HORMEL FOODS CORP /DE/ 10-Q

Item 1. FINANCIAL STATEMENTS HORMEL FOODS CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS Unaudited Quarter Ended In thousands, except per share amounts January 26, 2025 January 28, 2024 Net Sales $ 2,988,813 $ 2,996,911 Cost of Products Sold 2,513,581 2,488,178 Gross Profit 475,232 508,733 Selling, General, and Administrative 263,013 240,386 Equity in Earnings of Affiliates 16,111 16,091 Operating Income 228,330 284,438 Interest and Investment Income 9,204 19,434 Interest Expense 19,462 18,326 Earnings Before Income Taxes 218,073 285,547 Provision for Income Taxes 47,543 66,818 Net Earnings 170,530 218,729 Less: Net Earnings (Loss) Attributable to Noncontrolling Interest ( 45 ) ( 134 ) Net Earnings Attributable to Hormel Foods Corporation $ 170,575 $ 218,863 Net Earnings Per Share Basic $ 0.31 $ 0.40 Diluted $ 0.31 $ 0.40 Weighted-average Shares Outstanding Basic 549,460 547,020 Diluted 549,854 547,920 See Notes to the Consolidated Financial Statements 3 Table of Contents HORMEL FOODS CORPORATION CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Unaudited Quarter Ended In thousands January 26, 2025 January 28, 2024 Net Earnings $ 170,530 $ 218,729 Other Comprehensive Income (Loss), Net of Tax: Foreign Currency Translation ( 27,078 ) 11,459 Pension and Other Benefits 2,366 2,129 Derivatives and Hedging 15,862 5,206 Equity Method Investments 473 2,884 Total Other Comprehensive Income (Loss) ( 8,377 ) 21,678 Comprehensive Income 162,153 240,407 Less: Comprehensive Income (Loss) Attributable to Noncontrolling Interest ( 490 ) 75 Comprehensive Income Attributable to Hormel Foods Corporation $ 162,643 $ 240,332 See Notes to the Consolidated Financial Statements 4 Table of Contents HORMEL FOODS CORPORATION CONSOLIDATED STATEMENTS OF FINANCIAL POSITION Unaudited In thousands, except share and per share amounts January 26, 2025 October 27, 2024 Assets Cash and Cash Equivalents $ 840,398 $ 741,881 Short-term Marketable Securities 26,016 24,742 Accounts Receivable (Net of Allowance for Doubtful Accounts of $ 3,703 at January 26, 2025, and $ 3,712 at October 27, 2024) 767,804 817,908 Inventories 1,516,716 1,576,300 Taxes Receivable 50,747 50,380 Prepaid Expenses and Other Current Assets 64,386 35,265 Total Current Assets 3,266,068 3,246,476 Goodwill 4,916,874 4,923,487 Intangible Assets 1,727,655 1,732,705 Pension Assets 201,350 205,964 Investments in Affiliates 710,433 719,481 Other Assets 406,315 411,889 Property, Plant, and Equipment Land 73,291 75,159 Buildings 1,480,204 1,503,519 Equipment 2,900,493 2,905,058 Construction in Progress 270,214 228,726 Less: Allowance for Depreciation ( 2,549,414 ) ( 2,517,734 ) Net Property, Plant, and Equipment 2,174,789 2,194,728 Total Assets $ 13,403,483 $ 13,434,729 Liabilities and Shareholders’ Investment Accounts Payable $ 709,190 $ 735,604 Accrued Expenses 63,833 66,380 Accrued Marketing Expenses 138,674 108,156 Employee-related Expenses 230,037 283,490 Interest and Dividends Payable 173,889 175,941 Taxes Payable 8,999 21,916 Current Maturities of Long-term Debt 7,187 7,813 Total Current Liabilities 1,331,810 1,399,299 Long-term Debt Less Current Maturities 2,850,206 2,850,944 Pension and Post-retirement Benefits 382,022 379,891 Deferred Income Taxes 594,788 589,366 Other Long-term Liabilities 206,216 211,219 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; Shares Issued as of January 26, 2025: 549,785,483 Shares Issued as of October 27, 2024: 548,605,305 8,054 8,037 Additional Paid-in Capital 602,887 571,178 Accumulated Other Comprehensive Loss ( 271,263 ) ( 263,331 ) Retained Earnings 7,688,663 7,677,537 Hormel Foods Corporation Shareholders’ Investment 8,028,342 7,993,420 Noncontrolling Interest 10,101 10,590 Total Shareholders’ Investment 8,038,442 8,004,011 Total Liabilities and Shareholders’ Investment $ 13,403,483 $ 13,434,729 See Notes to the Consolidated Financial Statement s 5 Table of Contents HORMEL FOODS CORPORATION CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ INVESTMENT Unaudited Quarter Ended January 28, 2024 Hormel Foods Corporation Shareholders Common Stock Treasury Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Non- controlling Interest Total Shareholders’ Investment In thousands, except per share amounts Shares Amount Shares Amount Balance at October 29, 2023 546,599 $ 8,007 — $ — $ 506,179 $ 7,492,952 $ ( 272,252 ) $ 4,100 $ 7,738,985 Net Earnings (Loss) 218,863 ( 134 ) 218,729 Other Comprehensive