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Hormel Foods Reports Second Quarter Results

Performance
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May 22, 2008

Austin, Minn.

Hormel Foods Corporation (NYSE: HRL) today reported its performance for the fiscal 2008 second quarter.

HIGHLIGHTS

¨ Diluted EPS of $.56, up 14 percent from $.49 per share in 2007

¨ Dollar sales of $1.59 billion increased 6 percent from 2007 (up 4
percent excluding acquisitions)

¨ Volume up 5 percent compared to last year (up 3 percent
excluding acquisitions)

¨ Operating profit up 10 percent from 2007

¨ Grocery Products operating profit up 6 percent; volume flat; dollar
sales up 4 percent

¨ Refrigerated Foods operating profit up 26 percent; volume up 4
percent (up 1 percent excluding acquisitions); dollar sales up 4
percent (up 1 percent excluding acquisitions)

¨ Jennie-O Turkey Store operating profit down 16 percent; volume
up 9 percent; dollar sales up 8 percent

¨ Specialty Foods operating profit down 5 percent; volume up 5
percent; dollar sales up 8 percent

¨ All Other operating profit up 20 percent; volume up 7 percent;
dollar sales up 19 percent

The company reported fiscal 2008 second quarter net earnings of $77.6 million, up 14 percent from earnings of $68.0 million a year earlier. Diluted earnings per share for the quarter were $.56 this year compared to $.49 per share last year. Sales totaled $1.59 billion, up from $1.50 billion in fiscal 2007. For the six months ended April 27, 2008, net earnings were $165.7 million, or $1.20 per diluted share (up 17 percent), compared to $143.3 million a year ago or $1.03 per diluted share. Sales totaled $3.22 billion, up 7 percent, from $3.01 billion in the same period last year.

COMMENTARY

“It was a solid quarter for Hormel Foods. We were able to meet our company objectives for sales and earnings growth in the second quarter amidst a challenging operating environment,” said Jeffrey M. Ettinger, chairman of the board, president and chief executive officer. “Our Refrigerated Foods segment led the way, as lower pork input costs combined with increased sales of value-added products provided a significant increase in earnings. Our Grocery Products segment also delivered higher than expected sales and earnings, aided by strong sales of the SPAM family of products and continued growth of theHORMEL COMPLEATS product line.”

“Jennie-O Turkey Store reported a significant decline in earnings as a result of a continued run-up in grain and fuel costs. The Specialty Foods segment also reported a decline in earnings, as a result of increased input and fuel costs. Our International segment had another excellent quarter, posting double-digit increases in dollar sales and earnings, primarily attributable to strong export sales of the SPAMfamily of products and fresh pork. Overall, our balanced model helped to stabilize earnings for the company even when two of our segments experienced a difficult operating environment.”

SEGMENT OPERATING HIGHLIGHTS – SECOND QUARTER

Grocery Products (15% of Net Sales, 32% of Total Operating Profit)

The Grocery Products segment reported a 6 percent increase in operating profit compared to last year. The SPAM family of products had another strong quarter with higher sales and profits due to improved promotional support, national media efforts and expanded distribution of SPAM Singles. Sales of HORMEL COMPLEATSmicrowave meals, HORMEL chili and DINTY MOORE stew also increased in the quarter. Sales of VALLEY FRESH products were down due to competitive pressures. Sales of ethnic products also declined due to lower volumes of CHI-CHI’S sauces and the rationalization of low margin business.

Refrigerated Foods (52% of Net Sales, 43% of Total Operating Profit)

The Refrigerated Foods segment had a strong quarter with operating profit up 26 percent compared to fiscal 2007. Lower hog input costs compared to last year led to higher margins in both value-added products and fresh pork. Sales and volumes also improved in key retail product lines such as HORMEL NATURAL CHOICE deli meats andHORMEL refrigerated entrees. Volumes in the Foodservice business unit were flat for the quarter. We have been able to offset some lost volumes in the casual dining segment by pursuing other channels. The acquisition of Burke Corporation also positively contributed to the second quarter results.

Jennie-O Turkey Store (18% of Net Sales, 9% of Total Operating Profit)

Operating profit declined 16 percent in the Jennie-O Turkey Store segment in the quarter despite an 8 percent increase in sales. Grain-related costs were $39 million higher compared to fiscal 2007. The increase in corn prices during the second quarter added a new layer of costs that were not fully recovered. Given the current market dynamics, we will be reducing our poult placements in our grow-out facilities by approximately 5%. We will also continue to pursue manufacturing efficiencies, customer and product rationalization, and pricing to improve profitability. Sales of value-added retail products continued to grow during the quarter, led by fresh tray pack, turkey burgers and marinated tenders. This helped offset softer sales of certain other value-added retail products, including pan roasts and turkey franks.

