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SEGMENT REPORTING | 6 Months Ended
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Apr. 28, 2019
Segment Reporting [Abstract] |
SEGMENT REPORTING | 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 four segments: Grocery Products, Refrigerated Foods, Jennie-O Turkey Store, and International & Other. At the beginning of fiscal 2019, the Hormel Deli Solutions division combined all deli businesses, including the Jennie-O Turkey Store deli division, into one division within the Refrigerated Foods segment. In addition, the ingredients business was realigned from the Grocery Products segment to the Refrigerated Foods segment. Fiscal 2018 segment results have been adjusted to reflect these changes. The Grocery Products segment consists primarily of the processing, marketing, and sale of shelf-stable food products sold predominantly in the retail market, along with the sale of nutritional and private label shelf-stable products to retail, foodservice, and industrial customers. This segment also includes the results from the Company’s MegaMex joint venture. The Refrigerated Foods segment consists primarily of the processing, marketing, and sale of branded and unbranded pork, beef, and poultry products for retail, foodservice, deli, and commercial customers. The Jennie-O Turkey Store segment consists primarily of the processing, marketing, and sale of branded and unbranded turkey products for retail, foodservice, and fresh product customers. The International & Other segment includes Hormel Foods International, which manufactures, markets, and sells Company products internationally. This segment also includes the results from the Company’s international joint ventures and royalty arrangements. Intersegment sales are recorded at prices that approximate cost and are eliminated in the Consolidated Statements of Operations. The Company does not allocate investment income, interest expense, and 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 noncontrolling interests are excluded. These items are included below as Net Unallocated Expense and Noncontrolling Interest when reconciling to Earnings Before Income Taxes. Sales and profits for each of the Company’s reportable segments and reconciliation to earnings before income taxes are set forth below. The Company is an integrated enterprise, characterized by substantial intersegment cooperation, cost allocations, and sharing of assets. Therefore, the Company does not represent these segments, if operated independently, would report the profit and other financial information shown below.
| Three Months Ended |  | Six Months Ended
(in thousands) | April 28, 2019 |  | April 29, 2018 |  | April 28, 2019 |  | April 29, 2018
Sales to Unaffiliated Customers |  |  |  |  |  |  |  |  |  |  |
Grocery Products | $ | 635,319 |  |  | $ | 621,492 |  |  | $ | 1,242,144 |  |  | $ | 1,225,069 |
Refrigerated Foods | 1,257,884 |  |  | 1,245,066 |  |  | 2,536,631 |  |  | 2,499,703 |
Jennie-O Turkey Store | 305,256 |  |  | 303,875 |  |  | 626,490 |  |  | 626,635 |
International & Other | 146,285 |  |  | 160,135 |  |  | 299,834 |  |  | 310,454 |
Total | $ | 2,344,744 |  |  | $ | 2,330,568 |  |  | $ | 4,705,099 |  |  | $ | 4,661,861 |
Intersegment Sales |  |  |  |  |  |  |
Grocery Products | $ | — |  |  | $ | 10 |  |  | $ | 22 |  |  | $ | 14 |
Refrigerated Foods | 3,273 |  |  | 1,386 |  |  | 5,451 |  |  | 3,550 |
Jennie-O Turkey Store | 30,050 |  |  | 25,539 |  |  | 58,861 |  |  | 50,228 |
International & Other | — |  |  | — |  |  | — |  |  | — |
Total | 33,323 |  |  | 26,935 |  |  | 64,334 |  |  | 53,792 |
