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Hormel Foods Reports Third Quarter Results and Maintains Guidance

  Hormel Foods Reports Third Quarter Results and Maintains Guidance

Business Wire

AUSTIN, Minn. -- August 22, 2013

Hormel Foods Corporation (NYSE: HRL) today reported its performance for the
fiscal year 2013 third quarter. All comparisons are to the third quarter or
first nine months of fiscal 2012.

HIGHLIGHTS

Third Quarter

  *Full year guidance range of $1.88 to $1.96 maintained
  *Diluted EPS of $.42 up 2 percent from diluted EPS of $.41
  *Segment operating profit up 5 percent
  *Dollar sales of $2.2 billion, up 8 percent
  *Volume up 3 percent
  *Grocery Products operating profit up 32 percent; volume up 27 percent
    (volume down 1 percent excluding sales of SKIPPY® products); dollar sales
    up 25 percent (dollar sales flat excluding sales of SKIPPY® products)
  *Jennie-O Turkey Store operating profit up 17 percent; volume up 1 percent;
    dollar sales up 4 percent
  *Refrigerated Foods operating profit down 26 percent; volume down 3
    percent; dollar sales up 2 percent
  *Specialty Foods operating profit up 8 percent; volume down 5 percent;
    dollar sales up 5 percent
  *International & Other operating profit up 34 percent; volume up 28 percent
    (volume up 10 percent excluding sales of SKIPPY® products); dollar sales
    up 31 percent (dollars sales up 11 percent excluding sales of SKIPPY®
    products)

The company reported fiscal 2013 third quarter net earnings of $113.6 million,
up 2 percent from net earnings of $111.2 million a year earlier. For the nine
months ended July 28, 2013, net earnings were $368.9 million, as compared to
net earnings of $367.4 million the same period last year. Diluted net earnings
per share for the nine months ended July 28, 2013 were $1.37, equal to a year
ago.

Sales for the quarter were $2.2 billion, up 8 percent from the same period in
fiscal 2012. For the nine months ended July 28, 2013, sales totaled $6.4
billion, up 6 percent from the same period last year.

COMMENTARY

“We had a solid quarter, with all five segments reporting increased sales over
last year,” said Jeffrey M. Ettinger, chairman of the board, president and
chief executive officer. “We also generated improved earnings, with four of
five segments posting increased operating profits. Earnings per share of $0.42
for the third quarter was in line with our expectations and keeps us on pace
with our full year adjusted guidance range.”

“Our Grocery Products segment benefitted from good performance by our new
SKIPPY® business. Our Jennie-O Turkey Store segment delivered a strong
quarter, despite higher grain costs and lower commodity meat prices. Our
International business continues to achieve impressive results, led by strong
export sales of our SPAM® family of products and fresh pork, as well as the
addition of the SKIPPY® business. Higher pork input costs squeezed margins for
our retail value-added products, particularly bacon, decreasing our
Refrigerated Foods segment results during the quarter,” Ettinger remarked.

“We are excited about the recent roll-out of our HORMEL® REV® snack wraps
during the quarter, which is supported by a national advertising campaign that
began in late July. I am also pleased with the progress our team has made in
integrating and growing sales of SKIPPY® products, both in the U.S. and
internationally,” commented Ettinger.

SEGMENT OPERATING HIGHLIGHTS – THIRD QUARTER

Grocery Products (17% of Net Sales, 29% of Total Segment Operating Profit)
Grocery Products segment profit increased by 32 percent. Net sales, including
SKIPPY® products, increased over last year’s results by 25 percent. Excluding
SKIPPY® products, segment sales were flat as compared to last year. Net sales
of DINTY MOORE® stew, HORMEL® MARY KITCHEN® hash, and HORMEL® bacon toppings
increased over last year.

Refrigerated Foods (50% of Net Sales, 24% of Total Segment Operating Profit)
Refrigerated Foods segment profit declined 26 percent, as elevated raw
material costs squeezed margins in certain retail categories, with bacon
impacted the most. Sales increased 2 percent, led by retail sales of HORMEL®
party trays, HORMEL® NATURAL CHOICE® deli meats, and HORMEL® CURE 81® hams,
and foodservice sales of HORMEL® FIRE BRAISED meats and HORMEL® PECANWOOD
bacon.

