HORMEL FOODS CORP /DE/ 10-K

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Report of Management Management’s Responsibility for Financial Statements The accompanying financial statements were prepared by the management of Hormel Foods Corporation which is responsible for their integrity and objectivity. These statements have been prepared in accordance with U.S. generally accepted accounting principles appropriate in the circumstances and, as such, include amounts that are based on our best estimates and judgments. Hormel Foods Corporation has developed a system of internal controls designed to assure that the records reflect the transactions of the Company and that the established policies and procedures are adhered to. This system is augmented by well-communicated written policies and procedures, a strong program of internal audit and well-qualified personnel. These financial statements have been audited by Ernst & Young LLP, an independent registered public accounting firm, and their report is included herein. The audit was conducted in accordance with the standards of the U.S. Public Company Accounting Oversight Board and includes a review of the Company’s accounting and financial controls and tests of transactions. The Audit Committee of the Board of Directors, composed solely of outside directors, meets periodically with the independent auditors, management, and the internal auditors to assure that each is carrying out its responsibilities. Both Ernst & Young LLP and our internal auditors have full and free access to the Audit Committee, with or without the presence of management, to discuss the results of their audit work and their opinions on the adequacy of internal controls and the quality of financial reporting. Management’s Report on Internal Control Over Financial Reporting Management of Hormel Foods Corporation is responsible for establishing and maintaining adequate internal control over financial reporting for the Company, as such term is defined in Exchange Act Rule 13a–15(f). The Company’s internal control system is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Under the supervision, and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Based on our evaluation under the framework in Internal Control - Integrated Framework , we concluded that our internal control over financial reporting was effective as of October 27, 2024. Our internal control over financial reporting as of October 27, 2024, has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report which is included herein. /s/ James P. Snee /s/ Jacinth C. Smiley James P. Snee Jacinth C. Smiley Chairman of the Board, Executive Vice President President and Chief Executive Officer and Chief Financial Officer 32 Table of Contents Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of Hormel Foods Corporation Opinion on Internal Control Over Financial Reporting We have audited Hormel Foods Corporation’s internal control over financial reporting as of October 27, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Hormel Foods Corporation (the Company) maintained, in all material respects, effective internal control over financial reporting as of October 27, 2024, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated statements of financial position of the Company as of October 27, 2024 and October 29, 2023, the related consolidated statements of operations, comprehensive income, changes in shareholders’ investment and cash flows for each of the three years in the period ended October 27, 2024, and the related notes and financial statement schedule listed in the Index at Item 15 and our report dated December 5, 2024 expressed an unqualified opinion thereon. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP Minneapolis, Minnesota December 5, 2024 33 Table of Contents Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of Hormel Foods Corporation Opinion on the Financial Statements We have audited the accompanying consolidated statements of financial position of Hormel Foods Corporation (the Company) as of October 27, 2024 and October 29, 2023, the related consolidated statements of operations, comprehensive income, changes in shareholders’ investment and cash flows for each of the three years in the period ended October 27, 2024, and the related notes and financial statement schedule listed in the Index at Item 15 (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at October 27, 2024 and October 29, 2023, and the results of its operations and its cash flows for each of the three years in the period ended October 27, 2024, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of October 27, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated December 5, 2024 expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion . Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosure to which it relates. Valuation of Pension Plan Assets Description of the Matter At October 27, 2024, the Company had $1.3 billion in plan assets related to the defined benefit pension plans. This includes $87.3 million of private equity and real estate funds and $724.5 million of investments recorded at net asset value (NAV). Auditing the fair value of these investments is challenging because of the higher estimation uncertainty of the inputs to the fair value calculations, including the underlying NAVs, discounted cash flow valuations, comparable market valuations, and adjustments for currency, credit liquidity and other risks. Additionally, certain information regarding the fair value of these investments is based on unaudited information available to management at the time of valuation. 34 Table of Contents How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls addressing the risk of material misstatement relating to the valuation of these investments. This included testing management's review controls over the valuation of these investments, for example, a review of fund performance in comparison to the selected benchmark returns and independent price testing of the underlying investments of certain funds. We also tested management’s review of the valuation of private equity, hedge funds and real estate funds, which included performing a look back comparison of fair values from audited financial statements to unaudited financial statements and rolling forward the balance using cash flows and predicting the ending market value using benchmark returns. Our audit procedures included, among others, inquiring of management and the investment advisor regarding changes to the investment portfolio, investment strategies, and valuation policies. We confirmed the completeness of the investments and ownership interest directly with the fund managers. We performed a hindsight analysis comparing the fair value of the investments using the most recently available financial statements of the fund to management’s recorded value as of the date of the audited financial statements of the fund. We rolled forward the fair value of certain investments from the date of the audited financial statements of the funds to the measurement date by predicting income from the date of the audited financial statements to the measurement date using a relevant benchmark return and evaluating activity (e.g. purchases, sales) to calculate the fair value of the funds recorded by management as of the measurement date. Additionally, we inspected the trust statement for observable transactions near year end to compare to the estimated fair value. /s/ Ernst & Young LLP We have served as the Company's auditor since 1931. Minneapolis, Minnesota December 5, 2024 35 Table of Contents Consolidated Statements of Operations Fiscal Year Ended October 27, October 29, October 30, In thousands, except per share amounts 2024 2023 2022 Net Sales $ 11,920,797 $ 12,110,010 $ 12,458,806 Cost of Products Sold 9,898,659 10,110,169 10,294,120 Gross Profit 2,022,138 1,999,841 2,164,686 Selling, General, and Administrative 1,005,294 942,167 879,265 Equity in Earnings of Affiliates 51,088 42,754 27,185 Goodwill and Intangible Impairment — 28,383 — Operating Income 1,067,932 1,072,046 1,312,607 Interest and Investment Income 48,396 14,828 28,012 Interest Expense 80,894 73,402 62,515 Earnings Before Income Taxes 1,035,434 1,013,472 1,278,103 Provision for Income Taxes 230,803 220,552 277,877 Net Earnings 804,631 792,920 1,000,226 Less: Net Earnings (Loss) Attributable to Noncontrolling Interest ( 407 ) ( 653 ) 239 Net Earnings Attributable to Hormel Foods Corporation $ 805,038 $ 793,572 $ 999,987 Net Earnings Per Share: Basic $ 1.47 $ 1.45 $ 1.84 Diluted $ 1.47 $ 1.45 $ 1.82 Weighted-average Shares Outstanding: Basic 548,129 546,421 544,918 Diluted 548,832 548,982 549,566 See Notes to the Consolidated Financial Statements 36 Table of Contents Consolidated Statements of Comprehensive Income Fiscal Year Ended October 27, October 29, October 30, In thousands 2024 2023 2022 Net Earnings $ 804,631 $ 792,920 $ 1,000,226 Other Comprehensive Income (Loss), Net of Tax: Foreign Currency Translation 15,618 3,588 ( 39,393 ) Pension and Other Benefits ( 3,333 ) 11,632 65,587 Derivatives and Hedging 11,075 ( 38,940 ) ( 5,267 ) Equity Method Investments ( 14,050 ) 6,847 — Total Other Comprehensive Income (Loss) 9,310 ( 16,874 ) 20,927 Comprehensive Income 813,941 776,045 1,021,153 Less: Comprehensive Income (Loss) Attributable to Noncontrolling Interest ( 18 ) ( 836 ) ( 542 ) Comprehensive Income Attributable to Hormel Foods Corporation $ 813,959 $ 776,881 $ 1,021,695 See Notes to the Consolidated Financial Statements 37 Table of Contents Consolidated Statements of Financial Position October 27, October 29, In thousands, except share and per share amounts 2024 2023 Assets Cash and Cash Equivalents $ 741,881 $ 736,532 Short-term Marketable Securities 24,742 16,664 Accounts Receivable (Net of Allowance for Doubtful Accounts of $ 3,712 at October 27, 2024 and $ 3,557 at October 29, 2023) 817,908 817,391 Inventories 1,576,300 1,680,406 Taxes Receivable 50,380 7,242 Prepaid Expenses and Other Current Assets 35,265 39,014 Total Current Assets 3,246,476 3,297,249 Goodwill 4,923,487 4,928,464 Other Intangibles 1,732,705 1,757,171 Pension Assets 205,964 204,697 Investments in Affiliates 719,481 725,121 Other Assets 411,889 370,252 Property, Plant, and Equipment Land 75,159 74,626 Buildings 1,503,519 1,458,354 Equipment 2,905,058 2,781,730 Construction in Progress 228,726 195,665 Less: Allowance for Depreciation ( 2,517,734 ) ( 2,344,557 ) Net Property, Plant, and Equipment 2,194,728 2,165,818 Total Assets $ 13,434,729 $ 13,448,772 Liabilities and Shareholders’ Investment Accounts Payable $ 735,604 $ 771,397 Accrued Expenses 66,380 51,679 Accrued Marketing Expenses 108,156 87,452 Employee-related Expenses 283,490 263,330 Interest and Dividends Payable 175,941 172,178 Taxes Payable 21,916 15,212 Current Maturities of Long-term Debt 7,813 950,529 Total Current Liabilities 1,399,299 2,311,776 Long-term Debt Less Current Maturities 2,850,944 2,358,719 Pension and Post-retirement Benefits 379,891 349,268 Deferred Income Taxes 589,366 498,106 Other Long-term Liabilities 211,219 191,917 Shareholders’ Investment Preferred Stock, Par Value $ 0.01 a Share — Authorized 160,000,000 Shares; Issued — None — — Common Stock, Nonvoting, Par Value $ 0.01 a Share — Authorized 400,000,000 Shares; Issued — None — — Common Stock, Par Value $ 0.01465 a Share — Authorized 1,600,000,000 Shares; Issued 548,605,305 Shares October 27, 2024 Issued 546,599,420 Shares October 29, 2023 8,037 8,007 Additional Paid-in Capital 571,178 506,179 Accumulated Other Comprehensive Loss ( 263,331 ) ( 272,252 ) Retained Earnings 7,677,537 7,492,952 Hormel Foods Corporation Shareholders’ Investment 7,993,420 7,734,885 Noncontrolling Interest 10,590 4,100 Total Shareholders’ Investment 8,004,011 7,738,985 Total Liabilities and Shareholders’ Investment $ 13,434,729 $ 13,448,772 See Notes to the Consolidated Financial Statements 38 Table of Contents Consolidated Statements of Changes in Shareholders’ Investment Hormel Foods Corporation Shareholders In thousands, except per Common Stock Treasury Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Non-controlling Interest Total Shareholders’ Investment share amounts Shares Amount Shares Amount Balance at October 31, 2021 542,412 $ 7,946 — $ — $ 360,336 $ 6,881,870 $ ( 277,269 ) $ 5,478 $ 6,978,360 Net Earnings (Loss) 999,987 239 1,000,226 Other Comprehensive Income (Loss) 21,708 ( 782 ) 20,927 Stock-based Compensation Expense 37 1 27,786 27,786 Exercise of Stock Options/ Restricted Shares 3,787 55 79,871 79,927 Declared Dividends — $ 1.04 per Share 1,475 ( 568,482 ) ( 567,007 ) Balance at October 30, 2022 546,237 $ 8,002 — $ — $ 469,468 $ 7,313,374 $ ( 255,561 ) $ 4,936 $ 7,540,219 Net Earnings (Loss) 793,572 ( 653 ) 792,920 Other Comprehensive Income (Loss) ( 16,691 ) ( 183 ) ( 16,874 ) Purchases of Common Stock ( 310 ) ( 12,303 ) ( 12,303 ) Stock-based Compensation Expense 44 — 24,077 24,077 Exercise of Stock Options/ Restricted Shares 629 9 12,009 12,018 Shares Retired ( 310 ) ( 5 ) 310 12,303 ( 277 ) ( 12,021 ) — Declared Dividends — $ 1.10 per Share 902 ( 601,974 ) ( 601,072 ) Balance at October 29, 2023 546,599 $ 8,007 — $ — $ 506,179 $ 7,492,952 $ ( 272,252 ) $ 4,100 $ 7,738,985 Net Earnings (Loss) 805,038 ( 407 ) 804,631 Other Comprehensive Income (Loss) 8,921 389 9,310 Contribution from Noncontrolling Interest 6,508 6,508 Stock-based Compensation Expense 54 1 23,231 23,233 Exercise of Stock Options/ Restricted Shares 1,951 28 40,685 40,713 Declared Dividends — $ 1.13 per Share 1,083 ( 620,453 ) ( 619,370 ) Balance at October 27, 2024 548,605 $ 8,037 — $ — $ 571,178 $ 7,677,537 $ ( 263,331 ) $ 10,590 $ 8,004,011 See Notes to the Consolidated Financial Statements 39 Table of Contents Consolidated Statements of Cash Flows Fiscal Year Ended October 27, October 29, October 30, In thousands 2024 2023 2022 Operating Activities Net Earnings $ 804,631 $ 792,920 $ 1,000,226 Adjustments to Reconcile to Net Cash Provided by (Used in) Operating Activities: Depreciation 233,827 227,331 213,026 Amortization 23,929 25,980 22,859 Equity in Earnings of Affiliates ( 51,088 ) ( 42,754 ) ( 27,185 ) Distributions Received from Equity Method Investees 46,055 38,160 43,039 Provision for Deferred Income Taxes 87,670 31,794 177,000 Non-cash Investment Activities ( 23,557 ) ( 2,392 ) 19,298 Stock-based Compensation Expense 23,233 24,077 24,943 Operating Lease Cost 37,590 29,072 20,633 Goodwill and Intangible Impairment — 28,383 — Other Non-cash, Net 16,292 20,034 12,931 Changes in Operating Assets and Liabilities, Net of Divestitures: Decrease (Increase) in Accounts Receivable 1,899 48,998 28,365 Decrease (Increase) in Inventories 95,283 35,714 ( 351,663 ) Decrease (Increase) in Prepaid Expenses and Other Assets 13,143 ( 68,666 ) ( 15,460 ) Increase (Decrease) in Pension and Post-retirement Benefits 24,350 18,272 ( 29,392 ) Increase (Decrease) in Accounts Payable and Accrued Expenses ( 27,200 ) ( 140,519 ) ( 14,511 ) Increase (Decrease) in Net Income Taxes Payable ( 39,317 ) ( 18,557 ) 10,869 Net Cash Provided by (Used in) Operating Activities 1,266,738 1,047,847 1,134,977 Investing Activities Net Sale (Purchase) of Securities ( 6,088 ) ( 42 ) 2,493 Proceeds from Sale of Business 25,006 — — Purchases of Property, Plant, and Equipment ( 256,441 ) ( 270,211 ) ( 278,918 ) Proceeds from Sales of Property, Plant, and Equipment 474 5,322 1,224 Proceeds from (Purchases of) Affiliates and Other Investments ( 7,970 ) ( 427,709 ) 2,404 Proceeds from Company-owned Life Insurance 8,112 3,096 14,761 Net Cash Provided by (Used in) Investing Activities ( 236,907 ) ( 689,544 ) ( 258,037 ) Financing Activities Proceeds from Long-term Debt 497,765 1,980 — Payment of Debt Issuance Costs ( 1,105 ) — — Repayments of Long-term Debt and Finance Leases ( 959,017 ) ( 8,827 ) ( 8,673 ) Dividends Paid on Common Stock ( 614,960 ) ( 592,932 ) ( 557,839 ) Share Repurchase — ( 12,303 ) — Proceeds from Exercise of Stock Options 40,713 12,018 79,827 Proceeds from Noncontrolling Interest 6,508 — — Net Cash Provided by (Used in) Financing Activities ( 1,030,096 ) ( 600,064 ) ( 486,684 ) Effect of Exchange Rate