Income (Loss) 21,469 209 21,678 Contribution from Noncontrolling Interest 280 280 Stock-based Compensation Expense 4,444 4,444 Exercise of Stock Options/Restricted Shares 997 14 18,883 18,898 Declared Dividends – $ 0.2825 per Share 209 ( 154,658 ) ( 154,449 ) Balance at January 28, 2024 547,596 $ 8,021 — $ — $ 529,715 $ 7,557,157 $ ( 250,783 ) $ 4,455 $ 7,848,566 Quarter Ended January 26, 2025 Hormel Foods Corporation Shareholders Common Stock Treasury Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Non- controlling Interest Total Shareholders’ Investment In thousands, except per share amounts Shares Amount Shares Amount Balance at October 27, 2024 548,605 $ 8,037 — $ — $ 571,178 $ 7,677,537 $ ( 263,331 ) $ 10,590 $ 8,004,011 Net Earnings (Loss) 170,575 ( 45 ) 170,530 Other Comprehensive Income (Loss) ( 7,932 ) ( 445 ) ( 8,377 ) Stock-based Compensation Expense 5,454 5,454 Exercise of Stock Options/Restricted Shares 1,180 17 25,980 25,997 Declared Dividends – $ 0.2900 per Share 275 ( 159,448 ) ( 159,173 ) Balance at January 26, 2025 549,785 $ 8,054 — $ — $ 602,887 $ 7,688,663 $ ( 271,263 ) $ 10,101 $ 8,038,442 See Notes to the Consolidated Financial Statements 6 Table of Contents HORMEL FOODS CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS Unaudited Quarter Ended In thousands January 26, 2025 January 28, 2024 Operating Activities Net Earnings $ 170,530 $ 218,729 Adjustments to Reconcile to Net Cash Provided by (Used in) Operating Activities: Depreciation and Amortization 65,872 64,067 Equity in Earnings of Affiliates ( 16,111 ) ( 16,091 ) Distributions Received from Equity Method Investees 19,894 15,731 Provision for Deferred Income Taxes ( 70 ) ( 179 ) Non-cash Investment Activities ( 2,547 ) ( 12,612 ) Stock-based Compensation Expense 5,454 4,444 Loss (Gain) on Sale of Business 10,800 — Operating Lease Cost 9,580 8,675 Other Non-cash, Net 1,140 5,814 Changes in Operating Assets and Liabilities: Decrease (Increase) in Accounts Receivable 57,194 68,094 Decrease (Increase) in Inventories 55,606 103,894 Decrease (Increase) in Prepaid Expenses and Other Assets ( 8,101 ) 1,533 Increase (Decrease) in Pension and Post-retirement Benefits 10,167 10,756 Increase (Decrease) in Accounts Payable and Accrued Expenses ( 56,325 ) ( 132,229 ) Increase (Decrease) in Net Income Taxes Payable ( 13,877 ) 63,353 Net Cash Provided by (Used in) Operating Activities 309,206 403,980 Investing Activities Net Sale (Purchase) of Securities ( 1,387 ) ( 964 ) Proceeds from Sale of Business 13,643 — Purchases of Property, Plant, and Equipment ( 72,167 ) ( 47,210 ) Proceeds from Sales of Property, Plant, and Equipment 35 8 Proceeds from (Purchases of) Affiliates and Other Investments ( 1,393 ) — Proceeds from Company-owned Life Insurance 936 11 Net Cash Provided by (Used in) Investing Activities ( 60,333 ) ( 48,154 ) Financing Activities Repayments of Long-term Debt and Finance Leases ( 2,202 ) ( 2,249 ) Dividends Paid on Common Stock ( 154,980 ) ( 150,294 ) Proceeds from Exercise of Stock Options 14,120 18,898 Proceeds from Noncontrolling Interest — 280 Net Cash Provided by (Used in) Financing Activities ( 143,063 ) ( 133,365 ) Effect of Exchange Rate Changes on Cash ( 7,294 ) 4,218 Increase (Decrease) in Cash and Cash Equivalents 98,516 226,680 Cash and Cash Equivalents at Beginning of Year 741,881 736,532 Cash and Cash Equivalents at End of Period $ 840,398 $ 963,212 Supplemental Non-cash Financing and Investing Activities: Purchases of property, plant, and equipment included in accounts payable $ 20,090 $ 6,576 See Notes to the Consolidated Financial Statements 7 Table of Contents HORMEL FOODS CORPORATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Unaudited NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation: The accompanying unaudited consolidated financial statements of Hormel Foods Corporation (the Company) have been prepared in accordance with accounting principles generally accepted in the United States (U.S.) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include certain information and footnotes required by U.S. generally accepted accounting principles (GAAP) for comprehensive financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results and cash flows for the interim period are not necessarily indicative of the results that may be expected for the full year. These statements should be reviewed in conjunction with the consolidated financial statements and associated notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended October 27, 2024. The significant accounting policies used in preparing these interim consolidated financial statements are consistent with those described in Note A - Summary of Significant Accounting Policies to the consolidated financial statements in the Form 10-K. The Company has determined there have been no material changes in the Company’s significant accounting policies, including estimates and assumptions, as disclosed in its Annual Report on Form 10-K for the fiscal year ended October 27, 2024. 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. Reclassifications: Certain reclassifications of previously reported amounts have been made to conform to the current year presentation. Accounting Changes and Recent Accounting Pronouncements: 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 allows the disclosure of 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 the Company's fiscal year ending October 26, 2025, and interim periods for the fiscal year ending October 25, 2026. 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 the Company's fiscal year ending October 25, 2026. The Company is currently assessing the impact of adopting the updated provisions. 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 guidance is effective for the Company's annual period ending October 29, 2028, and interim periods for the fiscal year ending October 28, 2029. The disclosure updates are required to be applied prospectively with the option for retrospective application. The Company is currently assessing the impact 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. 8 Table of Contents NOTE B - ACQUISITIONS AND DIVESTITURES Divestitures: On October 18, 2024, the Company sold its equity interests in Hormel Health Labs, LLC (Hormel Health Labs) and related assets to Lyons Health Labs Holdco, LLC for $ 24.5 million. The divestiture resulted in a pre-tax gain of $ 3.9 million, net of transaction costs, which was recognized in Selling, General, and Administrative. Results of operations for Hormel Health Labs were reflected within the Foodservice segment through the date of divestiture. On November 18, 2024, the Company sold its equity interests in a non-core sow operation, Mountain Prairie, LLC, and related assets to Chaparral Ranches, LLC for $ 13.6 million. The divestiture resulted in a pre-tax loss of $ 11.3 million, including transaction costs, which was recognized in Selling, General, and Administrative. Results of operations were primarily reflected within the Retail segment through the date of divestiture. NOTE C - GOODWILL AND INTANGIBLE ASSETS Goodwill: The change in the carrying amount of goodwill for the three months ended January 26, 2025, is: In thousands Retail Foodservice International Total Balance at October 27, 2024 $ 2,916,796 $ 1,748,355 $ 258,336 $ 4,923,487 Foreign Currency Translation — — ( 6,612 ) ( 6,612 ) Balance at January 26, 2025 $ 2,916,796 $ 1,748,355 $ 251,724 $ 4,916,874 Intangible Assets: The intangible assets by type are: January 26, 2025 October 27, 2024 In thousands Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Definite-lived Intangible Assets Customer Relationships $ 143,139 $ ( 70,991 ) $ 72,148 $ 168,239 $ ( 93,536 ) $ 74,703 Other Definite-lived Intangibles 59,241 ( 21,170 ) 38,071 59,241 ( 20,107 ) 39,134 Trade Names/Trademarks 6,210 ( 6,210 ) — 6,210 ( 5,996 ) 214 Foreign Currency Translation — ( 4,588 ) ( 4,588 ) — ( 4,458 ) ( 4,458 ) Total Definite-lived Intangible Assets $ 208,590 $ ( 102,959 ) $ 105,631 $ 233,690 $ ( 124,097 ) $ 109,593 Indefinite-lived Intangible Assets Brands/Trade Names/Trademarks $ 1,629,582 $ 1,629,582 Other Indefinite-lived Intangibles 184 184 Foreign Currency Translation ( 7,743 ) ( 6,655 ) Total Indefinite-lived Intangible Assets 1,622,024 1,623,112 Total Intangible Assets $ 1,727,655 $ 1,732,705 Amortization expense on intangible assets is as follows: Quarter Ended In thousands January 26, 2025 January 28, 2024 Amortization Expense $ 3,830 $ 4,463 9 Table of Contents 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 NOTE D - INVESTMENTS IN AFFILIATES Equity in Earnings of Affiliates consists of: Quarter Ended In thousands % Owned January 26, 2025 January 28, 2024 MegaMex Foods, LLC (1) 50 % $ 9,303 $ 8,091 Other Equity Method Investments (2) Various ( 25 - 45 %) 6,808 8,000 Total Equity in Earnings of Affiliates $ 16,111 $ 16,091 (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: Quarter Ended In thousands January 26, 2025 January 28, 2024 Dividends $ 19,894 $ 15,731 The Company recognized basis differences of $ 324.8 million upon the purchase of a minority interest in PT Garudafood Putra Putri Jaya Tbk (Garudafood) and $ 21.3 million associated with the formation of MegaMex Foods, LLC. As of January 26, 2025, basis differences of $ 307.8 million, which includes the impact of foreign currency translation, and $ 8.2 million were remaining for Garudafood and MegaMex Foods, LLC, respectively. The basis differences associated with definite-lived assets are being amortized through Equity in Earnings of Affiliates over the associated useful lives. Based on quoted market prices, the fair value of the common stock held in Garudafood was $ 273.1 million as of January 24, 2025. NOTE E - INVENTORIES Principal components of inventories are: In thousands January 26, 2025 October 27, 2024 Finished Products $ 842,802 $ 881,295 Raw Materials and Work-in-Process 406,911 427,834 Operating Supplies 144,939 147,333 Maintenance Materials and Parts 122,064 119,837 Total Inventories $ 1,516,716 $ 1,576,300 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 10 Table of Contents 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 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 K - 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 the quarters ended January 26, 2025, and January 28, 2024. Volume: The Company’s outstanding contracts related to its commodity hedging programs include: In millions January 26, 2025 October 27, 2024 Corn 33.5 bushels 29.2 bushels Lean Hogs 194.0 pounds 175.6 pounds Natural Gas 3.2 MMBtu 4.2 MMBtu Diesel Fuel 4.7 gallons 4.0 gallons Fair Value of Derivatives: The gross fair values of the Company’s derivative instruments designated as hedges are: January 26, 2025 October 27, 2024 In thousands Assets Liabilities Assets Liabilities Gross Fair Value of Commodity Contracts $ 16,678 $ ( 3,507 ) $ 9,851 $ ( 12,638 ) Counterparty and Collateral Netting Offset (1) ( 4,154 ) 3,507 ( 1,785 ) 12,638 Amounts Recognized on Consolidated Statements of Financial Position (2) $ 12,524 $ — $ 8,066 $ — (1) Per the terms of the Company's master netting arrangements, the gross fair value of the Company's commodity contracts was offset by the obligation to return net cash collateral of $ 0.6 million (including cash of $ 0.4 million and $ 0.3 million of realized loss) as of January 26, 2025 and the right to reclaim net cash collateral of $ 10.9 million (including cash of $ 26.5 million and $ 15.6 million of realized loss) as of October 27, 2024. (2) The Company's commodity contracts are reflected in Prepaid Expenses and Other Current Assets. 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 January 26, 2025 October 27, 2024 Commodity Contracts Accounts Payable (1) $ 2,217 $ ( 2,902 ) (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. 11 Table of Contents Accumulated Other Comprehensive Loss Impact: As of January 26, 2025, the Company included in AOCL pre-tax hedging gains of $ 12.4 million on commodity contracts and gains of $ 11.3 million related to interest rate settled positions. The Company expects to recognize the majority of the gains 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 (losses) recognized in AOCL related to the Company’s derivative instruments are: Quarter Ended In thousands January 26, 2025 January 28, 2024 Commodity Contracts $ 19,134 $ ( 5,613 ) Excluded Component (1) ( 87 ) 1,156 (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: Location on Consolidated Statements of Operations Quarter Ended In thousands January 26, 2025 January 28, 2024 Commodity Contracts Cost of Products Sold $ ( 2,141 ) $ ( 11,601 ) Interest Rate Contracts Interest Expense 247 247 See Note H - Accumulated Other Comprehensive Loss for the after-tax impact of these gains or losses on Net Earnings. 