Specialty Foods (12% of Net Sales, 12% of Total Operating Profit)

The Specialty Foods segment reported operating profits down 5 percent compared to fiscal 2007. Better results at the Century Foods International business unit from higher sales of nutritional jar and ready-to-drink products did not offset declines in the other business units. Profits declined in the Specialty Products business unit due to higher input costs and lower sales volumes of dry sausage. Diamond Crystal Brands was adversely affected by higher input costs and lower volumes.

All Other (3% of Net Sales, 4% of Total Operating Profit)

The All Other segment, which includes the International business unit, had another excellent quarter with operating profits up 20 percent. Export sales and margins continued to be strong throughout the quarter, particularly for the SPAM family of products and fresh pork. Operating results in our China operations declined due to continued high hog input costs and lower export volumes.

OUTLOOK

“We are reconfirming our fiscal 2008 guidance range of $2.30-$2.40 per share. Although we hope to build on our solid first half results, we anticipate further pressure from increasing grain and energy costs. We also face some uncertainty regarding protein input costs. The strength of our core businesses, the growth of our value-added products and the ability of our people to adapt to changes in the business environment should allow us to meet our goals,” Ettinger said.

DIVIDENDS

Effective May 15, 2008, the Company paid its 319th consecutive quarterly dividend. The annual rate is $.74.

CONFERENCE CALL

A conference call will be Webcast at 9:00 a.m. CT on Thursday, May 22, 2008. Access is available at 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 800-218-0713. An audio replay is available by calling 800-405-2236 and entering access code 11113993#. The audio replay will be available beginning at 11:00 a.m. CT on Thursday, May. 22, 2008, through 11:59 p.m. CT on Friday, June 6, 2008. The Webcast replay will be available at 11:00 a.m. CT, Thursday, May 22, 2008, and archived for one year.

Statements Follow

# # #

Segment Data

Fiscal 2008 Second Quarter Segment Operating Results (in Thousands)