Changes on Cash 5,614 ( 3,814 ) ( 21,679 ) Increase (Decrease) in Cash and Cash Equivalents 5,349 ( 245,575 ) 368,577 Cash and Cash Equivalents at Beginning of Year 736,532 982,107 613,530 Cash and Cash Equivalents at End of Year $ 741,881 $ 736,532 $ 982,107 Supplemental Non-cash Financing and Investing Activities: Purchases of Property, Plant, and Equipment included in Accounts Payable $ 21,996 $ 21,175 $ 19,104 See Notes to the Consolidated Financial Statements 40 Table of Contents Notes to the Consolidated Financial Statements Note A Summary of Significant Accounting Policies Principles of Consolidation: The Consolidated Financial Statements include the accounts of Hormel Foods Corporation (the Company) and all its majority-owned subsidiaries after elimination of intercompany accounts, transactions, and profits. Financial information from certain foreign subsidiaries is reported on a one-month lag. Use of Estimates: The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Rounding: Certain amounts in the Consolidated Financial Statements and associated notes may not foot due to rounding. All percentages have been calculated using unrounded amounts. Fiscal Year: The Company’s fiscal year ends on the last Sunday in October. Fiscal years 2024, 2023, and 2022 consisted of 52 weeks. Fiscal year 2025 will consist of 52 weeks. Reportable Segments: As of October 30, 2022, the Company had four operating and reportable segments: Grocery Products, Refrigerated Foods, Jennie-O Turkey Store, and International and Other. At the beginning of fiscal 2023, the Company transitioned to a new strategic operating model, which aligns its businesses to be more agile, consumer and customer focused, and market driven. Effective on October 31, 2022, the Company operates with the following three operating and reportable segments: Retail, Foodservice, and International, which are consistent with how the Company’s chief operating decision maker assesses performance and allocates resources. This change had no impact on the consolidated results of operations, financial position, shareholders’ investment, or cash flows. Prior period segment results have been retrospectively recast to reflect the new reportable segments. Cash and Cash Equivalents: The Company considers all investments with an original maturity of three months or less on their acquisition date to be cash equivalents. The Company’s cash equivalents as of October 27, 2024 and October 29, 2023, consisted primarily of bank deposits, money market funds rated AAA, or other highly liquid investment accounts. The Net Asset Value (NAV) of the Company’s money market funds is based on the market value of the securities in the portfolio. Fair Value Measurements: Pursuant to the provisions of Accounting Standards Codification (ASC) 820, Fair Value Measurements and Disclosures , the Company measures certain assets and liabilities at fair value or discloses the fair value of certain assets and liabilities recorded at cost in the Consolidated Financial Statements. Fair value is calculated as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). ASC 820 establishes a fair value hierarchy which requires assets and liabilities measured at fair value to be categorized into one of three levels based on the inputs used in the valuation. The Company classifies assets and liabilities in their entirety based on the lowest level of input significant to the fair value measurement. The three levels are defined as follows: Level 1: Observable inputs based on quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: Observable inputs, other than those included in Level 1, based on quoted prices for similar assets and liabilities in active markets, or quoted prices for identical assets and liabilities in inactive markets. Level 3: Unobservable inputs that reflect an entity’s own assumptions about what inputs a market participant would use in pricing the asset or liability based on the best information available in the circumstances. See additional discussion regarding the Company’s fair value measurements in Note F - Derivatives and Hedging, Note G - Pension and Other Post-Retirement Benefits, and Note I - Fair Value Measurements. Compensation: The Company maintains a rabbi trust to fund certain supplemental executive retirement plans and deferred compensation plans. The rabbi trust is reflected in Other Assets and deferred compensation liabilities in Other Long-term Liabilities on the Consolidated Statements of Financial Position. The securities held by the trust are classified as trading securities. Therefore, unrealized gains and losses associated with these investments are included in Interest and Investment Income on the Consolidated Statements of Operations. The Company also has corporate-owned life insurance policies on 41 Table of Contents certain participants in the deferred compensation plans. The cash surrender value of these policies is included in Other Assets on the Consolidated Statements of Financial Position. Inventories: Inventories are stated at the lower of cost or net realizable value. Cost is determined principally under the average cost method. Adjustments to the Company’s lower of cost or net realizable value inventory reserve are reflected in Cost of Products Sold in the Consolidated Statements of Operations. Property, Plant, and Equipment: Property, Plant, and Equipment are stated at cost and the Company recognizes depreciation using the straight-line method over the estimated useful life of the assets. Costs associated with software developed or obtained for internal use, including third-party development fees incurred during the application development stage, are capitalized and amortized on a straight-line basis. Depreciation has been computed principally using asset lives of 20 to 40 years for buildings and 3 to 14 years for software and equipment. Leases: The Company determines if an arrangement contains a lease at inception. Right-of-use assets and lease liabilities are recognized based on the present value of future minimum lease payments over the lease term at the commencement date. Leases with an initial term of twelve months or less are not recorded on the Consolidated Statements of Financial Position. The Company combines lease and non-lease components together in determining the minimum lease payments for all leases. The length of the lease term used in recording right-of-use assets and lease liabilities is based on the contractually required lease term adjusted for any options to renew, early terminate, or purchase the lease that are reasonably certain of being exercised. Most leases include one or more options to renew or terminate. The exercise of lease renewal and termination options is at the Company’s discretion and generally is not reasonably certain at lease commencement. The Company’s lease agreements typically do not contain material residual value guarantees. The Company has one lease with an immaterial residual value guarantee that is included in the minimum lease payments. Certain lease agreements include rental payment increases over the lease term that can be fixed or variable. Fixed payment increases and variable payment increases based on an index or rate are included in the initial lease liability using the index or rate at commencement date. Variable payment increases not based on an index or rate are recognized as incurred. If the rate implicit in the lease is not readily determinable, the Company used its periodic incremental borrowing rate, based on the information available at commencement date, to determine the present value of future lease payments. Leases and right-of-use assets that existed prior to the adoption of Accounting Standards Update 2016-02, Leases (Topic 842) were valued using the incremental borrowing rate on October 28, 2019. Impairment of Long-Lived Assets and Definite-Lived Intangible Assets: Definite-lived intangible assets are amortized over their estimated useful lives. The Company reviews long-lived assets and definite-lived intangible assets for impairment annually, or more frequently when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If impairment indicators are present and the estimated future undiscounted cash flows are less than the carrying value of the assets and any related goodwill, the carrying value is reduced to the estimated fair value. The Company recorded no material impairment charges for long-lived or definite-lived assets in fiscal years 2024, 2023, or 2022. Goodwill and Other Indefinite-Lived Intangibles: Indefinite-lived intangible assets are originally recorded at their estimated fair values at the date of acquisition. Goodwill is the residual after allocating the purchase price to net assets acquired. Acquired goodwill and other indefinite-lived intangible assets are allocated to reporting units that will receive the related benefits. Goodwill and indefinite-lived intangible assets are tested annually for impairment during the fourth quarter or more frequently if impairment indicators arise. See additional discussion regarding the Company’s goodwill and intangible assets in Note C - Goodwill and Intangible Assets. Goodwill In conducting the annual impairment test for goodwill, the Company has the option to first assess qualitative factors to determine whether it is more likely than not (> 50 percent likelihood) the fair value of any reporting unit is less than its carrying amount. If the Company elects to perform a qualitative assessment and determines an impairment is more likely than not, the Company is required to perform a quantitative impairment test. Otherwise, no further analysis is required. Alternatively, the Company may elect to proceed directly to the quantitative impairment test. In conducting a qualitative assessment, the Company analyzes actual and projected growth trends for net sales, gross margin, and segment profit for each reporting unit, as well as historical performance versus plan and the results of prior quantitative tests. Additionally, the Company assesses factors that may impact the business’s financial results such as macroeconomic conditions and the related impact, market-related exposures, plans to market for sale all or a portion of the business, competitive changes, new or discontinued product lines, and changes in key personnel. If performed, the quantitative goodwill impairment test is performed at the reporting unit level. First, the fair value of each reporting unit is compared to its corresponding carrying value, including goodwill. The fair value of each reporting unit is 42 Table of Contents estimated using discounted cash flow valuations (Level 3), which incorporate assumptions regarding future growth rates, terminal values, and discount rates. The estimates and assumptions used consider historical performance and are consistent with the assumptions used in determining future profit plans for each reporting unit, which are approved by the Company’s Board of Directors. If the quantitative assessment results in the carrying value exceeding the fair value of any reporting unit, the results from the quantitative analysis will be relied upon to determine both the existence and amount of goodwill impairment. An impairment loss will be recognized for the amount by which the reporting unit’s carrying amount exceeds its fair value, not to exceed the carrying amount of goodwill in that reporting unit. As a result of organizational changes in the first quarter of fiscal 2023, the Company conducted an assessment of its operating segments and reporting units. Based on this analysis, goodwill was reallocated using the relative fair value approach. Prior to the goodwill reallocation, an impairment assessment was performed which indicated no impairment to the Company’s reporting units. Subsequent to the goodwill reallocation, the Company completed quantitative impairment testing on each new reporting unit. The fair value of each reporting unit exceeded its carrying amount; therefore, no impairment charges were recorded. During the fourth quarter of fiscal 2024, the Company completed its annual goodwill impairment tests by performing qualitative assessments. No impairment charges were recorded as a result of the annual assessments in fiscal years 2024, 2023, and 2022. Indefinite-Lived Intangibles In conducting the annual impairment test for its indefinite-lived intangible assets, the Company first performs a qualitative assessment to determine whether it is more likely than not (> 50 percent likelihood) an indefinite-lived intangible asset is impaired. If the Company concludes this is the case, a quantitative test for impairment must be performed. Otherwise, the Company does not need to perform a quantitative test. In conducting the qualitative assessment, the Company analyzes growth rates for historical and projected net sales and the results of prior quantitative tests. Additionally, each operating segment assesses items that may impact the value of their intangible assets or the applicable royalty rates to determine if impairment may be indicated. If performed, the quantitative impairment test compares the fair value and carrying amount of the indefinite-lived intangible asset. The fair value of indefinite-lived intangible assets is primarily determined on the basis of estimated discounted value using the relief from royalty method (Level 3), which incorporates assumptions regarding future sales projections, discount rates and royalty rates. If the carrying amount exceeds fair value, the indefinite-lived intangible asset is considered impaired, and an impairment charge is recorded for the difference. Even if not required, the Company may elect to perform the quantitative test in order to gain further assurance in the qualitative assessment. During the fourth quarter of fiscal 2024, 2023, and 2022, the Company completed its annual indefinite-lived asset impairment tests by performing qualitative assessments. In fiscal 2023, the qualitative assessment determined the Justin ’ s ® trade name was more likely than not impaired, and the Company performed a quantitative impairment test. As a result of the quantitative impairment test, a $ 28.4 million intangible asset impairment charge was recorded for the Justin ’ s ® trade name. No other impairment charges were recorded as a result of the assessments in fiscal years 2024, 2023, and 2022. Pension and Other Post-retirement Benefits: The Company has elected to use the corridor approach to recognize expenses related to its defined benefit pension and other post-retirement benefit plans. Under the corridor approach, actuarial gains or losses resulting from experience and changes in assumptions are deferred and amortized over future periods. For the defined benefit pension plans, the unrecognized gains and losses are amortized when the net gain or loss exceeds 10 percent of the greater of the projected benefit obligation or the fair value of plan assets at the beginning of the year. For the other post-retirement plans, the unrecognized gains and losses are amortized when the net gain or loss exceeds 10 percent of the accumulated pension benefit obligation at the beginning of the year. For plans with primarily active participants, net gains or losses in excess of the corridor are amortized over the average remaining service period of participating employees expected to receive benefits under those plans. For plans with primarily inactive participants, net gains or losses in excess of the corridor are amortized over the average remaining life of the participants receiving benefits under those plans. Contingent Liabilities: The Company may be subject to investigations, legal proceedings, or claims related to the ongoing operation of its business, including claims both by and against the Company. Such proceedings typically involve claims related to product liability, contract disputes, antitrust regulations, wage and hour laws, employment practices, or other actions brought by employees, consumers, competitors, government agencies, or suppliers. The Company establishes accruals for its potential exposure for claims when losses become probable and reasonably