Jennie-O Turkey Store (17% of Net Sales, 25% of Total Segment Operating
Profit)
Jennie-O Turkey Store delivered a solid performance this quarter despite high
feed costs, with segment operating profit up 17 percent from a year ago.
Increased value-added sales and an improved product mix offset higher feed
costs and lower commodity meat prices. Net sales for the quarter rose 4
percent, driven by growth in sales of JENNIE-O TURKEY STORE® ground turkey
chubs and turkey bacon.

Specialty Foods (11% of Net Sales, 13% of Total Segment Operating Profit)
Specialty Foods segment profit increased 8 percent and net sales grew 5
percent, led by sales of sweetener, nutritional products, ready to drink
beverages, and ingredients. The agreement allowing Diamond Crystal Brands to
sell SPLENDA® sweetener into foodservice trade channels was extended one month
to July 31, 2013.

International & Other (5% of Net Sales, 9% of Total Segment Operating Profit)
The International & Other segment grew segment profit by 34 percent and net
sales by 31 percent, driven principally by stronger exports of our SPAM®
family of products and fresh pork, improved performance by our operations in
China, and the addition of the SKIPPY® export business.

OUTLOOK

“Earnings reported in the third quarter keep us on track to achieve results
consistent with our adjusted annual guidance range of $1.88 to $1.96 per
share,” said Ettinger. “Toward the end of the third quarter we were able to
adjust for higher raw material costs in key product categories such as bacon.
We anticipate Jennie-O Turkey Store will continue to rebound from headwinds
faced earlier in the year, which should benefit results through the rest of
fiscal 2013. We expect four of five segments to outperform in the fourth
quarter, with only Specialty Foods expected to experience a down quarter.”

“We are excited about the new products that we are introducing to the
marketplace this year, such as our HORMEL® REV® snack wraps and HORMEL® FIRE
BRAISED meats,” concluded Ettinger. “We have solid marketing and promotional
plans in place to drive sales of our value-added products in the fourth
quarter.”

DIVIDENDS

Effective August 15, 2013, the Company paid its 340^th consecutive quarterly
dividend, at the annual rate of $.68.

CONFERENCE CALL

A conference call will be Webcast at 8:00 a.m. CT (9:00 a.m. ET) on Thursday,
August 22, 2013. Access is available at http://www.hormelfoods.com. If you do
not have Internet access and want to listen to the call over the phone, the
dial in number is 877-941-8609 and you must provide the access code of
4632577. An audio replay is available by calling 800-406-7325  and entering
access code 4632577. The audio replay will be available beginning at 10:30
a.m. CT on Thursday, August 22, 2013, through 11:59 p.m. CT on Thursday,
September 5, 2013. The Webcast replay will be available at 10:30 a.m. CT,
Thursday, August 22, 2013, and archived for one year.

About Hormel Foods
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 branded, value-added products to
the global marketplace. The company is a member of the Standard & Poor's (S&P)
500 Index, S&P Dividend Aristocrats for 2012, Maplecroft Climate Innovation
Indexes, Global 1000 Sustainable Performance Leaders and was again named one
of "The 100 Best Corporate Citizens” by Corporate Responsibility Magazine for
the fifth year in a row. Hormel Foods debuted on the G.I. Jobs magazine list
of America’s Top 100 Military Friendly Employers in 2012. The company enjoys a
strong reputation among consumers, retail grocers, foodservice and industrial
customers for products highly regarded for quality, taste, nutrition,
convenience and value. For more information, visit http://www.hormelfoods.com.

FORWARD-LOOKING STATEMENTS

This news release contains forward-looking information based on management’s
current views and assumptions. Actual events may differ materially. Please
refer to the cautionary statement regarding Forward-Looking Statements and
Risk Factors that appear on pages 31-38 in the company’s Form 10-Q for the
quarter ended April 28, 2013, which was filed with the SEC on June 7, 2013,
and can be accessed at www.hormelfoods.com under “Investors-SEC Filings.”

