Hormel Foods to Take One-Time Charges in Second Quarter
Valley Fresh® canned meats are produced at this facility. Affected employees will receive severance pay and may have the opportunity to work at one of four other Hormel Foods facilities in California. A write-down in assets and employee related costs will result in a one-time charge to fiscal 2010 second quarter earnings per share of approximately five cents.
“This decision was a difficult one to make because of its impact on our valued employees at this location. The manufacture of our Valley Fresh® canned products will be moved to another facility which will provide greater purchasing and distribution efficiencies,” said Mike Devine, Vice President of Grocery Products Operations.
Impact of the New Health Care Laws
The Company’s fiscal second quarter will also be impacted by another one-time charge of approximately five cents per share, resulting from the recently enacted Patient Protection and Affordable Care Act, including modifications made in the Health Care and Education Reconciliation Act of 2010. This charge is due primarily to a reduction in the value of the company’s deferred tax asset as a result of a change to the tax treatment of Medicare Part D reimbursements.
The Company’s 2010 earnings guidance, as provided in Hormel’s Form 8-K dated February 18, 2010, did not include either of these charges. Revised guidance incorporating the impact of both of these charges will be provided in the Company’s fiscal 2010 second quarter earnings release on May 19, 2010.