estimable. Where the Company is able to reasonably estimate a range of probable losses, but no amount within the range is more likely than another, the Company records the amount at the low end of the range. The Company also discloses the nature of claims against the Company when losses are reasonably possible and material; in this situation, the Company also discloses an estimate of the possible loss, range of loss, or that an estimate cannot be made. 43 Table of Contents Foreign Currency Translation: Assets and liabilities denominated in foreign currency are translated at the current exchange rate as of the date of the Consolidated Statements of Financial Position. Amounts in the Consolidated Statements of Operations are translated at the average monthly exchange rate. Translation adjustments resulting from fluctuations in exchange rates are recorded as a component of Accumulated Other Comprehensive Loss within Shareholders’ Investment. When calculating foreign currency translation, the Company has deemed its foreign investments to be permanent in nature and has not provided for taxes on currency translation adjustments arising from converting the investment in a foreign currency to U.S. dollars. Derivatives and Hedging Activity: The Company uses derivative instruments to manage its exposure to commodity prices and interest rates. Hedge accounting is used for cash flow and fair value hedging programs that qualify in accordance with ASC 815, Derivatives and Hedging . The Company has determined its designated hedging programs to be highly effective in offsetting the changes in fair value or cash flows generated by the items hedged. Effectiveness testing is performed on a quarterly basis to ascertain a high level of effectiveness for cash flow and fair value hedging programs. If the requirements of hedge accounting are no longer met, hedge accounting is discontinued immediately and any future changes to fair value are recorded directly through earnings. The derivative instruments are recorded at fair value on the Consolidated Statements of Financial Position. The Company nets the derivative assets and liabilities for each of its commodity hedging programs, including cash collateral, when a master netting arrangement exists between the Company and the counterparty to the derivative contract. The amount or timing of cash collateral balances may impact the classification of the commodity derivative on the Consolidated Statements of Financial Position. The cash flow impacts from the derivative instruments are primarily included in Operating Activities in the Consolidated Statements of Cash Flows. Additional information on hedging activities is presented in Note F - Derivatives and Hedging. Equity Method Investments: The Company has a number of investments for which its voting interests are in excess of 20 percent but not greater than 50 percent and for which there are no other indicators of control. The Company accounts for such investments under the equity method of accounting and its underlying share of each investee’s equity, along with any balances due to or from affiliates, is reported on the Consolidated Statements of Financial Position as part of Investments in Affiliates. The Company records its interest in the net earnings of its equity method investments, along with adjustments for unrealized profits on intra-entity transactions and amortization of basis differences, within Equity in Earnings of Affiliates in the Consolidated Statements of Operations. Financial results for certain entities are reported on a 30- to 90-day lag. The Company regularly monitors and evaluates the fair value of its equity method investments. If events and circumstances, such as ongoing or projected decreases in earnings or significant business disruptions, indicate that a decline in the fair value of these assets has occurred and is other than temporary, the Company records a charge in Equity in Earnings of Affiliates in the Consolidated Statements of Operations. The Company did no t record an impairment charge on any of its equity method investments in fiscal 2024 or 2022. In fiscal 2023, the Company recorded a $ 7.0 million impairment related to a corporate venturing investment. See additional information pertaining to the Company’s equity method investments in Note D - Investments in Affiliates. The Company uses the cumulative earnings approach to determine the cash flow presentation of distributions from equity method investments. Distributions received are reflected in operating activities in the Consolidated Statements of Cash Flows unless the cumulative distributions exceed the portion of the cumulative equity in earnings of the equity method investment. Distributions in excess of the cumulative equity in earnings are deemed to be returns of the investment and classified as investing activities in the Consolidated Statements of Cash Flows. Revenue Recognition: The Company’s customer contracts predominantly contain a single performance obligation to fulfill customer orders for the purchase of specified products. Revenue from product sales is primarily identified by purchase orders (contracts), which in some cases are governed by a master sales agreement. The purchase orders in combination with the invoice typically specify quantity and product(s) ordered, shipping terms, and certain aspects of the transaction price including discounts. Contracts are at standalone pricing or governed by pricing lists or brackets. The Company’s revenue is recognized at the point in time when performance obligations have been satisfied and control of the product has transferred to the customer. This is typically once the ordered product is received or picked up by the customer. Revenue is recognized at the net consideration the Company expects to receive in exchange for the goods. The amount of net consideration recognized includes estimates of variable consideration, including costs for trade promotion programs, consumer incentives, and allowances and discounts associated with distressed or potentially unsaleable products. A majority of the Company’s revenue is short-term in nature with shipments within one year from order date. The Company’s payment terms generally range between seven to 60 days and vary by sales channel and other factors. The Company accounts for shipping and handling costs as contract fulfillment costs and excludes taxes imposed on and collected from customers in revenue producing transactions from the transaction price. The Company does not have significant deferred revenue or unbilled receivable balances as a result of transactions with customers. Costs to obtain contracts with a duration of one year or less are expensed and included in the Consolidated Statements of Operations. 44 Table of Contents The Company promotes products through advertising, consumer incentives, and trade promotions. These promotional programs include, but are not limited to, discounts, slotting fees, coupons, rebates, and in-store display incentives. Customer trade promotion and consumer incentive activities are recorded as a reduction to revenue and a corresponding accrued liability based on amounts estimated as variable consideration. The Company discloses revenue by reportable segment and class of similar product in Note P - Segment Reporting. Allowance for Doubtful Accounts: The Company estimates the Allowance for Doubtful Accounts based on a combination of factors, evaluations, and historical data while considering current and future economic conditions. Advertising Expenses: Advertising costs are included in Selling, General, and Administrative expenses in the Consolidated Statements of Operations and expensed when incurred. Advertising expenses include all media advertising but exclude the costs associated with samples, demonstrations, and market research. Advertising costs for fiscal years 2024, 2023, and 2022 were $ 163.3 million, $ 160.1 million, and $ 157.3 million, respectively. Shipping and Handling Costs: The Company’s shipping and handling expenses are included in Cost of Products Sold in the Consolidated Statements of Operations. Research and Development Expenses: Research and development costs are expensed as incurred and are primarily included in Selling, General, and Administrative expenses in the Consolidated Statements of Operations. Research and development expenses incurred for fiscal years 2024, 2023, and 2022 were $ 36.1 million, $ 33.7 million, and $ 34.7 million, respectively. Income Taxes: The Company records income taxes in accordance with the liability method of accounting. Deferred taxes are recognized for the estimated taxes ultimately payable or recoverable based on enacted tax law. Changes in enacted tax rates are reflected in the tax provision as they occur. In accordance with ASC 740, Income Taxes , the Company recognizes a tax position in its financial statements when it is more likely than not that the position will be sustained upon examination based on the technical merits of the position. That position is then measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. Stock-Based Compensation: The Company records stock-based compensation expense in accordance with ASC 718, Compensation – Stock Compensation . The Company recognizes stock-based compensation expense ratably over the shorter of the vesting period or the grantee’s retirement eligibility date. These costs are primarily included in Selling, General, and Administrative expenses in the Consolidated Statements of Operations. The Company estimates forfeitures at the time of grant based on historical experience and revises in subsequent periods if actual forfeitures differ. Share Repurchases: The Company may purchase shares of its common stock through open market and privately negotiated transactions pursuant to share repurchase authorizations approved by the Company's Board of Directors and at prices deemed appropriate by management. The timing and amount of repurchase transactions under the repurchase authorization depend on market conditions as well as corporate and regulatory considerations. For additional share repurchases information, see Part II, Item 5 - Market for Registrants’ Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Supplemental Cash Flow Information: Non-cash investment activities presented in the Consolidated Statements of Cash Flows primarily consist of unrealized gains or losses on the Company’s rabbi trust. Changes in the value of these investments are presented in Interest and Investment Income in the Consolidated Statements of Operations. Reclassifications: Certain reclassifications of previously reported amounts have been made to conform to the current year presentation. The reclassifications had no impact on the Consolidated Statements of Operations, Consolidated Statements of Comprehensive Income, Consolidated Statements of Financial Position, Consolidated Statements of Shareholders' Investment, or Consolidated Statements of Cash Flows. Accounting Changes and Recent Accounting Pronouncements: New Accounting Pronouncements Recently Adopted Fiscal 2024 No new accounting standards were adopted during fiscal 2024. Fiscal 2023 No new accounting standards were adopted during fiscal 2023. 45 Table of Contents Fiscal 2022 In December 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2019-12, Income Taxes - Simplifying the Accounting for Income Taxes (Topic 740). The updated guidance simplifies the accounting for income taxes by removing certain exceptions in Topic 740 and clarifying and amending existing guidance. The amendments are effective for fiscal years beginning after December 15, 2020, with early adoption permitted. The Company adopted the provisions of this new accounting standard at the beginning of fiscal 2022 and adoption did not have a material impact on its Consolidated Financial Statements. New Accounting Pronouncements Not Yet Adopted In November 2023, the FASB issued ASU 2023-07 Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The update is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant expenses. The ASU requires disclosures to include significant segment expenses that are regularly provided to the chief operating decision maker (CODM), a description of other segment items by reportable segment, and any additional measures of a segment’s profit or loss used by the CODM when deciding how to allocate resources. The ASU also requires all annual disclosures currently required by Topic 280 to be included in interim periods. The update is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted and requires retrospective application to all prior periods presented in the financial statements. The Company is currently assessing the impact of adopting the updated provisions. In December 2023, the FASB issued ASU 2023-09 Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The update is intended to enhance transparency and decision usefulness of income tax disclosures. This ASU updates income tax disclosure requirements by requiring specific categories and greater disaggregation within the rate reconciliation and disaggregation of income taxes paid by jurisdiction. The update is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently assessing the impact of adopting the updated provisions. In March 2024, the SEC adopted a final rule under SEC Release Nos. 33-11275 and 34-99678, The Enhancement and Standardization of Climate-Related Disclosures for Investors , to enhance and standardize climate-related disclosures. The rule will require companies to disclose material Scope 1 and Scope 2 greenhouse gas emissions; climate-related risks, governance, and oversight; and the financial effects of severe weather events and other natural conditions. These disclosures are required to be phased in starting with annual reporting periods beginning in 2025; however, this rule has been stayed pending the outcome of legal challenges. The Company is assessing the impact of adoption on our Consolidated Financial Statements and related disclosures in the event that the stay is lifted. In November 2024, the FASB issued ASU 2024-03 Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The new guidance is intended to provide investors more detailed disclosures around specific types of expenses. The new disclosures require certain details for expenses presented on the face of the Consolidated Statements of Operations as well as selling expenses to be presented in the notes to the financial statements. The update is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The disclosure updates are required to be applied prospectively with the option for retrospective application. The Company is currently assessing the impact and timing of adopting the updated provisions. Recently issued accounting standards or pronouncements not disclosed have been excluded as they are currently not relevant to the Company. Note B Acquisitions and Divestitures Divestitures: On October 18, 2024, the Company completed the sale of its equity interests in Hormel Health Labs, LLC (Hormel Health Labs) and related assets to Lyons Health Labs Holdco, LLC. The preliminary purchase price was $ 25.0 million, pending final working capital adjustments. The divestiture resulted in a pre-tax gain of $ 3.9 million, which was recognized in Selling, General and Administrative on the Consolidated Statements of Operations. Results of operations for Hormel Health Labs were reflected within the Foodservice segment through the date of divestiture. 