions they made in the quarter,” commented Johnson.  “We continue to explore additional opportunities that would complement our portfolio,” said Johnson.

 

“The outlook for our business looks good going into the fourth quarter.  Even though last year’s fourth quarter included an extra week, solid performance from all segments should enable us to deliver improved results for the quarter compared to a year ago,” Johnson said.

 

“After assessing industry factors and our business plans and prospects, our earnings guidance for the fourth quarter of fiscal 2005 is in a range of $.50 to $.56 per share.  For the full year of fiscal 2005, we are tightening our earnings guidance from $1.70 - $1.80 to $1.73 - $1.79,” Johnson concluded.

 

OPERATING HIGHLIGHTS

 

Grocery Products (13% of Net Sales, 25% of Total Segment Operating Profit)

 

                  Dollar sales totaled $182 million, up 10 percent.

                  Volume up 6 percent.  Contributors to the increase include Mexican Accent products, SPAM family of products and HORMEL microwave products.

                  Operating profit was up 8 percent.  New profitable sales from Mexican Accent, increased sales from the SPAM family of products and improved costs for HORMEL flavored bacon bits were the key drivers behind the increase in operating profit.

                  The roll-out of the 15 oz. microwave HORMEL and STAGG chili items are getting good reception from retailers.  We expect additional distribution in the fourth quarter.

 

2



 

Refrigerated Foods (53% of Net Sales, 32% of Total Segment Operating Profit)

 

                  Dollar sales totaled $726 million, up 28 percent.

                  Volume increased 39 percent.

                  Operating profit down 17 percent.  Exceptional prior year pork margins created difficult comparisons.  Improved results from value-added retail items helped off-set some of the variance.

                  Outstanding growth from case-ready products with volume up 40 percent.

                  Value-added areas of growth reporting double-digit volume increases include HORMEL fully cooked entrees, HORMEL party trays and Dilusso Deli Company items.

                  Completed the integration of Lloyd’s Barbeque Company into segment.  Excellent progress is being made achieving cost synergies and the sales volumes are tracking at planned levels.

                  Farmer John synergy projects continue to reveal cost saving opportunities.

                  Foodservice volume up 3 percent driven by growth from precooked breakfast sausage, ALWAYS TENDER pork, AUSTIN BLUES BBQ, APPLEWOOD smoked bacon and CAFÉ H products.

 

Jennie-O Turkey Store (20% of Net Sales, 30% of Total Segment Operating Profit)

 

                  Dollar sales totaled $266 million, an increase of 3 percent.

                  Volume was up 6 percent.  Double-digit volume growth items include JENNIE-O TURKEY STORE rotisserie turkey breasts, premium seasoned turkey breasts, tray pack and turkey burgers.

                  Operating profit totaled $27 million compared to $8 million last year.  The higher operating profit resulted from a combination of value-added sales growth, lower feed costs and efficiencies in our production facilities.

 

Specialty Foods (10% of Net Sales, 8% of  Total Segment Operating Profit)

 

                  Dollar sales increased 16 percent to $133 million.

                  Volume was up 11 percent and operating profit was up 10 percent as a result of the addition of Mark-Lynn Foods and strong sugar substitute sales.  Century Foods International posted lower sales in the quarter.

                  Integration of Mark-Lynn on target.

 

All Other (4% of Net Sales, 5% of Total Segment Operating Profit)

 

                  Dollar sales down 5 percent to $48 million.  Year-ago results included $7 million of sales from Vista International Packaging, which was sold in the third quarter of fiscal 2004.  Excluding Vista, this year’s dollar sales were up 11 percent, driven by strong export sales of fresh pork.  Dan’s Prize also reported double-digit growth.

                  Volume was down 3 percent compared with last year.

                  Operating profit was down 25 percent, due principally to Vista’s removal from our portfolio.

 

3



 

Net Interest and Investment Income/General Corporate Expense

                  Net interest and investment income improved in 2005 due to a $3.2 million increase in the Rabbi Trust return compared to a year ago.

