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Hormel Foods Reports Solid Third Quarter Results

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August 25, 2011

Austin, Minn.

Hormel Foods Corporation (NYSE: HRL) today reported its performance for the fiscal year 2011 third quarter.

All comparisons are to the third quarter or first nine months of fiscal 2010. All per share results reported here have been adjusted to give effect to the two-for-one stock split, which was effective February 1, 2011.

HIGHLIGHTS

Third Quarter

¨ Diluted EPS of $.36 up 13 percent from diluted EPS of $.32

¨ Segment operating profit up 2 percent

¨ Dollar sales of $1.9 billion, up 10 percent, on flat volume

¨ Grocery Products operating profit up 19 percent; volume up 1 percent; dollar sales up 4 percent

¨ Jennie-O Turkey Store operating profit up 14 percent; volume down 3 percent; dollar sales up 11 percent

¨ Refrigerated Foods operating profit down 12 percent; volume down 1 percent; dollar sales up 10 percent

¨ Specialty Foods operating profit down 8 percent; volume flat; dollar sales up 11 percent

¨ All Other operating profit up 67 percent; volume up 22 percent; dollar sales up 35 percent

The company reported fiscal 2011 third quarter net earnings of $98.5 million, up 15 percent from net earnings of $85.4 million a year earlier. For the nine months ended July 31, 2011, net earnings were $356.9 million, up 24 percent from adjusted1 net earnings of $287.8 million the same period last year. Diluted net earnings per share for the nine months ended July 31, 2011 were $1.31, up 24 percent from diluted adjusted1 net earnings per share of $1.06 last year.

On a U.S. GAAP basis, net earnings for the nine months ended July 31, 2011 were $356.9 million or $1.31 per diluted share (both up 30 percent) compared to net earnings of $274.4 million or $1.01 per diluted share from the same period last year.

Sales for the quarter were $1.9 billion, up 10 percent from the same period in fiscal 2010. For the nine months ended July 31, 2011, sales totaled $5.8 billion, up 12 percent from the same period last year.

COMMENTARY

“We are pleased to report improved earnings per share and sales for the quarter, which were up 13 percent and 10 percent, respectively,” said Jeffrey M. Ettinger, chairman of the board, president and chief executive officer. “Earnings growth was led by our Grocery Products and Jennie-O Turkey Store segments, both of which had a strong quarter. Our international business

1See explanation regarding adjusted earnings with table on page 4 of this release.

in our All Other segment was also a strong contributor to our earnings results.

Our Grocery Products segment generated solid results, benefitting from strong sales of Mexican products by our MegaMex Foods joint venture, and of our SPAM® family of products. I was pleased to see sales of our Hormel® Compleats® microwave meals grow nicely in the quarter. Our Jennie-O Turkey Store segment delivered another good quarter, aided by strong value-added sales and operational and supply chain efficiencies. Our international business in our All Other segment achieved impressive results, led by strong pork export sales. Lower pork operating margins hindered our Refrigerated Foods segment results and our Specialty Foods segment was pressured by higher than expected raw material costs during the quarter.”

SEGMENT OPERATING HIGHLIGHTS – THIRD QUARTER

Grocery Products (13% of Net Sales, 21% of Total Segment Operating Profit)

The Grocery Products segment exceeded last year’s profitability by 19 percent. Net sales increased over last year’s results by 4 percent. Improved sales of our SPAM® family of products, as well as of Mexican food products by our MegaMex Foods joint venture helped offset higher commodity input costs. Sales of Hormel® Compleats®microwave meals also grew during the quarter.

Refrigerated Foods (55% of Net Sales, 38% of Total Segment Operating Profit)

Refrigerated Foods segment profit declined by 12 percent, due primarily to lower pork operating margins. Net sales for the quarter increased 10 percent, with strong contributions from products such asHormel® pepperoni, Hormel® bacon, Hormel® party trays,Hormel® Natural Choice® deli meats and Hormel® Country Crock® sides.

Jennie-O Turkey Store (17% of Net Sales, 24% of Total Segment Operating Profit)

Jennie-O Turkey Store had another solid quarter, with segment operating profit up 14 percent from a year ago. Increased value-added sales and improved efficiencies contributed to the good results. Net sales for the quarter rose 11 percent.

Specialty Foods (11% of Net Sales, 12% of Total Segment Operating Profit)

The Specialty Foods segment operating profit declined 8 percent, due to higher raw material costs. Net sales grew 11 percent, led by higher sales of private label canned meats and sugar.

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

The All Other segment, which consists primarily of Hormel Foods International, grew segment profit 67 percent and net sales by 35 percent, driven principally by stronger exports of fresh pork and improved results by our international joint ventures.

General Corporate Expense and Taxes

General corporate expenses were lower due to a reduction in the lower of cost or market inventory reserve. Our effective tax rate for the third quarter of 2011 was favorably impacted by the resolution of tax matters with various federal and state tax jurisdictions.