46 Table of Contents Note C Goodwill and Intangible Assets Goodwill: The change in the carrying amount of goodwill for the fiscal years ended October 27, 2024 and October 29, 2023, is: In thousands Grocery Products Refrigerated Foods Jennie-O Turkey Store Retail Foodservice International Total Balance at October 30, 2022 $ 2,398,354 $ 2,094,421 $ 176,628 $ — $ — $ 256,427 $ 4,925,829 Goodwill Reallocation ( 2,398,354 ) ( 2,094,421 ) ( 176,628 ) 2,916,796 1,750,594 2,013 — Foreign Currency Translation — — — — — 2,635 2,635 Balance at October 29, 2023 $ — $ — $ — $ 2,916,796 $ 1,750,594 $ 261,074 $ 4,928,464 Goodwill Sold — — — — ( 2,239 ) — ( 2,239 ) Foreign Currency Translation — — — — — ( 2,738 ) ( 2,738 ) Balance at October 27, 2024 $ — $ — $ — $ 2,916,796 $ 1,748,355 $ 258,336 $ 4,923,487 Goodwill was reallocated as of October 31, 2022, due to organizational changes as described in Note A - Summary of Significant Accounting Policies. The goodwill sold during fiscal 2024 was due to the divestiture of Hormel Health Labs. Intangible Assets: The carrying amounts for indefinite-lived intangible assets are: In thousands October 27, 2024 October 29, 2023 Brands/Trade Names/Trademarks $ 1,629,582 $ 1,636,807 Other Intangibles 184 184 Foreign Currency Translation ( 6,655 ) ( 5,893 ) Total Indefinite-lived Intangible Assets $ 1,623,112 $ 1,631,098 The decrease in fiscal 2024 was primarily due to the trademarks associated with the divestiture of Hormel Health Labs. The gross carrying amount and accumulated amortization for definite-lived intangible assets are: October 27, 2024 October 29, 2023 In thousands Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization Customer Relationships $ 168,239 $ ( 93,536 ) $ 168,239 $ ( 82,658 ) Other Intangibles 59,241 ( 20,107 ) 59,241 ( 15,857 ) Trade Names/Trademarks 6,210 ( 5,996 ) 6,540 ( 5,089 ) Foreign Currency Translation — ( 4,458 ) — ( 4,344 ) Total Definite-lived Intangible Assets $ 233,690 $ ( 124,097 ) $ 234,020 $ ( 107,947 ) Amortization expense on intangible assets for the last three fiscal years is as follows: In thousands Amortization Expense 2024 $ 16,366 2023 18,386 2022 19,274 Estimated annual amortization expense on intangible assets for the five fiscal years after October 27, 2024, is as follows: In thousands Amortization Expense 2025 $ 14,624 2026 14,169 2027 13,927 2028 12,972 2029 11,504 47 Table of Contents During the fourth quarter of fiscal years 2024, 2023, and 2022, the Company completed required annual impairment tests of indefinite-lived intangible assets and goodwill. In fiscal 2023, an impairment was indicated for the Justin’s ® trade name, resulting in an impairment charge of $ 28.4 million. The expense was reflected in the Retail segment and included in Goodwill and Intangible Impairment in the Consolidated Statements of Operations. No other impairment was indicated. Useful lives of intangible assets were also reviewed during this process with no material changes identified. Note D Investments in Affiliates Equity in Earnings of Affiliates consists of: In thousands % Owned Fiscal Year Ended October 27, 2024 October 29, 2023 October 30, 2022 MegaMex Foods, LLC (1) 50 % $ 24,784 $ 40,501 $ 19,861 Other Equity Method Investments (2) Various ( 25 - 45 %) 26,304 2,253 7,324 Total Equity in Earnings of Affiliates $ 51,088 $ 42,754 $ 27,185 (1) MegaMex Foods, LLC is reflected in the Retail segment. (2) Other Equity Method Investments are primarily reflected in the International segment but also include corporate venturing investments. Distributions received from equity method investees consists of: In thousands Fiscal Year Ended October 27, 2024 October 29, 2023 October 30, 2022 Dividends $ 46,055 $ 38,160 $ 43,039 On December 15, 2022, the Company purchased from various minority shareholders a 29 % common stock interest in PT Garudafood Putra Putri Jaya Tbk (Garudafood), a food and beverage company in Indonesia. On April 12, 2023, the Company purchased additional shares increasing the ownership interest to approximately 30 %. This investment expanded the Company’s presence in Southeast Asia to support the global execution of the entertaining and snacking strategy. The Company has the ability to exercise significant influence, but not control, over Garudafood; therefore, the investment is accounted for under the equity method. The Company obtained its Garudafood interest for an aggregate purchase price of $ 425.8 million, including associated transaction costs. The transactions were funded using the Company’s cash on hand. Based on a third-party valuation, the Company’s basis difference between the fair value of the investment and proportionate share of the carrying value of Garudafood’s net assets is $ 324.8 million. The basis difference related to inventory, property, plant and equipment, and certain intangible assets is being amortized through Equity in Earnings of Affiliates over the associated useful lives. As of October 27, 2024, the remaining basis difference was $ 328.1 million, which includes the impact of foreign currency translation. Based on quoted market prices, the fair value of the common stock held in Garudafood was $ 295.6 million as of October 25, 2024. In fiscal 2023, the Company recorded a $ 7.0 million impairment charge related to a corporate venturing investment to recognize a decline in fair value not believed to be temporary. The impact is reflected in Equity in Earnings of Affiliates on the Consolidated Statements of Operations. The Company determined that no other-than-temporary impairment existed for any other equity method investments as of October 27, 2024. The Company recognized a basis difference of $ 21.3 million associated with the formation of MegaMex Foods, LLC, of which $ 8.5 million was remaining as of October 27, 2024. This difference is being amortized through Equity in Earnings of Affiliates. 48 Table of Contents Note E Inventories Principal components of inventories are: In thousands October 27, 2024 October 29, 2023 Finished Products $ 881,295 $ 954,432 Raw Materials and Work-in-Process 427,834 448,535 Operating Supplies 147,333 168,289 Maintenance Materials and Parts 119,837 109,151 Total Inventories $ 1,576,300 $ 1,680,406 Note F Derivatives and Hedging The Company uses hedging programs to manage risk associated with various commodity purchases and interest rates. These programs utilize futures, swaps, and options contracts to manage the Company’s exposure to market fluctuations. Cash Flow Commodity Hedges: The Company uses futures, swaps, and options contracts to offset price fluctuations in the Company’s future purchases of grain, lean hogs, natural gas, and diesel fuel. These contracts are designated as cash flow hedges; therefore, the related gains or losses are reported in Accumulated Other Comprehensive Loss (AOCL) and reclassified into earnings, through Cost of Products Sold, in the periods in which the hedged transactions affect earnings. The Company typically does not hedge its grain, natural gas, or diesel fuel exposure beyond two fiscal years and its lean hog exposure beyond one fiscal year. Fair Value Commodity Hedges: The Company designates the futures it uses to minimize the price risk assumed when fixed forward priced contracts are offered to the Company’s lean hog and grain suppliers as fair value hedges. The programs are intended to make the forward priced commodities cost nearly the same as cash market purchases at the date of delivery. Changes in the fair value of the futures contracts and the gain or loss on the hedged purchase commitment are marked-to-market through earnings and recorded on the Consolidated Statements of Financial Position as a Current Asset and Current Liability, respectively. Gains or losses related to these fair value hedges are recognized through Cost of Products Sold in the periods in which the hedged transactions affect earnings. Cash Flow Interest Rate Hedges: In the second quarter of fiscal 2021, the Company designated two separate interest rate locks as cash flow hedges to manage interest rate risk associated with anticipated debt transactions. The total notional amount of the Company’s locks was $ 1.25 billion. In the third quarter of fiscal 2021, the associated unsecured senior notes were issued with a tenor of seven and thirty years and both locks were lifted (See Note L - Long-term Debt and Other Borrowing Arrangements). Mark-to-market gains and losses on these instruments were deferred as a component of AOCL. The resulting gain in AOCL is reclassified to Interest Expense in the period in which the hedged transactions affect earnings. Fair Value Interest Rate Hedge: In the first quarter of fiscal 2022, the Company entered into an interest rate swap to protect against changes in the fair value of a portion of previously issued senior unsecured notes attributable to the change in the benchmark interest rate. The hedge specifically designated the last $ 450 million of the $ 950 million aggregate principal amount of its 0.650 % notes due June 2024 (the 2024 Notes). The Company terminated the swap in the fourth quarter of fiscal 2022. The loss related to the swap was recorded as a fair value hedging adjustment to the hedged debt and amortized through earnings over the remaining life of the debt. In the third quarter of fiscal 2024, the fair value hedging adjustment was completely amortized to correspond with the payment of the 2024 Notes upon maturity. Other Derivatives: The Company holds certain futures and swap contracts to manage the Company’s exposure to fluctuations in grain and pork commodity markets for which it has not applied hedge accounting. Activity related to derivatives not designated for hedge accounting was immaterial to the consolidated financial statements during fiscal years 2024, 2023, and 2022. 49 Table of Contents Volume: The Company’s outstanding contracts related to its commodity hedging programs include: In millions October 27, 2024 October 29, 2023 Corn 29.2 bushels 30.7 bushels Lean Hogs 175.6 pounds 144.2 pounds Natural Gas 4.2 MMBtu 3.0 MMBtu Diesel Fuel 4.0 gallons — gallons Fair Value of Derivatives: The gross fair values of the Company’s derivative instruments designated as hedges are: October 27, 2024 October 29, 2023 In thousands Assets Liabilities Assets Liabilities Gross Fair Value of Commodity Contracts $ 9,851 $ ( 12,638 ) $ 13,747 $ ( 26,980 ) Counterparty and Collateral Netting Offset (1) ( 1,785 ) 12,638 5,226 26,980 Amounts Recognized on Consolidated Statements of Financial Position (2) $ 8,066 $ — $ 18,972 $ — (1) Per the terms of the Company's master netting arrangements, the gross fair value of the Company's commodity contracts were offset by the right to reclaim net cash collateral of $ 10.9 million and $ 32.2 million as of October 27, 2024 and October 29, 2023, respectively. (2) The Company's commodity contracts are located in Prepaid Expenses and Other Current Assets on the Consolidated Statements of Financial Position. Fair Value Hedge - Assets (Liabilities): The carrying amount of the Company’s fair value hedged assets (liabilities) are: In thousands Location on Consolidated Statements of Financial Position October 27, 2024 October 29, 2023 Commodity Contracts Accounts Payable (1) $ ( 2,902 ) $ ( 4,914 ) Interest Rate Contracts Current Maturities of Long-term Debt (2) — ( 442,549 ) (1) Represents the carrying amount of fair value hedged assets and liabilities, which are offset by other assets included in master netting arrangements described above. (2) Represents the carrying amount of the hedged portion of the 2024 Notes. As of October 29, 2023, the carrying amount of the 2024 Notes included a cumulative fair value hedging adjustment of $ 7.5 million from discontinued hedges. The 2024 Notes were paid on June 3, 2024. Accumulated Other Comprehensive Loss Impact: As of October 27, 2024, the Company included in AOCL pre-tax hedging losses of $ 8.8 million on commodity contracts and gains of $ 11.5 million related to interest rate settled positions. The Company expects to recognize the majority of the losses on commodity contracts over the next twelve months. Gains on interest rate contracts offset the hedged interest payments over the tenor of the associated debt instruments. The pre-tax gains or (losses) recognized in AOCL related to the Company’s derivative instruments are: In thousands Fiscal Year Ended October 27, 2024 October 29, 2023 Commodity Contracts $ ( 12,898 ) $ ( 50,353 ) Excluded Component (1) 2,136 1,127 (1) Represents the time value of commodity options excluded from the assessment of effectiveness for which the difference between changes in fair value and periodic amortization is recorded in AOCL. The pre-tax gains (losses) reclassified from AOCL into earnings related to the Company’s derivative instruments are: In thousands Location on Consolidated Statements of Operations Fiscal Year Ended October 27, 2024 October 29, 2023 Commodity Contracts Cost of Products Sold $ ( 26,445 ) $ 1,225 Interest Rate Contracts Interest Expense 988 988 See Note H - Accumulated Other Comprehensive Loss for the after-tax impact of these gains or losses on Net Earnings. 50 Table of Contents Consolidated Statements of Operations Impact: The effect on the Consolidated Statements of Operations for pre-tax gains (losses) related to the Company’s derivative instruments are: Fiscal Year Ended In thousands October 27, 2024 October 29, 2023 October 30, 2022 Net Earnings Attributable to Hormel Foods Corporation $ 805,038 $ 793,572 $ 999,987 Cash Flow Hedges - Commodity Contracts Gain (Loss) Reclassified from AOCL ( 26,445 ) 1,225 55,350 Amortization of Excluded Component from Options ( 2,774 ) ( 5,835 ) ( 4,369 ) Gain (Loss) Reclassified from AOCL Due to Discontinuance of Cash Flow Hedges (1) — — 2,242 Fair Value Hedges - Commodity Contracts Gain (Loss) on Commodity Futures (2) 6,263 656 ( 18,122 ) Total Gain (Loss) on Commodity Contracts (3) $ ( 22,957 ) $ ( 3,955 ) $ 35,101 Cash Flow Hedges - Interest Rate Contracts Gain (Loss) Reclassified from AOCL 988 988 988 Fair Value Hedge - Interest Rate Contracts Gain (Loss) on Interest Rate Swap — — 928 Amortization of Loss Due to Discontinuance of Fair Value Hedge (4) ( 7,451 ) ( 12,499 ) ( 1,923 ) Total Gain (Loss) on Interest Rate Contracts (5) $ ( 6,463 ) $ ( 11,511 ) $ ( 7 ) Total Gain (Loss) Recognized in Earnings $ ( 29,420 ) $ ( 15,466 ) $ 35,094 (1) In fiscal year 2022, the Company discontinued hedge accounting related to corn usage that was deemed no longer probable to occur resulting in the immediate recognition of gains of $ 2.2 million ( 1.0 million bushels). (2) Represents gains or losses on commodity contracts designated as fair value hedges that were closed during the year, which were offset by a corresponding gain or loss on the underlying hedged purchase commitment. Additional gains or losses related to changes in the fair value of open commodity contracts, along with the offsetting gain or loss on the hedged purchase commitment, are also marked-to-market through earnings with no impact on a net basis. (3) Total Gain (Loss) on Commodity Contracts is recognized in earnings through Cost of Products Sold. (4) Represents the fair value hedging adjustment amortized through earnings. (5) Total Gain (Loss) on Interest Rate Contracts is recognized in earnings through Interest Expense. Note G Pension and Other Post-retirement Benefits The Company has several defined benefit plans and defined contribution plans covering most employees. Benefits for defined benefit pension plans covering certain bargaining unit employees are provided based on stated amounts for each year of service. Plan benefits covering certain non-bargaining unit hourly and salaried employees are based on final average compensation, age, and years of service for benefits accrued prior to January 1, 2017. In the fourth quarter of fiscal 2022, an amendment was enacted for the non-bargaining unit employee plan which changed the design from a stable value benefit to a cash balance benefit effective January 1, 2023. This amendment also called for benefits to be calculated retroactively to January 1, 2017. The cash balance design establishes hypothetical accounts for employees that are credited with an amount equal to a specified percent of their pay plus interest. Total costs associated with the Company’s defined contribution benefit plans in fiscal years 2024, 2023, and 2022 were $ 42.5 million, $ 41.0 million, and $ 47.9 million, respectively. Certain groups of employees are eligible for post-retirement health or welfare benefits. Benefits for retired employees vary for each group depending on respective retirement dates and applicable plan coverage in effect. Contribution requirements for retired employees are governed by the Company's Retiree Health Care Payment Program and may change each year as the cost to provide coverage is determined. 