                  General corporate expenses were higher in 2005 because of the $18.1 million pre-tax gain from the sale of Vista and a credit of $2.4 million for a reduction to post-retirement benefits (Medicare Act of 2003) that occurred in 2004.

 

DIVIDENDS

 

Effective August 15, 2005, the company paid its 308th consecutive quarterly dividend.  The annual rate is $.52 per share.

 

CONFERENCE CALL

 

A conference call will be Webcast at 9:30 a.m. CT on Thursday, August 25, 2005.  Access is available at www.hormel.com.  If you do not have Internet access and want to listen to an audio replay, call 800-642-1687 in the United States and 706-645-9291 internationally and enter conference call ID 8740934.  The Webcast replay will be available at 12:00 (noon) CT, August 25, and archived for one year.  The audio replay will be available beginning at 10:30 a.m. CT on Thursday, August 25, 2005, through 11:30 p.m. CT on September 23, 2005.

 

ABOUT HORMEL FOODS CORPORATION

 

Hormel Foods Corporation, based in Austin, Minn., is a multinational manufacturer and marketer of consumer-branded food and meat products, many of which are among the best known and trusted in the food industry.  The company leverages its extensive expertise, innovation and high competencies in pork and turkey processing and marketing to bring quality, value-added brands to the global marketplace.  For the past five years, Hormel Foods was named one of “The 400 Best Big Companies in America” by Forbes magazine.  The company enjoys a strong reputation among consumers, retail grocers, foodservice and industrial customers for products that are highly regarded for quality, taste, nutrition, convenience and value.  For more information, visit www.hormel.com.

 

FORWARD-LOOKING STATEMENTS

 

This news release contains forward-looking information based on management’s current views and assumptions.  Actual events may differ.  Please refer to the Cautionary Statement Relevant to Forward-Looking Statements and Information that appears on Exhibit 99.1 of the company’s Annual Report on Form 10-K for the fiscal year ended October 30, 2004, which can be accessed at http://www.hormel.com

 

4



 

Segment Data

 

Fiscal 2005 Third Quarter Segment Operating Results (in Thousands)

 

 

 

THIRD QUARTER – 13 WEEKS ENDED

 

 

 

July 31, 2005

 

July 24, 2004

 

% Change

 

SALES

 

 

 

 

 

 

 

Grocery Products

 

$

182,029

 

$

165,207

 

10.2

 

Refrigerated Foods

 

725,883

 

567,073

 

28.0

 

Jennie-O Turkey Store

 

266,055

 

258,042

 

3.1

 

Specialty Foods

 

133,403

 

115,371

 

15.6

 

All Other

 

47,651

 

50,306

 

(5.3

)

Total

 

$

1,355,021

 

$

1,155,999

 

17.2

 

 

 

 

 

 

 

 

 

OPERATING PROFIT

 

 

 

 

 

 

 

Grocery Products

 

$

23,089

 

$

21,477

 

7.5

 

Refrigerated Foods

 

29,712

 

35,680

 

(16.7

)

Jennie-O Turkey Store

 

27,005

 

8,279

 

226.2

 

Specialty Foods

 

7,569

 

6,896

 

9.8

 

All Other

 

4,719

 

6,325

 

(25.4

)

Total segment operating profit

 

92,094

 

78,657

 

17.1

 

Other income and net interest

 

(4,425

)

(6,730

)

34.2

 

Gen. corporate (expense) income

 

(6,137

)

16,804

 

(136.5

)

Income before tax

 

$

81,532

 

$

88,731

 

(8.1

)

 

 

 

YEAR TO DATE – 39 WEEKS ENDED

 

 

 

July 31, 2005

 

July 24, 2004

 

% Change

 

SALES

 

 

 

 

 

 

 

Grocery Products

 

$

566,490

 

$

535,673

 

5.8

 

Refrigerated Foods

 

2,062,166

 

1,653,684

 

24.7

 

Jennie-O Turkey Store

 

777,031

 

735,359

 

5.7

 

Specialty Foods

 

374,323

 

350,635

 