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: Quarter Ended In thousands January 26, 2025 January 28, 2024 Net Earnings Attributable to Hormel Foods Corporation $ 170,575 $ 218,863 Cash Flow Hedges - Commodity Contracts Gain (Loss) Reclassified from AOCL ( 2,141 ) ( 11,601 ) Amortization of Excluded Component from Options ( 208 ) ( 1,156 ) Fair Value Hedges - Commodity Contracts Gain (Loss) on Commodity Futures (1) 1,704 3,595 Total Gain (Loss) on Commodity Contracts (2) ( 645 ) ( 9,163 ) Cash Flow Hedges - Interest Rate Contracts Gain (Loss) Reclassified from AOCL 247 247 Fair Value Hedge - Interest Rate Contracts Amortization of Loss Due to Discontinuance of Fair Value Hedge (3) — ( 3,125 ) Total Gain (Loss) on Interest Rate Contracts (4) 247 ( 2,878 ) Total Gain (Loss) Recognized in Earnings $ ( 398 ) $ ( 12,040 ) (1) Represents gains or losses on commodity contracts designated as fair value hedges that were closed during the quarters ended January 26, 2025, and January 28, 2024, 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. (2) Total Gain (Loss) on Commodity Contracts is recognized in earnings through Cost of Products Sold. (3) Represents the fair value hedging adjustment amortized through earnings. (4) Total Gain (Loss) on Interest Rate Contracts is recognized in earnings through Interest Expense. 12 Table of Contents NOTE G - PENSION AND OTHER POST-RETIREMENT BENEFITS Net periodic cost of defined benefit plans consists of: Pension Benefits Quarter Ended In thousands January 26, 2025 January 28, 2024 Service Cost $ 11,973 $ 9,053 Interest Cost 17,646 18,336 Expected Return on Plan Assets ( 21,737 ) ( 19,377 ) Amortization of Prior Service Cost (Credit) 319 ( 221 ) Recognized Actuarial Loss (Gain) 3,014 3,316 Net Periodic Cost $ 11,215 $ 11,107 Post-retirement Benefits Quarter Ended In thousands January 26, 2025 January 28, 2024 Service Cost $ 42 $ 41 Interest Cost 2,480 2,896 Amortization of Prior Service Cost (Credit) 2 2 Recognized Actuarial Loss (Gain) ( 40 ) ( 317 ) Net Periodic Cost $ 2,484 $ 2,622 Non-service cost components of net pension and post-retirement benefit cost are presented within Interest and Investment Income. 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 27, 2024 $ ( 70,794 ) $ ( 187,325 ) $ 1,991 $ ( 7,204 ) $ ( 263,331 ) Unrecognized Gains (Losses) — — Gross ( 26,634 ) ( 119 ) 19,048 ( 930 ) ( 8,635 ) Tax Effect — — ( 4,634 ) — ( 4,634 ) Reclassification into Net Earnings — — — — Gross — 3,295 (1) 1,894 (2) 1,404 (3) 6,593 Tax Effect — ( 810 ) ( 446 ) — ( 1,256 ) Change Net of Tax ( 26,634 ) 2,366 15,862 473 ( 7,932 ) Balance at January 26, 2025 $ ( 97,427 ) $ ( 184,959 ) $ 17,853 $ ( 6,730 ) $ ( 271,263 ) (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. See Note F - Derivatives and Hedging for additional information. (3) Included in Equity in Earnings of Affiliates. 13 Table of Contents NOTE I - FAIR VALUE MEASUREMENTS Accounting guidance 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 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. 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. Fair Value Measurements at January 26, 2025 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) Assets at Fair Value Short-term Marketable Securities $ 26,016 $ 5,299 $ 20,717 $ — Other Trading Securities 212,390 — 212,390 — Commodity Derivatives 16,699 14,527 2,172 — Total Assets at Fair Value $ 255,105 $ 19,827 $ 235,279 $ — Liabilities at Fair Value Deferred Compensation $ 62,813 $ — $ 62,813 $ — Commodity Derivatives 3,544 3,348 197 — Total Liabilities at Fair Value $ 66,358 $ 3,348 $ 63,010 $ — Fair Value Measurements at 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) Assets at Fair Value 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 $ 244,361 $ 14,710 $ 229,652 $ — 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 $ — 14 Table of Contents The following methods and assumptions were used to estimate the fair value of the financial assets and liabilities above: 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 guaranteed minimum rate. Investments held by the rabbi trust generated gains of $ 2.7 million and $ 11.5 million for the quarters ended January 26, 2025 and January 28, 2024, 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. The Company’s financial assets and liabilities include cash and cash equivalents, accounts receivable, accounts payable, and other liabilities, for which carrying value approximates fair value due to their short-term maturities. 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 $ 2.4 billion as of January 26, 2025, and $ 2.5 billion as of October 27, 2024. See Note K - Long-term Debt and Other Borrowing Arrangements for additional information. The Company measures certain nonfinancial assets and liabilities including goodwill, intangible assets, and property, plant, and equipment at fair value on a nonrecurring basis. There were no material fair value remeasurements of nonfinancial assets or liabilities during the quarters ended January 26, 2025, and January 28, 2024. NOTE J - COMMITMENTS AND CONTINGENCIES There were no material changes outside the ordinary course of business during the quarter ended January 26, 2025, to the purchase commitments and other commitments and guarantees last disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended October 27, 2024. 