51 Table of Contents Net periodic cost of defined benefit plans included the following for fiscal years ending: Pension Benefits Post-retirement Benefits In thousands October 27, 2024 October 29, 2023 October 30, 2022 October 27, 2024 October 29, 2023 October 30, 2022 Service Cost $ 36,118 $ 35,607 $ 40,076 $ 163 $ 248 $ 469 Interest Cost 73,344 68,630 50,558 11,571 12,064 7,684 Expected Return on Plan Assets ( 77,510 ) ( 78,285 ) ( 108,248 ) — — — Amortization of Prior Service Cost (Credit) ( 886 ) ( 1,843 ) ( 1,496 ) 8 8 8 Recognized Actuarial Loss (Gain) 13,268 13,303 12,530 ( 1,265 ) ( 29 ) 2,439 Net Periodic Cost $ 44,334 $ 37,413 $ ( 6,581 ) $ 10,476 $ 12,290 $ 10,600 Non-service cost components of net pension and post-retirement benefit cost are presented within Interest and Investment Income in the Consolidated Statements of Operations. Actuarial gains and losses and any adjustments resulting from plan amendments are deferred and amortized over periods ranging from 8 to 12 years for pension benefits and 13 years for post-retirement benefits. The following amounts have not been recognized in net periodic pension cost and are included in Accumulated Other Comprehensive Loss: Pension Benefits Post-retirement Benefits In thousands October 27, 2024 October 29, 2023 October 27, 2024 October 29, 2023 Unrecognized Prior Service (Cost) Credit $ ( 8,435 ) $ ( 7,549 ) $ 525 $ ( 138 ) Unrecognized Actuarial (Loss) Gain ( 260,538 ) ( 270,468 ) 21,318 35,483 The following is a reconciliation of the beginning and ending balances of the benefit obligation, fair value of plan assets, and funded status of the plans as of the measurement dates: Pension Benefits Post-retirement Benefits In thousands October 27, 2024 October 29, 2023 October 27, 2024 October 29, 2023 Change in Benefit Obligation: Benefit Obligation at Beginning of Year $ 1,174,380 $ 1,200,013 $ 186,199 $ 211,986 Service Cost 36,118 35,607 163 248 Interest Cost 73,344 68,630 11,571 12,064 Actuarial (Gain) Loss (1) 143,280 ( 51,106 ) 12,826 ( 17,421 ) Plan Amendments — 3,307 ( 654 ) — Participant Contributions — — 2,001 2,137 Medicare Part D Subsidy — — 110 449 Benefits Paid ( 87,396 ) ( 82,071 ) ( 20,637 ) ( 23,263 ) Benefit Obligation at End of Year $ 1,339,726 $ 1,174,380 $ 191,578 $ 186,199 (1) Actuarial losses in fiscal 2024 were primarily due to the change in the discount rate assumptions utilized in measuring plan obligations. Pension Benefits Post-retirement Benefits In thousands October 27, 2024 October 29, 2023 October 27, 2024 October 29, 2023 Change in Plan Assets: Fair Value of Plan Assets at Beginning of Year $ 1,185,672 $ 1,240,200 $ — $ — Actual Return on Plan Assets 217,453 15,810 — — Participant Contributions — — 2,001 2,137 Employer Contributions 12,031 11,733 18,636 21,126 Benefits Paid ( 87,396 ) ( 82,071 ) ( 20,637 ) ( 23,263 ) Fair Value of Plan Assets at End of Year $ 1,327,760 $ 1,185,672 $ — $ — Funded Status at End of Year $ ( 11,966 ) $ 11,292 $ ( 191,578 ) $ ( 186,199 ) 52 Table of Contents Amounts recognized on the Consolidated Statements of Financial Position are as follows: Pension Benefits Post-retirement Benefits In thousands October 27, 2024 October 29, 2023 October 27, 2024 October 29, 2023 Pension Assets $ 205,964 $ 204,697 $ — $ — Employee-related Expenses ( 12,501 ) ( 12,023 ) ( 17,115 ) ( 18,313 ) Pension and Post-retirement Benefits ( 205,429 ) ( 181,382 ) ( 174,463 ) ( 167,886 ) Net Amount Recognized $ ( 11,966 ) $ 11,292 $ ( 191,578 ) $ ( 186,199 ) The accumulated benefit obligation for all pension plans was $ 1.3 billion as of October 27, 2024 and $ 1.2 billion as of October 29, 2023. The following table provides information for pension plans with projected and accumulated benefit obligations in excess of plan assets: In thousands October 27, 2024 October 29, 2023 Projected Benefit Obligation $ 217,929 $ 193,404 Accumulated Benefit Obligation 215,448 191,888 Fair Value of Plan Assets — — Weighted-average assumptions used to determine benefit obligations are as follows: October 27, 2024 October 29, 2023 Discount Rate 5.44 % 6.49 % Rate of Future Compensation Increase (For Plans that Base Benefits on Final Compensation Level) 4.09 % 4.06 % Interest Crediting Rate (For Cash Balance Plan) 4.50 % 4.98 % Weighted-average assumptions used to determine net periodic benefit costs are as follows: October 27, 2024 October 29, 2023 October 30, 2022 Discount Rate 6.49 % 5.92 % 3.00 % Rate of Future Compensation Increase (For Plans that Base Benefits on Final Compensation Level) 4.06 % 3.95 % 4.14 % Expected Long-term Return on Plan Assets 6.75 % 6.50 % 6.50 % Interest Crediting Rate (For Cash Balance Plan) (1) 4.98 % 4.42 % — % (1) Cash balance plan enacted in the fourth quarter of fiscal 2022. The expected long-term rate of return on plan assets is based on fair value and developed in consultation with outside advisors. A range is determined based on the composition of the asset portfolio, historical long-term rates of return, and estimates of future performance. The interest crediting rate is determined annually based on the U.S. 30-year Treasury rate with a floor of 2.65 percent. For measurement purposes, an 8 percent annual rate of increase in the per capita cost of covered health care benefits for pre-Medicare and post-Medicare retirees’ coverage is assumed for 2025. The pre-Medicare and post-Medicare rate is assumed to decrease to 5 percent for 2030 and remain steady thereafter. The Company’s funding policy is to make annual contributions of not less than the minimum required by applicable regulations. The Company expects to make contributions of $ 30.4 million during fiscal 2025, which represent benefit payments for unfunded plans. Benefits expected to be paid over the next ten fiscal years are as follows: In thousands Pension Benefits Post-retirement Benefits 2025 $ 89,209 $ 17,572 2026 92,954 17,186 2027 96,868 16,638 2028 99,026 16,089 2029 102,538 15,487 2030-2034 539,612 69,105 53 Table of Contents Plan assets for certain defined benefit pension plans are held in the Hormel Foods Corporation Master Trust (Master Trust). The investment strategy for the Master Trust attempts to minimize the long-term cost of pension benefits, reduce the volatility of pension expense, and achieve a healthy funded status for the plans. The Company establishes target allocations in consultation with outside advisors through the use of asset-liability modeling in an effort to match the duration of the plan assets with the duration of the Company’s projected benefit liability. The actual and target weighted-average asset allocations for the Company’s pension plan assets as of the plan measurement date are as follows: October 27, 2024 October 29, 2023 Asset Category Actual % Target Range % Actual % Target Range % Fixed Income 49.5 40 – 60 47.6 40 – 60 Global Stocks 33.1 20 – 55 31.2 20 – 55 Real Estate 5.6 0 – 10 8.0 0 – 10 Private Equity 6.1 0 – 15 6.7 0 – 15 Gold 2.4 0 – 5 2.4 0 – 5 Hedge Funds 1.8 0 – 10 2.1 0 – 10 Cash and Cash Equivalents 1.5 0 – 5 2.0 0 – 5 The following tables show the categories of defined benefit pension plan assets and the level under which fair values were determined pursuant to the provisions of ASC 820. Assets measured at fair value using the net asset value (NAV) per share practical expedient are not required to be classified in the fair value hierarchy. These amounts are provided to permit reconciliation to the total fair value of plan assets. Fair Value Measurements as of October 27, 2024 In thousands Total Fair Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Plan Assets in Fair Value Hierarchy Cash Equivalents $ 19,397 $ — $ 19,397 $ — Private Equity Domestic 35,958 — — 35,958 International 45,080 — — 45,080 Real Estate Funds Domestic 6,249 — — 6,249 Fixed Income U.S. Government Issues 175,715 152,721 22,994 — Municipal Issues 9,938 — 9,938 — Corporate Issues – Domestic 261,344 — 261,344 — Corporate Issues – Foreign 41,088 — 41,088 — Global Stocks – Mutual Funds Domestic 8,451 8,451 — — Plan Assets in Fair Value Hierarchy $ 603,219 $ 161,172 $ 354,760 $ 87,287 Plan Assets at Net Asset Value Real Estate – Domestic $ 67,765 Global Stocks – Collective Investment Funds 431,494 Global Stocks – Gold 32,022 Hedge Funds 24,192 Fixed Income – Hedge Funds 35,017 Fixed Income – Collective Investment Funds 134,051 Plan Assets at Net Asset Value $ 724,541 Total Plan Assets at Fair Value $ 1,327,760 54 Table of Contents Fair Value Measurements as of October 29, 2023 In thousands Total Fair Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Plan Assets in Fair Value Hierarchy Cash Equivalents $ 23,643 $ 461 $ 23,182 $ — Private Equity Domestic 31,383 — — 31,383 International 48,065 — — 48,065 Fixed Income U.S. Government Issues 171,949 123,683 48,266 — Municipal Issues 9,884 — 9,884 — Corporate Issues – Domestic 226,202 — 226,202 — Corporate Issues – Foreign 36,133 — 36,133 — Plan Assets in Fair Value Hierarchy $ 547,258 $ 124,144 $ 343,667 $ 79,448 Plan Assets at Net Asset Value Real Estate – Domestic $ 95,315 Global Stocks – Collective Investment Funds 369,513 Global Stocks – Gold 28,163 Hedge Funds 24,965 Fixed Income – Hedge Funds 64,613 Fixed Income – Collective Investment Funds 55,845 Plan Assets at Net Asset Value $ 638,414 Total Plan Assets at Fair Value $ 1,185,672 The following is a description of the valuation methodologies used for instruments measured at fair value, including the general classification of such instruments: Cash Equivalents: These Level 1 and Level 2 investments consist primarily of cash and highly liquid money market mutual funds traded in active markets in addition to highly liquid futures and T-bills with an observable daily settlement price. Private Equity : These Level 3 investments consist of various collective investment funds, which are managed by a third party, invested in a well-diversified portfolio of equity investments from top performing, high quality firms focused on U.S. and foreign small to mid-markets, venture capitalists, and entrepreneurs with a concentration in areas of innovation. Investment strategies include buyouts, growth capital, buildups, and distressed, as well as early stages of company development mainly in the U.S. The fair value of these funds is based on the fair value of the underlying investments. Real Estate Funds : These Level 3 investments include ownership in closed-ended real estate funds targeting value added real estate opportunities. These funds manage diversified portfolios of commercial properties with broad sector exposure. Investment strategies aim to acquire, hold, or dispose of investments with the goal of achieving current and/or capital appreciation. These funds have a predetermined life and are illiquid investments. Fixed Income: The Level 1 investments include U.S. Treasury bonds and notes, which are valued at the closing price reported on the active market in which the individual securities are traded. The Level 2 investments consist principally of U.S. government securities, which are valued daily using institutional bond quote sources and mortgage-backed securities pricing sources, and municipal, domestic, and foreign securities, which are valued daily using institutional bond quote sources. Global Stocks – Mutual Funds : These investments include holdings of mutual funds that are SEC-registered open-end investment companies that pool money from many investors and invests the money in stocks, bonds, short-term money-market instruments, other securities or assets, or some combination of these investments. Shares of these companies are liquid and traded daily on public market exchanges. Real Estate – Domestic: These investments include ownership in open-ended real estate funds, which manage diversified portfolios of commercial properties within the office, residential, retail, and industrial property sectors. Investment strategies aim to acquire, own, hold, or dispose of investments with the goal of achieving current income and/or capital appreciation. The real estate investments are valued at the NAV of shares held by the Master Trust. Requests to redeem shares are granted on a quarterly basis with either 45 or 90 days advance notice, subject to availability of cash. 55 Table of Contents Global Stocks – Collective Investment Funds: These investments include commingled funds consisting of a mix of U.S. common stocks and foreign common stocks. The collective investment funds are valued at the NAV of shares held by the Master Trust. The investment strategy is to obtain long-term capital appreciation by focusing on companies generating above average earnings growth and are leading growth businesses in the marketplace. All funds are daily liquid with the exception of one that is available on the first business day of the month for subscriptions and withdrawals. Global Stocks – Gold: This investment is a limited partnership consisting of physical gold, global mining industry common stocks, and to a limited extent, other precious metals. The limited partnership is valued at the NAV of shares held by the Master Trust. This fund allows for weekly subscriptions and monthly redemptions. Hedge Funds: These investments are designed to provide diversification to an overall institutional portfolio and, in particular, provide protection against equity market downturns. They are comprised of Commodity Trading Advisor Managed Futures, Global Macro (Discretionary and/or Quant) and Long Volatility/Tail Risk Hedging strategies. The hedge funds are valued at the NAV of shares held by the Master Trust. Requests to redeem shares are granted daily, monthly, or quarterly. Fixed Income – Hedge Funds: These investments target absolute, risk-adjusted returns by taking advantage of price dislocations and inconsistencies within credit markets. Funds are comprised primarily of U.S. and European corporate credit and structured credit. The investments are valued at the NAV of shares held by the Master Trust. Requests to redeem shares are granted on a quarterly basis on the three-year fund anniversary with a ninety-day notice period. Fixed Income – Collective Investment Funds: These investments include commingled funds consisting of a mix of U.S. government and investment grade corporate bonds. The collective investment funds are valued at NAV of the shares held by the Master Trust. The investment strategy is to achieve an investment return that approximates as closely to the Bloomberg Barclays U.S. Aggregate Bond Index over the long-term by investing in the securities that comprise the benchmark. There are no restrictions on redemptions. A reconciliation of the beginning and ending balance of the investments measured at fair value using significant unobservable inputs (Level 3) is as follows: In thousands October 27, 2024 October 29, 2023 Fair Value at Beginning of Year $ 79,448 $ 88,154 Purchases, Issuances, and Settlements (Net) 1,029 ( 8,926 ) Unrealized Gains (Losses) ( 2,144 ) ( 8,525 ) Realized Gains (Losses) 569 6,455 Interest and Dividend Income 8,385 2,290 Fair Value at End of Year $ 87,287 $ 79,448 During fiscal 2024, the value of the Level 3 investments ranged from $ 78.5 million to $ 87.3 million, with an average value of $ 82.9 million. The Company has commitments totaling $ 180.9 million for the investments within the pension plans. The unfunded commitment balance for each investment category is as follows: In thousands October 27, 2024 October 29, 2023 Domestic Equity $ 34,111 $ 16,835 International Equity 10,058 11,396 Unfunded Commitment Balance $ 44,169 $ 28,231 Funding for future capital calls will come from existing pension plan assets and not from additional cash contributions by the Company. 