OUTLOOK

“As a result of our solid results in the third quarter, we are raising our full year guidance range to $1.70 to $1.75 per share from $1.67 to $1.73 per share,” concluded Ettinger.

DIVIDENDS

Effective August 15, 2011, the Company paid its 332nd consecutive quarterly dividend, at the annual rate of $.51, marking its 83rd year of paying dividends.

CONFERENCE CALL

A conference call will be Webcast at 8:30 a.m. CT (9:30 a.m. ET) on Thursday, August 25, 2011. Access is available at https://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 800-762-8779 and you must provide the access code of 4457047. An audio replay is available by calling 800-406-7325 and entering access code 4457047. The audio replay will be available beginning at 10:30 a.m. CT on Thursday, August 25, 2011, through 11:59 p.m. CT on Thursday, September 8, 2011. The Webcast replay will be available at 10:30 a.m. CT, Thursday, August 25, 2011, and archived for one year.

COMPARISON OF U.S. GAAP TO NON-GAAP FINANCIAL MEASUREMENTS

The non-GAAP adjusted financial measurements are provided to assist the investor in better understanding the Company’s operating performance by excluding the impact of certain non-recurring items affecting comparability. 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 any generally accepted accounting principles and may be different from non-GAAP measures used by other companies

ADJUSTED EARNINGS

Adjusted net earnings for 2010 (a non-GAAP financial measurement) exclude one-time charges of $6.3 million ($0.02 per diluted share) relating to the closure of the Valley Fresh plant and an income tax charge of $7.1 million ($0.03 per diluted share) primarily due to the change in tax treatment of Medicare Part D reimbursements by health care laws enacted in the prior year. The tables below show the calculations to reconcile from adjusted earnings to U.S. GAAP earnings for 2010.

“Country Crock” is a registered trademark of the Unilever Group of Companies and is used under license. All rights reserved.

Year to Date

2011 U.S. GAAP Earnings 2010 Adjusted

Earnings

Valley Fresh Plant Closure Tax items primarily related to health care laws 2010 U.S.

GAAP Earnings

Grocery Products $ 118,038 $ 122,521 $ (9,733) $ 112,788
Refrigerated Foods 223,204 190,250 190,250
Jennie-O Turkey Store 155,379 96,100 96,100
Specialty Foods 54,583 60,841 60,841
All Other 26,480 16,678 16,678
Total segment operating profit 577,684 486,390 (9,733) 476,657
Net interest and investment expense (income) 16,837 17,452 17,452
General corporate expense 26,165 25,459 25,459
Earnings before income taxes 534,682 443,479 (9,733) 433,746
Income taxes 177,796 155,642 (3,455) $ 7,120 159,307
Net earnings attributable to

Hormel Foods Corporation

$ 356,886 $ 287,837 $ (6,278) $ (7,120) $ 274,439
Diluted net earnings per share $ 1.31 $ 1.06 $ (0.02) $ (0.03) $ 1.01

Statements Follow

# # #

Segment Data

Fiscal 2011 Third Quarter Segment Operating Results (in Thousands)

THIRD QUARTER – 13 WEEKS ENDED
NET SALES July 31, 2011 July 25, 2010 % Change
Grocery Products $ 245,368 $ 235,034 4.4
Refrigerated Foods 1,045,874 950,075 10.1
Jennie-O Turkey Store 327,809 295,862 10.8
Specialty Foods 207,025 187,065 10.7
All Other 84,516 62,415 35.4
Total $ 1,910,592 $ 1,730,451 10.4
OPERATING PROFIT
Grocery Products $ 30,428 $ 25,596 18.9
Refrigerated Foods 56,820 64,539 (12.0)
Jennie-O Turkey Store 34,851 30,664 13.7
Specialty Foods 18,141 19,703 (7.9)
All Other 8,043 4,823 66.8
Total segment operating profit 148,283 145,325 2.0
Net interest and investment expense (income) 5,484 6,183 (11.3)
General corporate expense 2,944 5,705 (48.4)
Noncontrolling interest 1,483 994 49.2
Earnings before income taxes $ 141,338 $ 134,431 5.1
YEAR TO DATE – 39 WEEKS ENDED
NET SALES July 31, 2011 July 25, 2010 % Change
Grocery Products $ 782,540 $ 753,343 3.9
Refrigerated Foods 3,097,200 2,735,847 13.2
Jennie-O Turkey Store 1,058,279 908,364 16.5
Specialty Foods 603,371 570,941 5.7
All Other 249,801 189,185 32.0
Total $ 5,791,191 $ 5,157,680 12.3
OPERATING PROFIT
Grocery Products $ 118,038 $ 112,788 4.7
Refrigerated Foods 223,204 190,250 17.3
Jennie-O Turkey Store 155,379 96,100 61.7
Specialty Foods 54,583 60,841 (10.3)
All Other 26,480 16,678 58.8
Total segment operating profit 577,684 476,657 21.2
Net interest and investment expense (income) 16,837 17,452 (3.5)
General corporate expense 26,165 25,459 2.8
Noncontrolling interest 3,815 2,729 39.8
Earnings before income taxes $ 538,497 $ 436,475 23.4
HORMEL FOODS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
Thirteen Weeks Ended Thirty-Nine Weeks Ended
7-31-2011 7-25-2010* 7-31-2011 7-25-2010*
Net sales $ 1,910,592 $ 1,730,451 $ 5,791,191 $ 5,157,680
Cost of products sold 1,612,737 1,445,536 4,793,104 4,273,911
GROSS PROFIT: 297,855 284,915 998,087 883,769
Selling, general and administrative 156,595 146,523 461,892 438,837
Equity in earnings of affiliates 5,562 2,222 19,139 8,995
OPERATING INCOME: 146,822 140,614 555,334 453,927
Other income & expenses:
Interest & investment income 139 310 2,552 2,176
Interest expense (5,623) (6,493) (19,389) (19,628)
EARNINGS BEFORE INCOME TAXES: 141,338 134,431 538,497 436,475
Provision for income taxes 41,374 48,067 177,796 159,307
(effective tax rate) 29.27% 35.76% 33.02% 36.50%
NET EARNINGS 99,964 86,364 360,701 277,168
Less: Net earnings attributable to

