XML 172 R25.htm IDEA: XBRL DOCUMENT
v3.23.1

DERIVATIVES AND HEDGING (Tables) | 6 Months Ended
--- | ---
Apr. 30, 2023
Derivative [Line Items] |
Schedule of fair values of derivative instruments | The fair values of the Company’s derivative instruments designated as hedges are:
|  | Gross Fair Value
in thousands | Location on Consolidated Condensed Statements of Financial Position | April 30, 2023 |  | October 30, 2022
Commodity Contracts(1) | Other Current Assets | $ | (9,833) |  |  | $ | 13,504 |
(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 Condensed Statements of Financial Position. The gross liability position as of April 30, 2023, includes the right to reclaim net cash collateral of $32.1 million contained within the master netting arrangement. The gross asset position as of October 30, 2022, is offset by the obligation to return net cash collateral of $1.3 million. See Note H - Fair Value Measurements for a discussion of these net amounts as reported in the Consolidated Condensed Statements of Financial Position.
Schedule of fair value hedge assets (liabilities) | The carrying amount of the Company's fair value hedged assets (liabilities) are:
|  | Carrying Amount of Hedged Assets/(Liabilities)
in thousands | Location on Consolidated Condensed Statements of Financial Position | April 30, 2023 |  | October 30, 2022
Commodity Contracts | Accounts Payable(1) | $ | 2,448 |  |  | $ | 5,725 |
Interest Rate Contracts | Long-term Debt Less Current Maturities(2) | (436,299) |  |  | (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 April 30, 2023, the carrying amount of the 2024 Notes included a cumulative fair value hedging adjustment of $13.7 million from discontinued hedges.
Schedule of gains or losses related to derivative instruments | The effect on AOCL for gains or losses (before tax) related to the Company's derivative instruments are:
| Gain/(Loss) Recognized in AOCL (1) |  | Gain/(Loss) Reclassified from AOCL into Earnings (1) | Location on Consolidated Statements of Operations
| Quarter Ended |  | Quarter Ended
in thousands | April 30, 2023 |  | May 1, 2022 |  | April 30, 2023 |  | May 1, 2022
Cash Flow Hedges |  |  |  |  |  |  |  |
Commodity Contracts | $ | (23,161) |  |  | $ | 50,331 |  |  | $ | 732 |  |  | $ | 11,269 |  | Cost of Products Sold
Excluded Component (2) | (1,036) |  |  | (2,271) |  |  | — |  |  | — |  |
Interest Rate Contracts | — |  |  | — |  |  | 247 |  |  | 247 |  | Interest Expense
| Gain/(Loss) Recognized in AOCL (1) |  | Gain/(Loss) Reclassified from AOCL into Earnings (1) | Location on Consolidated Statements of Operations
| Six Months Ended |  | Six Months Ended
in thousands | April 30, 2023 |  | May 1, 2022 |  | April 30, 2023 |  | May 1, 2022
Cash Flow Hedges |  |  |  |  |  |  |  |
Commodity Contracts | $ | (31,551) |  |  | $ | 70,611 |  |  | $ | 11,591 |  |  | $ | 19,015 |  | Cost of Products Sold
Excluded Component (2) | (691) |  |  | (3,444) |  |  | — |  |  | — |  |
Interest Rate Contracts | — |  |  | — |  |  | 494 |  |  | 494 |  | Interest Expense
(1) See Note G - 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 Statements of Operations Impact
| Quarter Ended |  | Six Months Ended
in thousands | April 30, 2023 |  | May 1, 2022 |  | April 30, 2023 |  | May 1, 2022
Net Earnings Attributable to Hormel Foods Corporation | $ | 217,239 |  |  | $ | 261,617 |  |  | $ | 434,958 |  |  | $ | 501,188 |
Cash Flow Hedges - Commodity Contracts |  |  |  |  |  |  |
Gain (Loss) Reclassified from AOCL | 732 |  |  | 9,599 |  |  | 11,591 |  |  | 17,345 |
Amortization of Excluded Component from Options | (1,497) |  |  | (1,120) |  |  | (2,909) |  |  | (1,945) |
Gain (Loss) Reclassified from AOCL Due to Discontinuance of Cash Flow Hedges (1) | — |  |  | 1,620 |  |  | — |  |  | 1,620 |
Fair Value Hedges - Commodity Contracts |  |  |  |  |  |  |
Gain (Loss) on Commodity Futures (2) | 1,563 |  |  | (9,757) |  |  | (1,459) |  |  | (13,407) |
Total Gain (Loss) on Commodity Contracts (3) | $ | 798 |  |  | $ | 342 |  |  | $ | 7,223 |  |  | $ | 3,613 |