56 Table of Contents Note H Accumulated Other Comprehensive Loss Components of Accumulated Other Comprehensive Loss are as follows: In thousands Foreign Currency Translation Pension & Other Benefits Derivatives & Hedging Equity Method Investments Accumulated Other Comprehensive Loss Balance at October 31, 2021 $ ( 51,181 ) $ ( 261,211 ) $ 35,123 $ — $ ( 277,269 ) Unrecognized Gains (Losses) Gross ( 38,612 ) 73,361 51,623 — 86,372 Tax Effect — ( 17,942 ) ( 12,384 ) — ( 30,326 ) Reclassification into Net Earnings Gross — 13,481 (1) ( 58,580 ) (2) — ( 45,099 ) Tax Effect — ( 3,312 ) 14,073 — 10,761 Change Net of Tax ( 38,612 ) 65,587 ( 5,267 ) — 21,708 Balance at October 30, 2022 $ ( 89,793 ) $ ( 195,624 ) $ 29,856 $ — $ ( 255,561 ) Unrecognized Gains (Losses) Gross 3,771 3,878 ( 49,226 ) 15,082 ( 26,495 ) Tax Effect — ( 880 ) 11,998 — 11,118 Reclassification into Net Earnings Gross — 11,439 (1) ( 2,213 ) (2) ( 8,235 ) (3) 991 Tax Effect — ( 2,806 ) 501 — ( 2,305 ) Change Net of Tax 3,771 11,632 ( 38,940 ) 6,847 ( 16,691 ) Balance at October 29, 2023 $ ( 86,022 ) $ ( 183,993 ) $ ( 9,084 ) $ 6,847 $ ( 272,252 ) Unrecognized Gains (Losses) Gross 15,229 ( 15,583 ) ( 10,762 ) ( 9,219 ) ( 20,336 ) Tax Effect — 3,869 2,571 — 6,440 Reclassification into Net Earnings Gross — 11,125 (1) 25,456 (2) ( 4,831 ) (3) 31,750 Tax Effect — ( 2,744 ) ( 6,190 ) — ( 8,933 ) Change Net of Tax 15,229 ( 3,333 ) 11,075 ( 14,050 ) 8,921 Balance at October 27, 2024 $ ( 70,794 ) $ ( 187,325 ) $ 1,991 $ ( 7,204 ) $ ( 263,331 ) (1) Included in computation of net periodic cost. See Note G - Pension and Other Post-Retirement Benefits for additional information. (2) Included in Cost of Products Sold and Interest Expense in the Consolidated Statements of Operations. See Note F - Derivatives and Hedging for additional information. (3) Included in Equity in Earnings of Affiliates in the Consolidated Statements of Operations. 57 Table of Contents Note I Fair Value Measurements The Company’s financial assets and liabilities carried at fair value on a recurring basis and their level within the fair value hierarchy are presented in the tables below. See additional discussion of fair value measurements in Note A - Summary of Significant Accounting Policies. Fair Value Measurements at October 27, 2024 Total Fair Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) In thousands Assets at Fair Value Cash and Cash Equivalents $ 741,881 $ 741,188 $ 693 $ — Short-term Marketable Securities 24,742 5,134 19,608 — Other Trading Securities 209,729 — 209,729 — Commodity Derivatives 9,890 9,575 314 — Total Assets at Fair Value $ 986,243 $ 755,898 $ 230,345 $ — Liabilities at Fair Value Deferred Compensation $ 62,101 $ — $ 62,101 $ — Commodity Derivatives 12,638 11,127 1,510 — Total Liabilities at Fair Value $ 74,738 $ 11,127 $ 63,611 $ — Fair Value Measurements at October 29, 2023 Total Fair Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) In thousands Assets at Fair Value Cash and Cash Equivalents $ 736,532 $ 735,387 $ 1,145 $ — Short-term Marketable Securities 16,664 2,499 14,164 — Other Trading Securities 188,162 — 188,162 — Commodity Derivatives 13,768 13,702 66 — Total Assets at Fair Value $ 955,126 $ 751,589 $ 203,538 $ — Liabilities at Fair Value Deferred Compensation $ 55,222 $ — $ 55,222 $ — Commodity Derivatives 27,071 26,732 339 — Total Liabilities at Fair Value $ 82,293 $ 26,732 $ 55,561 $ — The following methods and assumptions were used to estimate the fair value of the financial assets and liabilities above: Cash and Cash Equivalents: The Company’s cash equivalents considered Level 1 consist primarily of bank deposits, money market funds rated AAA, or other highly liquid investment accounts, and have a maturity date of three months or less. Cash equivalents considered Level 2 are funds holding agency bonds or securities recognized at amortized cost. Short-term Marketable Securities: The Company holds securities as part of a portfolio maintained to generate investment income and to provide cash for operations of the Company, if necessary. The portfolio is managed by a third party who is responsible for daily trading activities, and all assets within the portfolio are highly liquid. The cash, U.S. government securities, and money market funds rated AAA held by the portfolio are classified as Level 1. The current investment portfolio also includes corporate bonds and other asset backed securities for which there is an active, quoted market. Market prices are obtained from a variety of industry providers, large financial institutions, and other third-party sources to calculate a representative daily market value, and therefore, these securities are classified as Level 2. Deferred Compensation and Other Trading Securities: The Company maintains a rabbi trust to fund certain supplemental executive retirement plans and deferred compensation plans. These funds are managed by a third-party insurance policy, the values of which represent their cash surrender value based on the fair value of the underlying investments in the account. These policies are classified as Level 2. The majority of the funds held in the rabbi trust relate to supplemental executive retirement plans and are invested in fixed income investments. The declared rate on these investments is set based on a formula using the yield of the general account investment portfolio supporting the fund, as adjusted for expenses and other charges. The rate is guaranteed for one year at issue and may be reset annually on the policy anniversary, subject to a 58 Table of Contents guaranteed minimum rate. Investments held by the rabbi trust generated gains (losses) of $ 21.6 million, $ 3.2 million, and $( 16.8 ) million for fiscal years 2024, 2023, and 2022, respectively. Under the Company’s deferred compensation plans, participants can defer certain types of compensation and elect to receive a return based on the changes in fair value of various investment options, which include equity securities, money market accounts, bond funds, or other portfolios for which there is an active quoted market. The Company also offers a fixed rate investment option to participants. The rate earned on these investments is adjusted annually based on a specified percent of the U.S. Internal Revenue Service (IRS) applicable federal rates. These liabilities are classified as Level 2. The Company maintains funding in the rabbi trust generally mirroring the investment selections within the deferred compensation plans. Commodity Derivatives: The Company’s commodity derivatives represent futures, swaps, and options contracts used in its hedging or other programs to offset price fluctuations associated with purchases of corn, natural gas, diesel fuel, lean hogs, and pork, and to minimize the price risk assumed when forward-priced contracts are offered to the Company’s commodity suppliers. The Company’s futures and options contracts for corn are traded on the Chicago Board of Trade, while futures contracts for lean hogs are traded on the Chicago Mercantile Exchange. These are active markets with quoted prices available, and these contracts are classified as Level 1. The Company holds natural gas, diesel fuel, and pork swap contracts that are over-the-counter instruments classified as Level 2. The value of the natural gas and diesel fuel swap contracts is calculated using quoted prices from the New York Mercantile Exchange, and the value of the pork swap contracts are calculated using a futures implied U.S. Department of Agriculture estimated pork cut-out value. All derivatives are reviewed for potential credit risk and risk of nonperformance. The net balance for commodity derivatives is included in Prepaid Expenses and Other Current Assets or Accounts Payable, as appropriate, on the Consolidated Statements of Financial Position. As of October 27, 2024, the Company has recognized the right to reclaim net cash collateral of $ 10.9 million from various counterparties (including cash of $ 26.5 million less $ 15.6 million of realized loss). As of October 29, 2023, the Company had recognized the right to reclaim net cash collateral of $ 32.2 million from various counterparties (including cash of $ 42.6 million less $ 10.4 million of realized loss). The Company’s financial assets and liabilities include accounts receivable, accounts payable, and other liabilities, for which carrying value approximates fair value. The Company does not carry its long-term debt at fair value on the Consolidated Statements of Financial Position. The fair value of long-term debt, utilizing discounted cash flows (Level 2), was $ 2.5 billion as of October 27, 2024 and $ 2.7 billion as of October 29, 2023. See Note L - Long-term Debt and Other Borrowing Arrangements for additional information. The Company measures certain nonfinancial assets and liabilities at fair value, which are recognized or disclosed on a nonrecurring basis (e.g., goodwill, intangible assets, and property, plant, and equipment). During fiscal year 2023, the Company recorded a $ 28.4 million impairment charge on the Justin's ® trade name and a $ 7.0 million impairment charge on a corporate venturing investment. See additional discussion in Note C - Goodwill and Intangible Assets and Note D - Investments in Affiliates. During fiscal years 2024, 2023, and 2022, there were no other material remeasurements of assets or liabilities at fair value on a nonrecurring basis subsequent to their initial recognition. Note J Commitments and Contingencies Purchase Commitments: To ensure a steady supply of hogs and turkeys and keep the cost of products stable, the Company has entered into contracts with producers for the purchase of hogs and turkeys at formula-based prices over periods up to 9 years and 8 years, respectively. The Company has also entered into grow-out contracts with independent farmers to raise turkeys for the Company for periods up to 25 years. Under these arrangements, the Company owns the livestock, feed, and other supplies while the independent farmers provide facilities and labor. In addition, the Company has contracted for the purchase of corn, soybean meal, feed ingredients, and other raw materials from independent suppliers for periods up to 2 years. 59 Table of Contents As of October 27, 2024, the Company is committed to make purchases under these contracts, assuming current price levels, for future fiscal years: In thousands 2025 $ 1,234,988 2026 625,872 2027 313,814 2028 179,145 2029 66,480 Later Years 176,713 Total $ 2,597,012 Purchases under these contracts for fiscal years 2024, 2023, and 2022 were $ 1.3 billion, $ 1.4 billion, and $ 1.2 billion, respectively. Other Commitments and Guarantees: The Company has commitments of approximately $ 31.0 million related to infrastructure improvements supporting various manufacturing facilities and $ 38.3 million for a media advertising agreement as of October 27, 2024. As of October 27, 2024, the Company has $ 49.3 million of standby letters of credit issued on its behalf. The standby letters of credit are primarily related to the Company’s self-insured workers' compensation programs. This amount includes revocable standby letters of credit totaling $ 2.7 million for obligations of an affiliated party that may arise under workers' compensation claims. Letters of credit are not reflected on the Consolidated Statements of Financial Position. Legal Proceedings: The Company is a party to various legal proceedings related to the ongoing operation of its business, including claims both by and against the Company. At any time, such proceedings typically involve claims related to product liability, labeling, contracts, antitrust regulations, intellectual property, competition laws, employment practices, or other actions brought by employees, customers, consumers, competitors, or suppliers. The Company establishes accruals for its potential exposure, as appropriate, for claims against the Company when losses become probable and reasonably estimable. However, future developments or settlements are uncertain and may require the Company to change such accruals as proceedings progress. Resolution of any currently known matter, either individually or in the aggregate, is not expected to have a material effect on the Company’s financial condition, results of operations, or liquidity. Pork Antitrust Litigation Beginning in June 2018, a series of putative class action complaints were filed against the Company, as well as several other pork-processing companies and a benchmarking service called Agri Stats, in the U.S. District Court for the District of Minnesota styled In re Pork Antitrust Litigation (the Pork Antitrust Litigation). Class Plaintiffs consist of Direct Purchaser Plaintiffs, Commercial and Institutional Indirect Purchaser Plaintiffs, and Consumer Indirect Purchaser Plaintiffs. The Class Plaintiffs allege, among other things, that beginning in January 2009, the defendants conspired and combined to fix, raise, maintain, and stabilize the price of pork and pork products—including through the use of Agri Stats—in violation of federal antitrust laws. The complaints on behalf of the putative classes of indirect purchasers also include causes of action under various state unfair competition laws, consumer protection laws, and unjust enrichment common laws. The plaintiffs seek treble damages, injunctive relief, pre- and post-judgment interest, costs, and attorneys’ fees. Since the original filing, certain plaintiffs, including the Offices of the Attorney General in New Mexico and Alaska, have opted out of class treatment and are proceeding with individual direct actions making similar claims (Non-Class Direct-Action Plaintiffs), and others may do so in the future. Although the Company strongly denies liability, continues to deny the allegations asserted by the Class Plaintiffs, and believes it has valid defenses, to avoid the uncertainty, risk, expense, and distraction of continued litigation involving the Class Plaintiffs, the Company executed settlement agreements providing for payments by the Company to the Direct Purchaser Plaintiffs of $ 4.9 million, the Commercial and Institutional Indirect Purchaser Plaintiffs of $ 2.4 million, and the Consumer Indirect Purchaser Plaintiffs of $ 4.5 million. The settlement amounts were recorded in Selling, General, and Administrative in the Consolidated Statements of Operations in the second quarter of fiscal 2024 and were paid during the second half of fiscal 2024. The Company continues to defend against the claims of the Non-Class Direct-Action Plaintiffs. The Company has not recorded any liability for the non-class matters as it does not believe a loss is probable. The Company cannot reasonably estimate any reasonably possible loss. The Company believes that it has valid and meritorious defenses against the allegations. 