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Derivatives and Hedging (Tables) | 12 Months Ended
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Oct. 30, 2022
Derivatives and hedging |
Schedule of fair values of derivative instruments | The fair values of the Company’s derivative instruments designated as hedges are:
| Location on Consolidated |  | Gross Fair Value(1)
In thousands | Statements of Financial Position |  | October 30, 2022 |  | October 31, 2021
Commodity Contracts | Other Current Assets |  | $ | 13,504 |  |  | $ | 21,798 |
(1) Amounts represent the gross fair value of commodity derivative assets and liabilities. 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 in the Consolidated Statements of Financial Position. The gross asset position as of October 30, 2022, is offset by the obligation to return cash collateral of $1.3 million contained within the master netting arrangement. The gross asset position as of October 31, 2021, is offset by the obligation to return cash collateral of $10.8 million. See Note I - Fair Value Measurements for a discussion of these net amounts as reported in the Consolidated Statements of Financial Position.
Schedule of fair value hedge assets (liabilities) | The carrying amount of the Company’s fair value hedge assets (liabilities) are:
| Location on Consolidated |  | Carrying Amount of the Hedged Assets/(Liabilities)
In thousands | Statements of Financial Position |  | October 30, 2022 |  | October 31, 2021
Commodity Contracts | Accounts Payable(1) |  | $ | 5,725 |  |  | $ | 3,432 |
Interest Rate Contracts | Long-term Debt - Less Current Maturities(2) |  | (430,050) |  |  | — |
(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 30, 2022, the carrying amount of the "2024 Notes" included a cumulative fair value hedging adjustment of $20.0 million from discontinued hedges.
Schedule of gains or losses (before tax) related to derivative instruments | The effect of AOCL for gains or losses (before tax) related to the Company's derivative instruments are:
|  | Gain/(Loss) Recognized in AOCL(1) |  | Location on Consolidated Statements of Operations |  | Gain/(Loss) Reclassified from AOCL into Earnings(1)
In thousands |  | Fiscal Year Ended |  |  | Fiscal Year Ended
Cash Flow Hedges: |  | October 30, 2022 |  | October 31, 2021 |  |  | October 30, 2022 |  | October 31, 2021
Commodity Contracts |  | $ | 56,371 |  |  | $ | 59,143 |  |  | Cost of Products Sold |  | $ | 57,592 |  |  | $ | 31,044 |
Excluded Component(2) |  | (4,748) |  |  | 1,078 |  |  |  |  | — |  |  | — |
Interest Rate Contracts |  | — |  |  | 14,864 |  |  | Interest Expense |  | 988 |  |  | 399 |
(1) See Note H - Accumulated Other Comprehensive Loss for the after-tax impact of these gains or losses on Net Earnings. (2) Represents the time value of corn options excluded from the assessment of effectiveness for which the difference between changes in fair value and periodic amortization is recorded in AOCL. Consolidated Statements of Operations Impact: The effect on the Consolidated Statements of Operations for gains or losses (before tax) related to the Company's derivative instruments are:
| Consolidated Statement of Operations Impact
| Fiscal Year Ended
In thousands | October 30, 2022 |  | October 31, 2021 |  | October 25, 2020
Net Earnings Attributable to Hormel Foods Corporation | $ | 999,987 |  |  | $ | 908,839 |  |  | $ | 908,082 |
Cash Flow Hedges - Commodity Contracts |  |  |  |  |
Gain (Loss) Reclassified from AOCL | 55,350 |  |  | 31,787 |  |  | (37,834) |
Amortization of Excluded Component from Options | (4,369) |  |  | (3,033) |  |  | — |
Gain (Loss) Due to Discontinuance of Cash Flow Hedges(1) | 2,242 |  |  | (743) |  |  | — |
Fair Value Hedges - Commodity Contracts |  |  |  |  |
Gain (Loss) on Commodity Futures(2) | (18,122) |  |  | (28,078) |  |  | 13,192 |
Total Gain (Loss) on Commodity Contracts(3) | $ | 35,101 |  |  | $ | (67) |  |  | $ | (24,642) |
Cash Flow Hedges - Interest Rate Locks |  |  |  |  |
Amortization of Gain on Interest Rate Locks | 988 |  |  | 399 |  |  | — |
Fair Value Hedge - Interest Rate Swap |  |  |  |  |
Gain (Loss) on Interest Rate Swap | 928 |  |  | — |  |  | — |
Amortization of Loss Due to Discontinuance of Fair Value Hedge(4) | (1,923) |  |  | — |  |  | — |
Total Gain (Loss) on Interest Rate Contracts(5) | $ | (7) |  |  | $ | 399 |  |  | $ | — |
Total Gain (Loss) Recognized in Earnings | $ | 35,094 |  |  | $ | 332 |  |  | $ | (24,642) |
(1) In fiscal years ended 2022 and 2021, the Company discontinued hedge accounting related to corn usage deemed to no longer probable to occur resulting in the immediate recognition of gains of $2.2 million (1.0 million bushels) and losses of $0.7 million (2.8 million bushels), respectively. (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 into earnings. (5) Total Loss on Interest Rate Contracts is recognized in earnings through Interest Expense.
Cash Flow Hedges |
Derivatives and hedging |
Schedule of outstanding commodity futures contracts | The Company's outstanding contracts related to its commodity hedging programs include:
| Volume
Commodity Contracts | October 30, 2022 | October 31, 2021
Corn | 34.3 million bushels | 33.1 million bushels
Lean Hogs | 177.5 million pounds | 120.0 million pounds

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