Statements Follow

Segment Data

Fiscal 2013 Third Quarter Segment Operating Results (dollars in thousands)

                                    
                                      THIRD QUARTER – 13 WEEKS ENDED
                                                                   
NET SALES                             July 28, 2013   July 29, 2012   % Change
Grocery Products                      $  370,297      $  297,177      24.6
Refrigerated Foods                       1,068,587       1,043,311    2.4
Jennie-O Turkey Store                    367,125         351,604      4.4
Specialty Foods                          240,512         230,072      4.5
International & Other                   113,004        86,024       31.4   
Total                                 $  2,159,525    $  2,008,188    7.5    
                                                                      
OPERATING PROFIT
Grocery Products                      $  52,962       $  40,052       32.2
Refrigerated Foods                       44,769          60,757       (26.3  )
Jennie-O Turkey Store                    45,623          39,106       16.7
Specialty Foods                          23,170          21,490       7.8
International & Other                   16,692         12,437       34.2   
Total segment operating profit           183,216         173,842      5.4
Net interest and investment expense      3,577           2,363        51.4
(income)
General corporate expense                2,833           3,225        (12.2  )
Noncontrolling interest                 270            1,240        (78.2  )
Earnings before income taxes          $  177,076      $  169,494      4.5    
                                                                      
                                      
                                      YEAR TO DATE – 39 WEEKS ENDED

NET SALES                             July 28, 2013   July 29, 2012   % Change
Grocery Products                      $  1,097,942    $  830,649      32.2
Refrigerated Foods                       3,143,358       3,158,811    (0.5   )
Jennie-O Turkey Store                    1,142,198       1,120,028    2.0
Specialty Foods                          720,048         677,043      6.4
International & Other                   324,906        273,955      18.6   
Total                                 $  6,428,452    $  6,060,486    6.1    
                                                                      
OPERATING PROFIT
Grocery Products                      $  150,170      $  127,003      18.2
Refrigerated Foods                       153,239         167,515      (8.5   )
Jennie-O Turkey Store                    156,567         186,066      (15.9  )
Specialty Foods                          72,898          58,996       23.6
International & Other                   49,421         37,763       30.9   
Total segment operating profit           582,295         577,343      0.9
Net interest and investment expense      6,887           4,932        39.6
(income)
General corporate expense                19,228          18,040       6.6
Noncontrolling interest                 2,720          3,226        (15.7  )
Earnings before income taxes          $  558,900      $  557,597      0.2    
                                                                      

HORMEL FOODS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
                                             
                 Thirteen Weeks Ended            Thirty-Nine Weeks Ended
                 July 28, 2013   July 29, 2012   July 28, 2013  July 29, 2012
                                                                 
Net sales        $ 2,159,525     $ 2,008,188     $ 6,428,452     $ 6,060,486
                                                                 
Cost of           1,829,219     1,701,132     5,401,152     5,080,414 
products sold
                                                                 
GROSS PROFIT:      330,306         307,056         1,027,300       980,072
                                                                 
Selling,
general and        150,999         145,022         479,896         446,183
administrative
                                                                 
Equity in
earnings of       1,346         9,823         18,383        28,640    
affiliates
                                                                 
OPERATING          180,653         171,857         565,787         562,529
INCOME:
                                                                 
Other income &
expenses:
Interest &
investment         (455      )     844             2,471           4,772
(expense)
income
Interest          (3,122    )    (3,207    )    (9,358    )    (9,704    )
expense
                                                                 
EARNINGS
BEFORE INCOME      177,076         169,494         558,900         557,597
TAXES:
                                                                 
Provision for      63,171          57,087          187,309         186,922
income taxes
(effective tax    35.67     %    33.68     %    33.51     %    33.52     %
rate)
                                                                 