SECOND QUARTER – 13 WEEKS ENDED
NET SALES April 27, 2008 April 29, 2007 % Change
Grocery Products $ 233,464 $ 223,625 4.4
Refrigerated Foods 831,821 796,339 4.5
Jennie-O Turkey Store 291,889 270,044 8.1
Specialty Foods 182,534 169,069 8.0
All Other 54,376 45,520 19.5
Total $ 1,594,084 $ 1,504,597 5.9
OPERATING PROFIT
Grocery Products $ 41,611 $ 39,194 6.2
Refrigerated Foods 55,625 44,187 25.9
Jennie-O Turkey Store 11,708 13,949 (16.1)
Specialty Foods 15,513 16,281 (4.7)
All Other 5,843 4,866 20.1
Total segment operating
profit
130,300 118,477 10.0
Net interest and
investment income
(3,176) (4,373) 27.4
General corporate
expense
(5,747) (5,562) (3.3)
Income before tax $ 121,377 $ 108,542 11.8
YEAR TO DATE – 26 WEEKS ENDED
NET SALES April 27, 2008 April 29, 2007 % Change
Grocery Products $ 460,879 $ 429,841 7.2
Refrigerated Foods 1,689,281 1,594,311 6.0
Jennie-O Turkey Store 583,338 546,658 6.7
Specialty Foods 371,321 346,148 7.3
All Other 110,430 91,722 20.4
Total $ 3,215,249 $ 3,008,680 6.9
OPERATING PROFIT
Grocery Products $ 77,980 $ 72,178 8.0
Refrigerated Foods 118,431 86,129 37.5
Jennie-O Turkey Store 46,512 43,920 5.9
Specialty Foods 33,806 34,323 (1.5)
All Other 14,868 11,340 31.1
Total segment
operating profit
291,597 247,890 17.6
Net interest and
investment income
(14,834) (8,651) (71.5)
General corporate
expense
(16,075) (15,189) (5.8)
Income before tax $ 260,688 $ 224,050 16.4
HORMEL FOODS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
Thirteen Weeks Ended Twenty-Six Weeks Ended
4-27-2008 4-29-2007 4-27-2008 4-29-2007
Net sales $ 1,594,084 $ 1,504,597 $ 3,215,249 $ 3,008,680
Cost of products sold 1,217,445 1,158,711 2,436,591 2,303,357
GROSS PROFIT: 376,639 345,886 778,658 705,323
Expenses:
Selling and
delivery
210,282 192,507 418,226 391,151
Administrative
& general
42,625 40,433 88,100 82,343
TOTAL EXPENSES: 252,907 232,940 506,326 473,494
Equity in
earnings of
affiliates
821 (31) 3,190 872
OPERATING INCOME: 124,553 112,915 275,522 232,701
Other income & expenses:
Interest & investment income (loss) 3,253 2,625 (1,685) 4,705
Interest expense (6,429) (6,998) (13,149) (13,356)
EARNINGS BEFORE
INCOME TAXES: 121,377 108,542 260,688 224,050
Provision for income taxes 43,816 40,541 94,946 80,724
(effective tax rate) 36.10% 37.35% 36.42% 36.03%
NET EARNINGS $ 77,561 $ 68,001 $ 165,742 $ 143,326
NET EARNINGS PER SHARE
Basic $ .57 $ .49 $ 1.22 $ 1.04
Diluted $ .56 $ .49 $ 1.20 $ 1.03
WGHT AVG SHARES OUT
Basic 135,652 137,743 135,679 137,638
Diluted 137,620 139,711 137,643 139,639
DIVIDENDS DECLARED
PER SHARE $ .185 $ .15 $ .37 $ .30
HORMEL FOODS CORPORATION
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
April 27, 2008 October 28, 2007
(In Thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 107,156 $ 149,749
Accounts receivable 351,564 366,621
Inventories 750,483 646,968
Federal income taxes 15,686 0
Deferred income taxes 47,995 52,583
Prepaid expenses & other current assets 28,084 15,804
TOTAL CURRENT ASSETS 1,300,968 1,231,725
INTANGIBLES 757,882 757,993
OTHER ASSETS 440,839 437,331
PROPERTY, PLANT & EQUIPMENT, NET 971,459 966,601
TOTAL ASSETS $3,471,148 $3,393,650
LIABILITIES AND SHAREHOLDERS’ INVESTMENT
TOTAL CURRENT LIABILITIES $ 553,115 $ 664,777
LONG-TERM DEBT – LESS CURRENT MATURITIES 350,000 350,005
OTHER LONG-TERM LIABILITIES 539,247 494,085
SHAREHOLDERS’ INVESTMENT 2,028,786 1,884,783
TOTAL LIAB. & SHAREHOLDERS’ INVESTMENT $3,471,148 $3,393,650
HORMEL FOODS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Twenty-Six Weeks Ended
4-27-2008 4-29-2007
OPERATING ACTIVITIES (In Thousands)
Net earnings $ 165,742 $ 143,326
Adjustments to reconcile to net cash
provided by operating activities:
Depreciation 57,823 56,779
Amortization of intangibles 6,148 5,863
Equity in earnings of affiliates (4,587) (1,466)
Provision for deferred income taxes (8,492) (3,013)
Loss on property/equipment sales
and plant facilities
1,377 69
Changes in operating assets and
liabilities net of acquisitions:
Decrease in accounts receivable 15,057 24,814
Increase in inventories, prepaid
expenses, and other current assets
(85,392) (73,348)
(Increase) Decrease in pension
assets
(398) 4,330
Decrease in accounts payable,
accrued expenses, and pension and
post-retirement benefits
(32,346) (74,132)
Other 243 5,564
NET CASH PROVIDED BY OPERATING ACTIVITIES 115,175 88,786
INVESTING ACTIVITIES
Sale of available-for-sale securities 146,308 284,850
Purchase of available-for-sale securities (155,207) (298,625)
Acquisitions of businesses / intangibles (3,920) (13,618)
Purchases of property / equipment (67,941) (69,961)
Proceeds from sales of property /
equipment
1,604 2,824
Decrease (Increase) in investments,
equity in affiliates, and other assets
12,300 (21,134)
NET CASH USED IN INVESTING ACTIVITIES (66,856) (115,664)
FINANCING ACTIVITIES
Proceeds from short-term debt 25,000 15,000
Principal payments on short-term debt (70,000) (17,576)
Principal payments on long-term debt (54) (6,304)
Dividends paid on common stock (45,469) (39,881)
Share repurchase (21,927) (11,706)
Other 21,538 8,858
NET CASH USED IN FINANCING ACTIVITIES (90,912) (51,609)
DECREASE IN CASH AND CASH

EQUIVALENTS

(42,593) (78,487)
Cash and cash equivalents at beginning of year 149,749 172,485
CASH AND CASH EQUIVALENTS AT END OF QUARTER $ 107,156 $ 93,998
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 each of the past nine years, Hormel Foods has been named one of “The Best Big Companies in America” by Forbes magazine. The company enjoys a strong reputation among consumers, retail grocers and foodservice customers for products highly regarded for quality, taste, nutrition, convenience and value. For more information, visit 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 24-29 in the Company’s 10Q for the fiscal quarter ended January 27, 2008, which can be accessed at www.hormelfoods.com under “Investors-SEC Filings.”