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, regulators, 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 15 Table of Contents 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 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). The Class Plaintiffs alleged, 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 plaintiffs seek treble damages, injunctive relief, pre- and post-judgment interest, costs, and attorneys’ fees. Since the original filing, certain plaintiffs 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, and believes it has valid defenses, to avoid the uncertainty, risk, expense, and distraction of continued litigation, the Company executed settlement agreements providing for payments by the Company to the Class Plaintiffs and one Non-Class Direct-Action Plaintiff. For the Class Plaintiffs, the total settlement amount of $ 11.8 million was recorded as Accrued Expenses on the Consolidated Statements of Financial Position in the second quarter of fiscal 2024 and was paid during the second half of fiscal 2024. For the Non-Class Direct-Action Plaintiff, the settlement amount of $ 0.2 million was recorded as Accrued Expenses on the Consolidated Statements of Financial Position in the first quarter of fiscal 2025 and is expected to be paid in fiscal 2025. All settlement amounts were recorded in Selling, General, and Administrative in the Consolidated Statements of Operations. The Company continues to defend against the claims. Except as noted above, 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. Turkey Antitrust Litigation Beginning in December 2019, a series of 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 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 Company recorded the agreed-upon settlement amount as Accrued Expenses on the Consolidated Statements of Financial Position and in Selling, General, and Administrative in the Consolidated Statements of Operations for the third quarter of fiscal 2024. The Company expects to pay the agreed-upon settlement in the second quarter of fiscal 2025. 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 16 Table of Contents 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, agreeing to pay $ 13.5 million and provide certain data and information. The Company recorded the agreed-upon settlement amount as Accrued Expenses on the Consolidated Statements of Financial Position and in Selling, General, and Administrative in the Consolidated Statements of Operations for the third quarter of fiscal 2024. The settlement has been approved by the Court and was paid in February 2025, subsequent to the end of the first quarter. Tax Proceedings: Two current Company subsidiaries organized in Brazil, Clean Field Comércio de Produtos de Alimentícios LTDA and Omamori Indústria de Alimentos LTDA, along with a former subsidiary, Talis Distribuidora de Alimentos LTDA, which are reported in the International segment, 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 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 recorded any liability relating to these assessments and cannot reasonably estimate any reasonably possible loss at this time. NOTE K - LONG-TERM DEBT AND OTHER BORROWING ARRANGEMENTS Long-term Debt consists of: In thousands January 26, 2025 October 27, 2024 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 500,000 500,000 Unamortized Discount on Senior Notes ( 6,477 ) ( 6,687 ) Unamortized Debt Issuance Costs ( 14,914 ) ( 15,628 ) Finance Lease Liabilities 25,475 27,541 Other Financing Arrangements 3,309 3,530 Total Debt 2,857,393 2,858,756 Less: Current Maturities of Long-term Debt 7,187 7,813 Long-term Debt Less Current Maturities $ 2,850,206 $ 2,850,944 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 $ 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 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. 