60 Table of Contents Turkey Antitrust Litigation Beginning in December 2019, a series of putative class action complaints were filed against the Company, as well as several other turkey-processing companies and a benchmarking service called Agri Stats, in the U.S. District Court for the Northern District of Illinois styled In re Turkey Antitrust Litigation . The plaintiffs allege, among other things, that from at least 2010 to 2017, the defendants conspired and combined to fix, raise, maintain, and stabilize the price of turkey products—including through the use of Agri Stats—in violation of federal antitrust laws. The complaints on behalf of the putative classes of indirect purchasers also include causes of action under various state unfair competition laws, consumer protection laws, and unjust enrichment common laws. The plaintiffs seek treble damages, injunctive relief, pre- and post-judgment interest, costs, and attorneys’ fees. Since the original filing, certain direct-action plaintiffs have opted out of class treatment and are proceeding with individual direct actions making similar claims, and others may do so in the future. The Company has not recorded any liability for these matters as it does not believe a loss is probable. The Company cannot reasonably estimate any reasonably possible loss. The Company believes that it has valid and meritorious defenses against the allegations. Poultry Wages Antitrust Litigation In December 2019, a putative class of non-supervisory production and maintenance employees at poultry-processing plants in the continental U.S. filed an amended consolidated class action complaint against Jennie-O Turkey Store, Inc. and various other poultry processing companies in the U.S. District Court for the District of Maryland styled Jien, et al. v. Perdue Farms, Inc., et al . (the Poultry Wages Antitrust Litigation). In the operative amended complaint filed in February 2022, the plaintiffs allege that, since 2000, the defendants directly and through wage surveys and a benchmarking service exchanged information regarding compensation in an effort to depress and fix wages and benefits for employees at poultry-processing plants, feed mills, and hatcheries in violation of federal antitrust laws. The complaint sought, among other things, treble monetary damages, punitive damages, restitution, and pre- and post-judgment interest, as well as declaratory and injunctive relief. In July 2022, the Court partially granted the Company’s motion to dismiss, and dismissed plaintiffs’ per se wage-fixing claim as to the Company. Although the Company strongly denies liability, continues to deny the allegations asserted by the plaintiffs, and believes it has valid defenses, to avoid the uncertainty, risk, expense, and distraction of continued litigation, the Company executed a settlement agreement with the plaintiffs on August 20, 2024, to settle this matter for the payment of $ 3.5 million. The settlement remains subject to Court approval. The Company recorded the agreed-upon settlement amount in Selling, General, and Administrative in the Consolidated Statements of Operations and in Accrued Expenses on the Consolidated Statements of Financial Position for the third quarter of fiscal 2024. The agreed-upon settlement amount will be paid following preliminary Court approval. Red Meat Wages Antitrust Litigation In November 2022, a putative class of non-supervisory production and maintenance employees at “red meat” processing plants in the continental U.S. filed a class action complaint against the Company and various other beef- and pork-processing companies in the U.S. District Court for the District of Colorado styled Brown, et al. v. JBS USA Food Co., et al . (the Red Meat Wages Antitrust Litigation). In the operative amended complaint filed in January 2024, the plaintiffs allege that, since 2000, the defendants directly and through wage surveys and a benchmarking service exchanged information regarding compensation in an effort to depress and fix wages and benefits for employees at beef- and pork-processing plants in violation of federal antitrust laws. The complaint sought, among other things, treble monetary damages, punitive damages, restitution, and pre- and post-judgment interest, as well as declaratory and injunctive relief. Although the Company strongly denies liability, continues to deny the allegations asserted by the plaintiffs, and believes it has valid defenses, to avoid the uncertainty, risk, expense, and distraction of continued litigation, the Company executed a settlement agreement with the plaintiffs on August 20, 2024, to settle this matter for the payment of $ 13.5 million and the provision of certain data and information. The settlement remains subject to Court approval. The Company recorded the agreed-upon settlement amount in Selling, General, and Administrative in the Consolidated Statements of Operations and in Accrued Expenses on the Consolidated Statements of Financial Position for the third quarter of fiscal 2024. The agreed-upon settlement amount will be paid following preliminary Court approval. Tax Proceedings: Two current Company subsidiaries organized in Brazil, Clean Field Comércio de Produtos de Alimentícios LTDA and Omamori Indústria de Alimentos LTDA, the results of which are reported in the International segment, as well as one former subsidiary, Talis Distribuidora de Alimentos LTDA, received tax deficiency notices from the State of São Paulo Tax Authority Office alleging underpayment of ICMS and ICMS-ST taxes, which are similar to value added taxes, for multiple tax years. The subsidiaries have filed objections to appeal these tax deficiency notices, and the proceedings are in various stages of the administrative review process. Any adverse outcomes at the administrative level are expected to be eligible for further appeal through judicial processes. The Company has not recognized a loss relating to any of these assessments. The Company cannot at this time reasonably estimate any reasonably possible loss. 61 Table of Contents Note K Leases The Company has operating leases for manufacturing facilities, office space, warehouses, transportation equipment, as well as miscellaneous real estate and equipment contracts. Finance leases primarily include turkey growing facilities and an aircraft. The Company’s lessor portfolio consists primarily of immaterial operating leases of farmland to third parties. Lease information included on the Consolidated Statements of Financial Position are: In thousands Location on Consolidated Statements of Financial Position October 27, 2024 October 29, 2023 Right-of-Use Assets Operating Other Assets $ 147,698 $ 131,920 Finance Net Property, Plant, and Equipment 30,484 37,999 Total Right-of-Use Assets $ 178,183 $ 169,919 Lease Liabilities Current Operating Accrued Expenses $ 32,068 $ 26,238 Finance Current Maturities of Long-term Debt 7,383 8,597 Long-term Operating Other Long-term Liabilities 121,286 109,237 Finance Long-term Debt Less Current Maturities 20,158 27,488 Total Lease Liabilities $ 180,894 $ 171,560 Lease expenses are: Fiscal Year Ended In thousands October 27, 2024 October 29, 2023 October 30, 2022 Operating Lease Cost (1) $ 42,200 $ 34,209 $ 25,702 Finance Lease Cost Amortization of Right-of-Use Assets 7,562 7,594 7,965 Interest on Lease Liabilities 1,042 1,361 1,707 Variable Lease Cost (2) 390,032 511,906 463,439 Total Lease Cost $ 440,836 $ 555,070 $ 498,813 (1) Includes short-term lease costs, which are immaterial. (2) ASC 842 - Leases requires disclosure of payments related to agreements with an embedded lease that are not otherwise reflected on the Consolidated Statements of Financial Position. The Company’s variable lease costs primarily include inventory-related expenses, such as materials, labor, and overhead from manufacturing and service agreements that contain embedded leases. Variability of these costs is determined based on usage or output and may vary for other reasons such as changes in material prices. The weighted-average remaining lease term and discount rate for lease liabilities included on the Consolidated Statements of Financial Position are: October 27, 2024 October 29, 2023 Weighted-average Remaining Lease Term Operating Leases 6.1 years 6.0 years Finance Leases 4.4 years 5.3 years Weighted-average Discount Rate Operating Leases 4.43 % 4.43 % Finance Leases 3.27 % 3.37 % Supplemental cash flow and other information related to leases for the fiscal year ended are: In thousands October 27, 2024 October 29, 2023 October 30, 2022 Cash Paid for Amounts Included in the Measurement of Lease Liabilities Operating Cash Flows from Operating Leases $ 35,619 $ 29,436 $ 24,098 Operating Cash Flows from Finance Leases 1,042 1,361 1,707 Financing Cash Flows from Finance Leases 8,599 8,407 8,491 Right-of-Use Assets obtained in exchange for new finance lease liabilities 55 19 — Right-of-Use Assets obtained in exchange for new operating lease liabilities 48,294 84,087 19,646 62 Table of Contents The maturity of the Company’s lease liabilities as of October 27, 2024, are: In thousands Operating Leases Finance Leases (1) Total (2) 2025 $ 38,343 $ 8,126 $ 46,469 2026 34,674 5,691 40,364 2027 26,020 4,335 30,354 2028 17,481 10,542 28,023 2029 16,180 685 16,865 2030 and beyond 43,040 — 43,040 Total Lease Payments $ 175,738 $ 29,377 $ 205,115 Less: Imputed Interest 22,385 1,836 24,222 Present Value of Lease Liabilities $ 153,354 $ 27,541 $ 180,894 (1) Over the life of the lease contracts, finance lease payments include $ 7.2 million related to purchase options which are reasonably certain of being exercised. (2) Lease payments exclude $ 36.0 million of legally binding minimum lease payments for leases signed but not yet commenced as of October 27, 2024. Note L Long-term Debt and Other Borrowing Arrangements Long-term Debt consists of: In thousands October 27, 2024 October 29, 2023 Senior Unsecured Notes with Interest at 3.050 % Interest Due Semi-annually through June 2051 Maturity Date $ 600,000 $ 600,000 Senior Unsecured Notes with Interest at 1.800 % Interest Due Semi-annually through June 2030 Maturity Date 1,000,000 1,000,000 Senior Unsecured Notes with Interest at 1.700 % Interest Due Semi-annually through June 2028 Maturity Date 750,000 750,000 Senior Unsecured Notes with Interest at 4.800 % Interest Due Semi-annually through March 2027 Maturity Date 500,000 — Senior Unsecured Notes with Interest at 0.650 % Interest Due Semi-annually through June 2024 Maturity Date — 950,000 Unamortized Discount on Senior Notes ( 6,687 ) ( 7,016 ) Unamortized Debt Issuance Costs ( 15,628 ) ( 16,278 ) Interest Rate Swap Liabilities (1) — ( 7,451 ) Finance Lease Liabilities (2) 27,541 36,085 Other Financing Arrangements 3,530 3,908 Total Debt 2,858,756 3,309,247 Less: Current Maturities of Long-term Debt 7,813 950,529 Long-term Debt Less Current Maturities $ 2,850,944 $ 2,358,719 (1) See Note F - Derivatives and Hedging for additional information. (2) See Note K - Leases for additional information. Senior Unsecured Notes: On March 8, 2024, the Company issued senior notes in an aggregate principal amount of $ 500.0 million due March 2027. The notes bear interest at a fixed rate of 4.800 % per annum. Interest accrues on the notes from March 8, 2024, and is payable semi-annually in arrears on March 30 and September 30 of each year, commencing September 30, 2024. The notes may be redeemed in whole or in part at any time at the applicable redemption prices. If a change of control triggering event occurs, the Company must offer to purchase the notes at a purchase price equal to 101 % of their principal amount, plus accrued and unpaid interest, if any, to the date of purchase. On June 3, 2021, the Company issued $ 950.0 million aggregate principal amount of its 0.650 % notes due June 2024 (2024 Notes), $ 750.0 million aggregate principal amount of its 1.700 % notes due June 2028 (2028 Notes), and $ 600.0 million aggregate principal amount of its 3.050 % notes due June 2051 (2051 Notes). The notes may be redeemed in whole or in part at any time at the applicable redemption price. Interest accrues per annum at the stated rates and is paid semi-annually in arrears on June 3 and December 3 of each year, commencing December 3, 2021. Interest rate risk was hedged utilizing interest rate locks on the 2028 Notes and 2051 Notes. The Company lifted the hedges in conjunction with the issuance of these notes. See Note F - Derivatives and Hedging for additional information. If a change of control triggering event occurs, the Company must 63 Table of Contents offer to purchase the notes at a purchase price equal to 101 % of their principal amount, plus accrued and unpaid interest, if any, to the date of purchase. The Company repaid the $ 950.0 million 2024 Notes upon maturity on June 3, 2024. On June 11, 2020, the Company issued senior notes in an aggregate principal amount of $ 1.0 billion due June 2030. The notes bear interest at a fixed rate of 1.800 % per annum, with interest paid semi-annually in arrears on June 11 and December 11 of each year, commencing December 11, 2020. The notes may be redeemed in whole or in part at any time at the applicable redemption prices. If a change of control triggering event occurs, the Company must offer to purchase the notes at a purchase price equal to 101 % of their principal amount, plus accrued and unpaid interest, if any, to the date of purchase. Unsecured Revolving Credit Facility: On May 6, 2021, the Company entered into an unsecured revolving credit agreement with Wells Fargo Bank, National Association as administrative agent, swingline lender and issuing lender, U.S. Bank National Association, JPMorgan Chase Bank, N.A. and BofA Securities, Inc. as syndication agents and the lenders party thereto. The revolving credit agreement provides for an unsecured revolving credit facility with an aggregate principal commitment amount at any time outstanding of up to $ 750.0 million with an uncommitted increase option of an additional $ 375.0 million upon the satisfaction of certain conditions. On April 17, 2023, the Company entered into a first amendment (Amendment) to the Company’s $ 750.0 million unsecured revolving credit agreement. The Amendment provided for, among other things (i) the replacement of London Interbank Offered Rate (LIBOR) with Term Secured Overnight Financing Rate (SOFR) and Daily Simple Singapore Overnight Rate Average (SORA) for the Eurocurrency Rate for U.S. Dollars and Singapore Dollars, including applicable credit spread adjustments and relevant SOFR benchmark provisions, (ii) permitting two one-year extension options to be exercised at any anniversary, (iii) removing the change in debt ratings notice requirement, (iv) shortening the notice period requirements for Base Rate Loans to allow for same day notice, and (v) increasing the number of permitted Interest Periods from 8 to 15 . The unsecured revolving line of credit bears interest, at the Company’s election, at either a Base Rate plus margin of 0.0 % to 0.150 % or the Adjusted Term SOFR, Adjusted Daily Simple Risk-Free Rate (RFR) or Eurocurrency Rate plus margin of 0.575 % to 1.150 %. A variable fee of 0.050 % to 0.100 % is paid for the availability of this credit line. Extensions of credit under the facility may be made in the form of revolving loans, swingline loans, and letters of credit. The lending commitments under the agreement are scheduled to expire on May 6, 2026, at which time the Company will be required to pay in full all obligations then outstanding. As of October 27, 2024, and October 29, 2023, the Company had no outstanding borrowings from this facility. Debt Covenants: The Company is required by certain covenants in its debt agreements to maintain specified levels of financial ratios and financial position. As of October 27, 2024, the Company was in compliance with all covenants. Interest Payments: Total interest paid in the last three fiscal years is as follows: In millions Interest Payments 2024 $ 70.3 2023 57.1 2022 57.0 Note M Stock-Based Compensation The Company issues stock options, restricted stock units, restricted shares, and deferred stock units as part of its stock incentive plans for employees and nonemployee directors. Stock-based compensation expense for fiscal years 2024, 2023, and 2022, was $ 23.2 million, $ 24.1 million, and $ 24.9 million, respectively. As of October 27, 2024, there was $ 15.4 million of total unrecognized compensation expense from stock-based compensation arrangements granted under the plans. This compensation is expected to be recognized over a weighted-average period of approximately 1.8 years. During fiscal years 2024, 2023, and 2022, cash received from stock option exercises was $ 40.7 million, $ 12.0 million, and $ 79.8 million, respectively. Shares issued for option exercises, restricted stock units, restricted shares, and deferred stock units may be either authorized but unissued shares or shares of treasury stock. The number of shares available for future grants was 8.2 million at October 27, 2024, 10.1 million at October 29, 2023, and 11.1 million at October 30, 2022. 