6.8

 

All Other

 

156,079

 

159,308

 

(2.0

)

Total

 

$

3,936,089

 

$

3,434,659

 

14.6

 

 

 

 

 

 

 

 

 

OPERATING PROFIT

 

 

 

 

 

 

 

Grocery Products

 

$

86,523

 

$

84,888

 

1.9

 

Refrigerated Foods

 

91,065

 

102,648

 

(11.3

)

Jennie-O Turkey Store

 

95,277

 

47,178

 

102.0

 

Specialty Foods

 

19,007

 

19,991

 

(4.9

)

All Other

 

13,726

 

19,476

 

(29.5

)

Total segment operating profit

 

305,598

 

274,181

 

11.5

 

Other income and net interest

 

(12,414

)

(7,581

)

(63.8

)

Gen. corporate expense

 

(20,259

)

(12,026

)

(68.5

)

Income before tax

 

$

272,925

 

$

254,574

 

7.2

 

 

5



 

HORMEL FOODS CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

 

 

 

Thirteen Weeks Ended

 

Thirty-Nine Weeks Ended

 

 

 

7-31-2005

 

7-24-2004

 

7-31-2005

 

7-24-2004

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

1,355,021

 

$

1,155,999

 

$

3,936,089

 

$

3,434,659

 

 

 

 

 

 

 

 

 

 

 

Cost of products sold

 

1,054,277

 

899,071

 

3,020,841

 

2,632,536

 

 

 

 

 

 

 

 

 

 

 

GROSS PROFIT:

 

300,744

 

256,928

 

915,248

 

802,123

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

Selling and delivery

 

144,490

 

123,156

 

420,772

 

377,517

 

 

 

 

 

 

 

 

 

 

 

Marketing

 

29,379

 

24,915

 

90,288

 

77,981

 

 

 

 

 

 

 

 

 

 

 

Administrative & general

 

41,817

 

32,490

 

123,675

 

107,709

 

 

 

 

 

 

 

 

 

 

 

Gain on sale of business

 

0

 

(18,063

)

0

 

(18,063

)

 

 

 

 

 

 

 

 

 

 

TOTAL EXPENSES AND GAIN ON SALE OF BUSINESS:

 

215,686

 

162,498

 

634,735

 

545,144

 

 

 

 

 

 

 

 

 

 

 

Equity in earnings of affiliates

 

899

 

1,031

 

4,826

 

5,176

 

 

 

 

 

 

 

 

 

 

 

OPERATING INCOME:

 

85,957

 

95,461

 

285,339

 

262,155

 

 

 

 

 

 

 

 

 

 

 

Other income & expenses:

 

 

 

 

 

 

 

 

 

Interest & investment income (loss)

 

2,898

 

(85

)

8,389

 

12,497

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

(7,323

)

(6,645

)

(20,803

)

(20,078

)

 

 

 

 

 

 

 

 

 

 

EARNINGS BEFORE INCOME TAXES:

 

81,532

 

88,731

 

272,925

 

254,574

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

30,099

 

32,388

 

101,199

 

92,754

 

(effective tax rate)

 

36.92

%

36.50

%

37.08

%

36.43

%

 

 

 

 

 

 

 

 

 

 

NET EARNINGS

 

$

51,433

 

$

56,343

 

$

171,726

 

$

161,820

 

 

 

 

 

 

 

 

 

 

 

NET EARNINGS PER SHARE (Basic)

 

$

.37

 

$

.41

 

$

1.24

 

$

1.17

 

NET EARNINGS PER SHARE (Diluted)

 

$

.37

 

$

.40

 

$

1.23

 

$

1.15

 

 

6



 

HORMEL FOODS CORPORATION

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

 

 

 

July 31, 2005

 

October 30, 2004

 

 

 

(In Thousands)

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

Cash and cash equivalents

 

$

134,893

 

$

288,881

 

Accounts receivable

 

268,084

 

272,738

 

Inventories

 

508,737

 

425,655

 

Deferred income taxes

 

30,857

 

29,254

 