noncontrolling interest

1,483 994 3,815 2,729
NET EARNINGS ATTRIBUTABLE TO

HORMEL FOODS CORPORATION

$ 98,481 $ 85,370 $ 356,886 $ 274,439
NET EARNINGS PER SHARE
Basic $ .37 $ .32 $ 1.34 $ 1.03
Diluted $ .36 $ .32 $ 1.31 $ 1.01
WEIGHTED AVG SHARES O/S
Basic 266,925 266,401 266,887 266,922
Diluted 272,759 270,326 272,449 270,736
DIVIDENDS DECLARED
PER SHARE $ .1275 $ .1050 $ .3825 $ .3150
* Shares and per share figures have been restated to reflect the two-for-one stock split effected February 1, 2011.
HORMEL FOODS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
July 31, 2011 October 31, 2010
(In Thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 497,364 $ 467,845
Short-term marketable securities 76,125 50,595
Accounts receivable 427,927 430,939
Inventories 865,875 793,771
Income taxes receivable 16,830 8,525
Deferred income taxes 70,299 70,703
Prepaid expenses 11,859 12,153
Other current assets 10,842 23,635
TOTAL CURRENT ASSETS 1,977,121 1,858,166
INTANGIBLES 765,037 770,545
OTHER ASSETS 511,476 503,104
PROPERTY, PLANT & EQUIPMENT, NET 895,895 922,103
TOTAL ASSETS $ 4,149,529 $ 4,053,918
LIABILITIES AND SHAREHOLDERS’ INVESTMENT
TOTAL CURRENT LIABILITIES $ 700,963 $ 1,101,213
LONG-TERM DEBT – LESS CURRENT MATURITIES 250,000 0
OTHER LONG-TERM LIABILITIES 531,951 546,066
SHAREHOLDERS’ INVESTMENT 2,666,615 2,406,639
TOTAL LIAB. & SHAREHOLDERS’ INVESTMENT $ 4,149,529 $ 4,053,918
HORMEL FOODS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Thirty-Nine Weeks Ended
7-31-2011 7-25-2010
(In Thousands)
OPERATING ACTIVITIES
Net earnings $ 360,701 $ 277,168
Depreciation and amortization of intangibles 92,927 92,118
Increase in working capital (125,958) (101,817)
Other (8,245) 4,153
NET CASH PROVIDED BY OPERATING ACTIVITIES 319,425 271,622
INVESTING ACTIVITIES
Net purchase of securities (20,000) (50,000)
Acquisitions of businesses/intangibles (7,207) (27,978)
Net purchases of property / equipment (52,757) (60,554)
Decrease (Increase) in investments, equity in affiliates, and other assets 7,010 (30,970)
NET CASH USED IN INVESTING ACTIVITIES (72,954) (169,502)
FINANCING ACTIVITIES
(Payments on) Proceeds from long-term debt, net (102,436) 0
Dividends paid on common stock (95,991) (81,429)
Share repurchase (80,648) (53,171)
Other 62,123 24,145
NET CASH USED IN FINANCING ACTIVITIES (216,952) (110,455)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 29,519 (8,335)
Cash and cash equivalents at beginning of year 467,845 385,252
CASH AND CASH EQUIVALENTS AT END OF QUARTER $ 497,364 $ 376,917
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 500 Index, Dow Jones Sustainability Indexes, Maplecroft Climate Innovation Indexes, Global 1000 Sustainable Performance Leaders and was named one of “The 100 Most Trustworthy Companies” by Forbes in 2010. 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 https://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 33-39 in the company’s Form 10-Q for the quarter ended May 1, 2011, which was filed with the SEC on June 10, 2011, and can be accessed at www.hormelfoods.com under “Investors-SEC Filings.”