NET EARNINGS       113,905         112,407         371,591         370,675
Less: net
earnings
attributable      270           1,240         2,720         3,226     
to
noncontrolling
interest
NET EARNINGS
ATTRIBUTABLE
TO HORMEL        $ 113,635      $ 111,167      $ 368,871      $ 367,449   
FOODS
CORPORATION
                                                                 
NET EARNINGS
PER SHARE
Basic            $ .43          $ .42          $ 1.39         $ 1.39      
Diluted          $ .42          $ .41          $ 1.37         $ 1.37      
                                                                 
WEIGHTED AVG
SHARES O/S
Basic              264,605         263,359         264,472         263,638
Diluted            270,769         268,746         270,230         269,138
                                                                 
DIVIDENDS
DECLARED
PER SHARE        $ .17          $ .15          $ .51          $ .45       
                                                                 

HORMEL FOODS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
                                                        
                                                           
                                           July 28, 2013  October 28, 2012
                                           (in thousands)
ASSETS
                                                           
CURRENT ASSETS
Cash and cash equivalents                  $  329,496      $    682,388
Short-term marketable securities              -                 77,387
Accounts receivable                           514,398           507,041
Inventories                                   1,003,736         950,521
Income taxes receivable                       2,868             16,460
Deferred income taxes                         76,502            68,560
Prepaid expenses                              14,867            12,772
Other current assets                         9,723            5,555
                                                           
TOTAL CURRENT ASSETS                          1,951,590         2,320,684
                                                           
INTANGIBLES                                   1,314,882         753,947
                                                           
OTHER ASSETS                                  545,756           564,855
                                                           
PROPERTY, PLANT & EQUIPMENT, NET             949,021          924,480
                                                           
TOTAL ASSETS                               $  4,761,249    $    4,563,966
                                                           
                                                           
LIABILITIES AND SHAREHOLDERS’ INVESTMENT
                                                           
TOTAL CURRENT LIABILITIES                  $  789,484      $    786,300
                                                           
LONG-TERM DEBT – LESS CURRENT MATURITIES      250,000           250,000
                                                           
OTHER LONG-TERM LIABILITIES                   667,881           702,741
                                                           
SHAREHOLDERS’ INVESTMENT                     3,053,884        2,824,925
                                                           
TOTAL LIAB. & SHAREHOLDERS’ INVESTMENT     $  4,761,249    $    4,563,966
                                                           

HORMEL FOODS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                               
                                                 Thirty-Nine Weeks Ended
                                                 July 28, 2013  July 29, 2012
                                                 (in thousands)
OPERATING ACTIVITIES
Net earnings                                     $  371,591      $  370,675
Depreciation and amortization of intangibles        92,986          88,627
Increase in working capital                         (41,711  )      (171,992 )
Other                                              5,983         (3,257   )
NET CASH PROVIDED BY OPERATING ACTIVITIES           428,849         284,053
                                                                 
INVESTING ACTIVITIES
Net sale of securities                              77,558          -
Acquisitions of businesses/intangibles              (665,415 )      (168     )
Net purchases of property / equipment               (62,212  )      (90,405  )
(Increase) decrease in investments, equity in      (4,810   )     17,661   
affiliates, and other assets
NET CASH USED IN INVESTING ACTIVITIES               (654,879 )      (72,912  )
                                                                 
FINANCING ACTIVITIES
Dividends paid on common stock                      (129,426 )      (112,683 )
Share repurchase                                    (45,668  )      (50,692  )
Other                                              48,198        21,511   
NET CASH USED IN FINANCING ACTIVITIES               (126,896 )      (141,864 )
EFFECT OF EXCHANGE RATE CHANGES ON CASH            34            810      
(DECREASE) INCREASE IN CASH AND CASH                (352,892 )      70,087
EQUIVALENTS
Cash and cash equivalents at beginning of year     682,388       463,130  
CASH AND CASH EQUIVALENTS AT END OF QUARTER      $  329,496     $  533,217  
                                                                             

Contact:

Hormel Foods Corporation
Investor Contact:
Kevin Jones, 507-437-5248
kcjones@hormel.com
or
Media Contact:
Julie Craven, 507-437-5345
media@hormel.com