Prepaid expenses & other current assets

 

16,426

 

12,875

 

 

 

 

 

 

 

TOTAL CURRENT ASSETS

 

958,997

 

1,029,403

 

 

 

 

 

 

 

INTANGIBLES

 

611,594

 

512,942

 

 

 

 

 

 

 

OTHER ASSETS

 

281,792

 

287,386

 

 

 

 

 

 

 

PROPERTY, PLANT & EQUIPMENT, NET

 

882,392

 

704,237

 

 

 

 

 

 

 

TOTAL ASSETS

 

$

2,734,775

 

$

2,533,968

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ INVESTMENT

 

 

 

 

 

 

 

 

 

 

 

TOTAL CURRENT LIABILITIES

 

$

545,431

 

$

464,366

 

 

 

 

 

 

 

LONG-TERM DEBT – LESS CURRENT MATURITIES

 

361,160

 

361,510

 

 

 

 

 

 

 

OTHER LONG-TERM LIABILITIES

 

311,976

 

308,844

 

 

 

 

 

 

 

SHAREHOLDERS’ INVESTMENT

 

1,516,208

 

1,399,248

 

 

 

 

 

 

 

TOTAL LIAB. & SHAREHOLDERS’ INVESTMENT

 

$

2,734,775

 

$

2,533,968

 

 

7



 

HORMEL FOODS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

 

Thirty-Nine Weeks Ended

 

 

 

7-31-2005

 

7-24-2004

 

 

 

(In Thousands)

 

OPERATING ACTIVITIES

 

 

 

 

 

Net earnings

 

$

171,726

 

$

161,820

 

Adjustments to reconcile to net cash provided by operating activities:

 

 

 

 

 

Depreciation

 

79,499

 

64,581

 

Amortization of intangibles

 

7,092

 

5,247

 

Equity in earnings of affiliates

 

(4,705

)

(4,587

)

Provision for deferred income taxes

 

(4,126

)

(9,353

)

Loss (Gain) on property/equipment sales and plant facilities

 

164

 

(63

)

Gain on sales of business and investment

 

0

 

(24,285

)

Changes in operating assets and liabilities net of acquisitions:

 

 

 

 

 

Decrease in accounts receivable

 

37,533

 

29,312

 

Increase in inventories, prepaid expenses, and other current assets

 

(23,206

)

(68,336

)

(Decrease) Increase in accounts payable and accrued expenses

 

(8,263

)

12,515

 

Other

 

5,375

 

3,909

 

NET CASH PROVIDED BY OPERATING ACTIVITIES

 

261,089

 

170,760

 

 

 

 

 

 

 

INVESTING ACTIVITIES

 

 

 

 

 

Purchase of held-to-maturity securities

 

0

 

(3,250

)

Acquisitions of businesses

 

(339,944

)

(2,097

)

Purchases of property / equipment

 

(78,212

)

(57,234

)

Proceeds from sales of property / equipment

 

1,719

 

827

 

Proceeds from sales of business and investment

 

0

 

126,774

 

Decrease (Increase) in investments, equity in affiliates, net pension assets, and other assets

 

10,574

 

(21,947

)

Dividends from affiliates

 

775

 

0

 

NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES

 

(405,088

)

43,073

 

 

 

 

 

 

 

FINANCING ACTIVITIES

 

 

 

 

 

Proceeds from short-term debt

 

115,000

 

0

 

Principal payments on short-term debt

 

(55,000

)

0

 

Principal payments on long-term debt

 

(5,035

)

(21,569

)

Dividends paid on common stock

 

(51,469

)

(45,729

)

Stock repurchase

 

(22,592

)

(13,141

)

Other

 

9,107

 

8,985

 

NET CASH USED IN FINANCING ACTIVITIES

 

(9,989

)

(71,454

)

(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

 

(153,988

)

142,379

 

Cash and cash equivalents at beginning of year

 

288,881

 

97,976

 

CASH AND CASH EQUIVALENTS AT END OF QUARTER

 

$

134,893

 

$

240,355

 

 

8


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