Intersegment elimination | (33,323 | ) |  | (26,935 | ) |  | (64,334 | ) |  | (53,792 | )
Total | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Net Sales |  |  |  |  |  |  |
Grocery Products | $ | 635,319 |  |  | $ | 621,502 |  |  | $ | 1,242,166 |  |  | $ | 1,225,083 |
Refrigerated Foods | 1,261,157 |  |  | 1,246,452 |  |  | 2,542,082 |  |  | 2,503,253 |
Jennie-O Turkey Store | 335,306 |  |  | 329,414 |  |  | 685,351 |  |  | 676,863 |
International & Other | 146,285 |  |  | 160,135 |  |  | 299,834 |  |  | 310,454 |
Intersegment elimination | (33,323 | ) |  | (26,935 | ) |  | (64,334 | ) |  | (53,792 | )
Total | $ | 2,344,744 |  |  | $ | 2,330,568 |  |  | $ | 4,705,099 |  |  | $ | 4,661,861 |
Segment Profit |  |  |  |  |  |  |
Grocery Products | $ | 104,499 |  |  | $ | 93,206 |  |  | $ | 199,796 |  |  | $ | 190,751 |
Refrigerated Foods | 158,088 |  |  | 166,920 |  |  | 320,681 |  |  | 324,451 |
Jennie-O Turkey Store | 17,749 |  |  | 32,073 |  |  | 55,653 |  |  | 69,797 |
International & Other | 14,325 |  |  | 20,850 |  |  | 39,303 |  |  | 45,505 |
Total segment profit | 294,661 |  |  | 313,049 |  |  | 615,433 |  |  | 630,504 |
Net unallocated expense | (23,178 | ) |  | 16,304 |  |  | (9,287 | ) |  | 28,698 |
Noncontrolling interest | 207 |  |  | 138 |  |  | 301 |  |  | 242 |
Earnings Before Income Taxes | $ | 318,046 |  |  | $ | 296,883 |  |  | $ | 625,021 |  |  | $ | 602,048 |
Revenue has been disaggregated into the categories below to show how sales channels affect the nature, amount, timing, and uncertainty of revenue and cash flows for the second quarter and first six months of fiscal 2019 and 2018.
| Three Months Ended |  | Six Months Ended
(in thousands) | April 28, 2019 |  | April 29, 2018 |  | April 28, 2019 |  | April 29, 2018
U.S. Retail | $ | 1,255,507 |  |  | $ | 1,257,474 |  |  | $ | 2,508,822 |  |  | $ | 2,557,146 |
U.S. Foodservice | 716,407 |  |  | 674,244 |  |  | 1,406,312 |  |  | 1,331,347 |
U.S. Deli | 212,715 |  |  | 220,478 |  |  | 463,991 |  |  | 431,475 |
International | 160,115 |  |  | 178,372 |  |  | 325,974 |  |  | 341,893 |
Total | $ | 2,344,744 |  |  | $ | 2,330,568 |  |  | $ | 4,705,099 |  |  | $ | 4,661,861 |
The Company’s products primarily consist of meat and other food products. Perishable includes fresh meats, frozen items, refrigerated meal solutions, sausages, hams, guacamole, and bacon (excluding JOTS products). Shelf-stable includes canned luncheon meats, peanut butter, chilies, shelf-stable microwaveable meals, hash, stews, meat spreads, flour and corn tortillas, salsas, tortilla chips, and other items that do not require refrigeration. The Poultry category is composed primarily of JOTS products. The Miscellaneous category primarily consists of nutritional food products and supplements, dessert and drink mixes, and industrial gelatin products. The amount of total revenues contributed by classes of similar products for the second quarter and first six months of fiscal 2019 and 2018 are as follows:
| Three Months Ended |  | Six Months Ended
(in thousands) | April 28, 2019 |  | April 29, 2018 |  | April 28, 2019 |  | April 29, 2018
Perishable | $ | 1,317,455 |  |  | $ | 1,304,008 |  |  | $ | 2,658,607 |  |  | $ | 2,622,881 |
Shelf-stable | 444,831 |  |  | 444,748 |  |  | 881,728 |  |  | 869,341 |
Poultry | 427,663 |  |  | 427,669 |  |  | 869,055 |  |  | 871,111 |
Miscellaneous | 154,795 |  |  | 154,143 |  |  | 295,709 |  |  | 298,528 |
Total | $ | 2,344,744 |  |  | $ | 2,330,568 |  |  | $ | 4,705,099 |  |  | $ | 4,661,861 |

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI http://asc.fasb.org/topic&trid=2134510 + Details
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