64 Table of Contents Stock Options: The Company’s policy is to grant options with the exercise price equal to the market price of the common stock on the date of grant. Options typically vest over four years and expire ten years after the date of the grant. A reconciliation of the number of options outstanding and exercisable as of October 27, 2024, is: Shares (in thousands) Weighted-average Exercise Price Weighted-average Remaining Contractual Term (Years) Aggregate Intrinsic Value (in thousands) Stock Options Outstanding at October 29, 2023 16,384 $ 37.61 Granted 1,757 31.46 Exercised ( 1,827 ) 24.28 Forfeited ( 61 ) 42.74 Expired ( 259 ) 37.94 Stock Options Outstanding at October 27, 2024 15,994 $ 38.43 4.4 $ 5,547 Stock Options Exercisable at October 27, 2024 12,641 $ 38.51 3.3 $ 5,451 The weighted-average grant date fair value of stock options granted and the total intrinsic value of options exercised are: Fiscal Year Ended In thousands, except per share amounts October 27, 2024 October 29, 2023 October 30, 2022 Weighted-average Grant Date Fair Value $ 5.95 $ 10.06 $ 7.09 Intrinsic Value of Exercised Options 16,259 6,350 109,745 The fair value of each option award is calculated on the date of grant using the Black-Scholes valuation model utilizing the following weighted-average assumptions: Fiscal Year Ended October 27, 2024 October 29, 2023 October 30, 2022 Risk-free Interest Rate 4.1 % 3.5 % 1.6 % Dividend Yield 3.6 % 2.4 % 2.4 % Stock Price Volatility 21.5 % 21.1 % 20.4 % Expected Option Life 7.5 years 7.4 years 7.5 years As part of the annual valuation process, the Company reassesses the appropriateness of the inputs used in the valuation models. The Company establishes the risk-free interest rate using U.S. Treasury yields as of the grant date. The dividend yield is based on the dividend rate approved by the Company’s Board of Directors and the stock price on the grant date. The expected volatility assumption is based on historical volatility. The expected life assumption is based on an analysis of past exercise behavior by option holders. In performing the valuations for option grants, the Company has not stratified option holders as exercise behavior has historically been consistent across all employees. Restricted Stock Units: Restricted stock units are valued equal to the market price of the common stock on the date of the grant and generally vest after three years . These awards accumulate dividend equivalents, which are provided as additional units and are subject to the same vesting requirements as the underlying grant. A reconciliation of the restricted stock units as of October 27, 2024, is: Shares (in thousands) Weighted- average Grant Date Fair Value Weighted-average Remaining Contractual Term (Years) Aggregate Intrinsic Value (in thousands) Restricted Stock Units Outstanding at October 29, 2023 723 $ 45.59 Granted 394 31.39 Dividend Equivalents 29 34.94 Vested ( 245 ) 44.78 Forfeited ( 18 ) 43.63 Restricted Stock Units Outstanding at October 27, 2024 882 $ 39.22 1.3 $ 27,391 The weighted-average grant date fair value of restricted stock units granted, the total fair value of restricted stock units granted, and the fair value of restricted stock units that have vested are: Fiscal Year Ended In thousands, except per share amounts October 27, 2024 October 29, 2023 October 30, 2022 Weighted-average Grant Date Fair Value $ 31.39 $ 45.96 $ 44.14 Fair Value of Restricted Stock Units Granted 12,355 10,889 15,980 Fair Value of Restricted Stock Units Vested 10,988 8,466 1,893 65 Table of Contents Restricted Shares : Restricted shares awarded to nonemployee directors annually on February 1 are subject to a restricted period which expires the date of the Company’s next annual stockholders' meeting. Newly elected directors receive a prorated award of restricted shares of the Company's common stock, which expires on the date of the Company's second succeeding annual stockholders' meeting. A reconciliation of the restricted shares as of October 27, 2024, is: Shares (in thousands) Weighted- average Grant Date Fair Value Restricted Shares Outstanding at October 29, 2023 44 $ 44.14 Granted 54 30.89 Vested ( 35 ) 45.34 Forfeited ( 9 ) 34.44 Restricted Shares Outstanding at October 27, 2024 53 $ 31.51 The weighted-average grant date fair value of restricted shares granted, the total fair value of restricted shares granted, and the fair value of shares that have vested are: Fiscal Year Ended In thousands, except per share amounts October 27, 2024 October 29, 2023 October 30, 2022 Weighted-average Grant Date Fair Value $ 30.89 $ 44.14 $ 47.11 Fair Value of Restricted Shares Granted 1,680 1,920 1,760 Fair Value of Restricted Shares Vested 1,600 1,760 1,760 Deferred Stock Units : Nonemployee directors can elect to receive all or a portion of their annual retainer in the form of non-forfeitable deferred stock units which vest immediately. The deferred stock units accumulate dividend equivalents, which are provided as additional units. Each deferred stock unit represents the right to receive one share of the Company’s common stock following the completion of the director’s service. During fiscal 2024, the Company granted 13 thousand units, credited dividend equivalents of 4 thousand units, and distributed 15 thousand units, which had a weighted-average fair value on the grant date of $ 33.22 , $ 32.15 , and $ 18.42 per share, respectively. As of October 27, 2024, 121 thousand units were outstanding, which had a weighted-average fair value on the grant date of $ 39.51 per share and an aggregate intrinsic fair value of $ 3.7 million. Note N Income Taxes The components of the Provision for Income Taxes are as follows: Fiscal Year Ended In thousands October 27, 2024 October 29, 2023 October 30, 2022 Current U.S. Federal $ 110,928 $ 161,016 $ 67,638 State 17,002 20,166 20,054 Foreign 15,203 7,576 13,185 Total Current 143,133 188,758 100,877 Deferred U.S. Federal 74,461 23,221 164,091 State 14,868 8,602 13,638 Foreign ( 1,659 ) ( 29 ) ( 729 ) Total Deferred 87,670 31,794 177,000 Total Provision for Income Taxes $ 230,803 $ 220,552 $ 277,877 The Company has elected to treat global intangible low-taxed income (GILTI) as a period cost. 66 Table of Contents Deferred Income Taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the deferred income tax liabilities and assets are as follows: In thousands October 27, 2024 October 29, 2023 Deferred Tax Liabilities Goodwill and Intangible Assets $ ( 556,263 ) $ ( 477,282 ) Tax over Book Depreciation and Basis Differences ( 211,554 ) ( 233,802 ) Other, net ( 39,618 ) ( 33,105 ) Deferred Tax Assets Pension and Other Post-retirement Benefits 50,078 42,952 Employee Compensation Related Liabilities 70,339 65,958 Marketing and Promotional Accruals 9,833 16,972 Inventory 6,853 46,856 Other, net 84,733 75,562 Net Deferred Tax (Liabilities) Assets $ ( 585,599 ) $ ( 495,889 ) Reconciliation of the statutory federal income tax rate to the Company’s effective tax rate is as follows: Fiscal Year Ended October 27, 2024 October 29, 2023 October 30, 2022 U.S. Statutory Rate 21.0 % 21.0 % 21.0 % State Taxes on Income, Net of Federal Tax Benefit 2.6 2.5 2.4 Stock-based Compensation ( 0.1 ) ( 0.1 ) ( 1.5 ) Foreign-derived Intangible Income Deduction — ( 1.3 ) ( 0.4 ) All Other, net ( 1.2 ) ( 0.3 ) 0.2 Effective Tax Rate 22.3 % 21.8 % 21.7 % As of October 27, 2024, the Company had $ 362.6 million of undistributed earnings from non-U.S. subsidiaries. The Company maintains all earnings as permanently reinvested. Accordingly, no additional income taxes have been provided for withholding tax, state tax, or other taxes. Total income taxes paid during fiscal years 2024, 2023, and 2022 were $ 186.4 million, $ 205.0 million, and $ 93.1 million, respectively. Fiscal year 2024 included amounts paid for the purchase of federal transferable energy credits. The changes in unrecognized tax benefits, excluding interest and penalties, for fiscal years 2024 and 2023 are as follows: In thousands Balance as of October 30, 2022 $ 19,520 Tax Positions Related to the Current Period Increases 3,876 Tax Positions Related to Prior Periods Increases 2,131 Decreases ( 1,708 ) Settlements ( 811 ) Decreases Related to a Lapse of Applicable Statute of Limitations ( 3,881 ) Balance as of October 29, 2023 $ 19,127 Tax Positions Related to the Current Period Increases 3,151 Tax Positions Related to Prior Periods Increases 1,449 Decreases ( 443 ) Settlements ( 2,341 ) Decreases Related to a Lapse of Applicable Statute of Limitations ( 3,183 ) Balance as of October 27, 2024 $ 17,760 Unrecognized tax benefits, including interest and penalties, are recorded in Other Long-term Liabilities on the Consolidated Statements of Financial Position. If recognized as of October 27, 2024, these benefits would impact the Company’s effective tax rate by $ 15.9 million compared to $ 17.0 million as of October 29, 2023. The Company includes accrued interest and penalties related to uncertain tax positions in Provision for Income Taxes, with immaterial expenses included during fiscal 2024, 2023, and 2022. The amount of accrued interest and penalties at October 27, 2024 and October 29, 2023, associated with unrecognized tax benefits was $ 2.3 million and $ 2.4 million, respectively. 67 Table of Contents Tax Examinations: The Company is regularly audited by federal, state, and foreign taxing authorities. The IRS concluded its examination of fiscal 2021 in the second quarter of fiscal 2023. The IRS placed the Company in the Bridge phase of the Compliance Assurance Process (CAP) for fiscal years 2020 and 2023. In this phase, the IRS will not accept any disclosures, conduct any reviews, or provide any assurances. The Company has elected to participate in CAP for fiscal years through 2025. The objective of CAP is to contemporaneously work with the IRS to achieve federal tax compliance and resolve all or most of the issues prior to filing of the tax return. The Company may elect to continue participating in CAP for future tax years; the Company may withdraw from the program at any time. The Company is in various stages of audit by several state taxing authorities on a variety of fiscal years, as far back as 2015. While it is reasonably possible that one or more of these audits may be completed within the next 12 months and the related unrecognized tax benefits may change based on the status of the examinations, as of October 27, 2024, it was not possible to reasonably estimate the effect of any amount of such change to previously recorded uncertain tax positions. The Company is subject to various examinations by foreign tax authorities. With limited exceptions, the Company is no longer subject to foreign tax examinations for fiscal years prior to 2018 for material jurisdictions. Tax Legislation: The Inflation Reduction Act of 2022 (IRA) was signed into law on August 16, 2022. The IRA made several changes to the U.S. tax code, including a 15% corporate minimum tax which applied to the Company beginning in fiscal year 2024 and did not have a material impact on the provision for income taxes or financial statements. The Organization for Economic Co-operation and Development created a Pillar Two Framework, which generally provides for a minimum effective tax rate of 15%. The Company is evaluating the potential impact on future fiscal periods, pending legislative adoption by individual countries. Note O Earnings Per Share Data The reported net earnings attributable to the Company were used when computing basic and diluted earnings per share. Diluted earnings per share was calculated using the treasury stock method. The shares used as the denominator for those computations are as follows: Fiscal Year Ended In thousands October 27, 2024 October 29, 2023 October 30, 2022 Basic Weighted-average Shares Outstanding 548,129 546,421 544,918 Dilutive Potential Common Shares 703 2,562 4,648 Diluted Weighted-average Shares Outstanding 548,832 548,982 549,566 Antidilutive Potential Common Shares 17,878 6,834 1,915 Note P Segment Reporting The Company develops, processes, and distributes a wide array of food products in a variety of markets. The Company reports its results in the following three segments: Retail, Foodservice, and International, which are consistent with how the Company’s chief operating decision maker (CODM) assesses performance and allocates resources. The Retail segment consists primarily of the processing, marketing, and sale of food products sold predominantly in the retail market in the United States. This segment also includes the results from the Company’s MegaMex Foods, LLC joint venture. The Foodservice segment consists primarily of the processing, marketing, and sale of food products for foodservice, convenience store, and commercial customers located in the United States. 68 Table of Contents The International segment processes, markets, and sells Company products internationally. This segment also includes the results from the Company’s international joint ventures, international equity method investments, and international royalty arrangements. Financial measures for each of the Company’s reportable segments are set forth below. Intersegment sales are eliminated in consolidation and are not reviewed when evaluating segment performance. The Company does not allocate deferred compensation, non-recurring expenses associated with the Transform and Modernize initiative, investment income, interest expense, or interest income to its segments when measuring performance. The Company also retains various other income and expenses at the corporate level. Equity in Earnings of Affiliates is included in segment profit; however, earnings attributable to the Company’s corporate venturing investments and noncontrolling interests are excluded. These items are included below as Net Unallocated Expense and Noncontrolling Interest when reconciling to Earnings Before Income Taxes. The Company is an integrated enterprise, characterized by substantial intersegment cooperation, cost allocations, and sharing of assets. Therefore, the Company does not represent that these segments, if operated independently, would report the profit and other financial information shown below. The Company’s CODM reviews assets at a consolidated level and does not use assets by segment to evaluate performance or allocate resources. Therefore, the Company does not disclose assets by segment. In thousands Fiscal Year Ended October 27, 2024 October 29, 2023 October 30, 2022 Net Sales Retail $ 7,374,149 $ 7,749,039 $ 7,987,598 Foodservice 3,845,118 3,639,492 3,691,408 International 701,529 721,479 779,799 Total Net Sales $ 11,920,797 $ 12,110,010 $ 12,458,806 Segment Profit Retail $ 562,768 $ 577,690 $ 721,832 Foodservice 596,292 595,682 547,686 International 92,084 55,234 107,642 Total Segment Profit $ 1,251,144 $ 1,228,606 $ 1,377,161 Net Unallocated Expense 215,304 214,482 99,297 Noncontrolling Interest ( 407 ) ( 653 ) 239 Earnings Before Income Taxes $ 1,035,434 $ 1,013,472 $ 1,278,103 Depreciation and Amortization Retail $ 140,103 $ 145,690 $ 135,824 Foodservice 78,949 74,370 69,577 International 19,151 15,627 16,072 Corporate 19,553 17,623 14,413 Total Depreciation and Amortization $ 257,756 $ 253,311 $ 235,885 The Company’s products primarily consist of meat and other food products. Total revenue contributed by classes of similar products are: Fiscal Year Ended In thousands October 27, 2024 October 29, 2023 October 30, 2022 Perishable $ 8,548,802 $ 8,511,795 $ 8,737,486 Shelf-stable 3,371,995 3,598,215 3,721,320 Total Net Sales $ 11,920,797 $ 12,110,010 $ 12,458,806 Perishable includes fresh meats, frozen items, refrigerated meal solutions, bacon, sausages, hams, guacamole, and other items that require refrigeration. Shelf-stable includes canned luncheon meats, nut butters, snack nuts, chili, shelf-stable microwaveable meals, hash, stews, tortillas, salsas, tortilla chips, nutritional food supplements, and other items that do not require refrigeration. The Company has a global presence selling its products in all 50 U.S. states as well as several major international markets. No individual foreign country is material to the consolidated results. Additionally, the Company’s long-lived assets located in foreign countries are not significant. Total net sales attributed to the U.S. and all foreign countries in total are: Fiscal Year Ended In thousands October 27, 2024 October 29, 2023 October 30, 2022 U.S. $ 11,283,978 $ 11,515,094 $ 11,776,883 Foreign 636,819 594,915 681,923 Total Net Sales $ 11,920,797 $ 12,110,010 $ 12,458,806 69 Table of Contents Sales to Walmart Inc. and its subsidiaries (Walmart) represented 15.6 % or $ 2.0 billion, 15.5 % or $ 2.0 billion, and 15.6 % or $ 2.1 billion of the Company’s consolidated gross sales less returns and allowances in fiscal 2024, 2023, and 2022, respectively. Walmart is a customer for the Company’s Retail and International segments. Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.