Cash Flow Hedges - Interest Rate Locks |  |  |  |  |  |  |
Gain (Loss) Reclassified from AOCL | 247 |  |  | 247 |  |  | 494 |  |  | 494 |
Fair Value Hedge - Interest Rate Swap |  |  |  |  |  |  |
Gain (Loss) on Interest Rate Swap | — |  |  | 699 |  |  | — |  |  | 1,491 |
Amortization of Loss Due to Discontinuance of Fair Value Hedge (4) | (3,125) |  |  | — |  |  | (6,250) |  |  | — |
Total Gain (Loss) on Interest Rate Contracts (5) | $ | (2,878) |  |  | $ | 946 |  |  | $ | (5,755) |  |  | $ | 1,985 |
Total Gain (Loss) Recognized in Earnings | $ | (2,080) |  |  | $ | 1,288 |  |  | $ | 1,468 |  |  | $ | 5,598 |
(1) During the second quarter of fiscal 2022, the Company discontinued hedge accounting on 0.6 million bushels of corn usage that was deemed no longer probable to occur. A gain of $1.7 million related to the discontinued hedges and an immaterial loss related to the excluded component from options was reclassified directly into earnings. (2) Represents gains or losses on commodity contracts designated as fair value hedges that were closed during the quarter ended April 30, 2023, 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 Gain (Loss) on Interest Rate Contracts is recognized in earnings through Interest Expense.
Cash Flow Hedges |
Derivative [Line Items] |
Schedule of outstanding commodity futures contracts | The Company's outstanding contracts related to its commodity hedging programs include:
| Volume
in millions | April 30, 2023 |  | October 30, 2022
Corn | 27.5 bushels |  | 34.3 bushels
Lean Hogs | 186.9 pounds |  | 177.5 pounds
Natural Gas | 1.2 MMBtu |  | — MMBtu

X
- Definition Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table. + References No definition available. + Details
Name: | us-gaap_DerivativeLineItems
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition Tabular disclosure of the location and amount of derivative instruments and nonderivative instruments designated as hedging instruments reported before netting adjustments, and the amount of gain (loss) on derivative instruments and nonderivative instruments designated and qualified as hedging instruments. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4E -URI https://asc.fasb.org/extlink&oid=125515794&loc=SL5624181-113959 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4A -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=125515794&loc=SL5618551-113959 Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4C -URI https://asc.fasb.org/extlink&oid=125515794&loc=SL5624171-113959 + Details
Name: | us-gaap_ScheduleOfDerivativeInstrumentsGainLossInStatementOfFinancialPerformanceTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- Definition Tabular disclosure of the location and fair value amounts of derivative instruments (and nonderivative instruments that are designated and qualify as hedging instruments) reported in the statement of financial position. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4B -URI https://asc.fasb.org/extlink&oid=125515794&loc=SL5624163-113959 + Details
Name: | us-gaap_ScheduleOfDerivativeInstrumentsInStatementOfFinancialPositionFairValueTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- Definition Tabular disclosure of derivative liabilities at fair value. + References No definition available. + Details
Name: | us-gaap_ScheduleOfDerivativeLiabilitiesAtFairValueTableTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- Definition Tabular disclosure of the notional amounts of outstanding derivative positions. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 1A -Subparagraph (d) -URI https://asc.fasb.org/extlink&oid=125515794&loc=SL5579245-113959 + Details
Name: | us-gaap_ScheduleOfNotionalAmountsOfOutstandingDerivativePositionsTableTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- Details
Name: | us-gaap_DerivativeInstrumentsGainLossByHedgingRelationshipAxis=us-gaap_CashFlowHedgingMember
Namespace Prefix: |
Data Type: | na
Balance Type: |
Period Type: |