17 Table of Contents 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 January 26, 2025, and October 27, 2024, 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 January 26, 2025, the Company was in compliance with all covenants. NOTE L - INCOME TAXES The Company’s tax provision is determined using an estimated annual effective tax rate and adjusted for discrete taxable events that may occur during the quarter. The effects of tax legislation are recognized in the period in which the law is enacted. The deferred tax assets and liabilities are remeasured using enacted tax rates expected to apply to taxable income in the years the related temporary differences are anticipated to reverse. The Company’s effective tax rate for the quarter ended January 26, 2025, was 21.8 % compared to 23.4 % for the corresponding period a year ago. The Company benefited primarily from the purchase of federal transferable energy tax credits in the first quarter of fiscal 2025. Unrecognized tax benefits, including interest and penalties, are primarily recorded in Other Long-term Liabilities. If recognized as of January 26, 2025, these benefits would impact the Company’s effective tax rate by $ 16.7 million compared to $ 17.7 million as of January 28, 2024. The Company includes accrued interest and penalties related to uncertain tax positions in Provision for Income Taxes, with immaterial expenses included during the quarters ended January 26, 2025, and January 28, 2024. The amount of accrued interest and penalties associated with unrecognized tax benefits was $ 2.6 million at January 26, 2025, and $ 2.7 million at January 28, 2024. Tax Examinations: The Company is regularly audited by federal, state, and foreign taxing authorities. The IRS concluded its examination of fiscal 2022 in the second quarter of fiscal 2024. The IRS placed the Company in the Bridge phase of the Compliance Assurance Process (CAP) for fiscal years 2023 and 2024. 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 through fiscal year 2026. 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 18 Table of Contents unrecognized tax benefits may change based on the status of the examinations, as of January 26, 2025, 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. See Note J - Commitments and Contingencies for additional information. Tax Legislation: The Organization for Economic Cooperation and Development published a framework for Pillar Two of the Global Anti-Base Erosion Rules which was designed to coordinate participating jurisdictions in updating the international tax system to ensure that large multinational companies pay a minimum tax of 15%. Many countries have enacted, or begun the process of enacting, laws based on the Pillar Two framework. The Company considered the applicable tax laws in relevant jurisdictions and concluded the impact of Pillar Two was not material to the tax provision for the quarter ended January 26, 2025. The Company will continue to evaluate the impact of such legislative changes but does not expect the new tax laws to have a material effect on the Company’s consolidated financial statements in future reporting periods. NOTE M - 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: Quarter Ended In thousands January 26, 2025 January 28, 2024 Basic Weighted-average Shares Outstanding 549,460 547,020 Dilutive Potential Common Shares 395 900 Diluted Weighted-average Shares Outstanding 549,854 547,920 Antidilutive Potential Common Shares 19,778 17,892 NOTE N - 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. 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, gains or losses on the sale of businesses, investment income, interest expense, or interest income to its segments when measuring performance. The Company also retains various other income and expense items 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. 19 Table of Contents Quarter Ended In thousands January 26, 2025 January 28, 2024 Net Sales Retail $ 1,890,133 $ 1,911,272 Foodservice 930,185 913,087 International 168,495 172,552 Total Net Sales $ 2,988,813 $ 2,996,911 Segment Profit Retail $ 119,147 $ 149,505 Foodservice 138,826 150,164 International 20,845 20,031 Total Segment Profit 278,818 319,700 Net Unallocated Expense 60,700 34,020 Noncontrolling Interest ( 45 ) ( 134 ) Earnings Before Income Taxes $ 218,073 $ 285,547 The Company’s products primarily consist of meat and other food products. Total revenue contributed by classes of similar products are: Quarter Ended In thousands January 26, 2025 January 28, 2024 Perishable $ 2,151,822 $ 2,106,571 Shelf-stable 836,991 890,340 Total Net Sales $ 2,988,813 $ 2,996,911 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, and other items that do not require refrigeration.