UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

 

FORM 11-K

 

ý  ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

For the fiscal year ended October 25, 2003

 

OR

 

o  TRANSITION REPORT PURSUANT TO SECTION 15(D) OF THE

SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

For the transition period from                  to               

 

Commission file number   1-2402

 

A.           Full title of the plan and the address of the plan, if different from that of the issuer named below:

 

Hormel Foods Corporation Joint Earnings Profit Sharing Plan

 

B.             Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:

 

Hormel Foods Corporation

1 Hormel Place

Austin, MN   55912

 

507-437-5611

 

 



 

Contents

 

Report of Independent Auditors

 

Financial Statements

Statements of Net Assets Available for Benefits

Statements of Changes in Net Assets Available for Benefits

Notes to Financial Statements

 

Schedule

Schedule H, Line 4i – Schedule of Assets (Held at End of Year)

 



 

Report of Independent Auditors

 

The Employee Benefits Committee

Hormel Foods Corporation

Joint Earnings Profit Sharing Plan

 

We have audited the accompanying statements of net assets available for benefits of Hormel Foods Corporation Joint Earnings Profit Sharing Plan as of October 25, 2003 and October 26, 2002, and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

 

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan at October 25, 2003 and October 26, 2002, and changes in its net assets available for benefits for the years then ended, in conformity with accounting principles generally accepted in the United States.

 

Our audits were performed for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying supplemental schedule of assets (held at end of year) as of October 25, 2003 is presented for the purpose of additional analysis and is not a required part of the financial statements but is supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental schedule is the responsibility of the Plan’s management. The supplemental schedule has been subjected to the auditing procedures applied in our audits of the financial statements and, in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole.

 

 

 

/s/  Ernst & Young LLP

 

 

 

 

 

April 16, 2004

 

 

1



 

Hormel Foods Corporation
Joint Earnings Profit Sharing Plan

Statements of Net Assets Available for Benefits

 

 

 

October 25,
2003

 

October 26,
2002

 

Assets

 

 

 

 

 

Cash and cash equivalents

 

$

327,455

 

$

 

Investments

 

191,957,690

 

187,069,359

 

Contributions receivable from Hormel Foods Corporation

 

8,886,711

 

7,893,250

 

Net assets available for benefits

 

$

201,171,856

 

$

194,962,609

 

 

See accompanying notes.

 

2



 

Hormel Foods Corporation
Joint Earnings Profit Sharing Plan

Statements of Changes in Net Assets Available for Benefits

 

 

 

Year Ended

 

 

 

October 25,
2003

 

October 26,
2002

 

Additions:

 

 

 

 

 

Contributions from Hormel Foods Corporation

 

$

8,920,634

 

$

7,914,282

 

Contributions from participants

 

98,934

 

97,900

 

Interest and dividend income

 

2,787,592

 

2,743,880

 

Assets transferred to Plan

 

327,411

 

 

 

 

12,134,571

 

10,756,062

 

 

 

 

 

 

 

Deductions:

 

 

 

 

 

Distributions

 

9,585,800

 

9,859,084

 

Administrative expenses

 

160,336

 

169,704

 

 

 

9,746,136

 

10,028,788

 

 

 

 

 

 

 

Net realized and unrealized appreciation in fair value of investments

 

3,820,812

 

2,197,886

 

Net additions

 

6,209,247

 

2,925,160

 

Net assets available for benefits at beginning of year

 

194,962,609

 

192,037,449

 

Net assets available for benefits at end of year

 

$

201,171,856

 

$

194,962,609

 

 

See accompanying notes.

 

3



 

Hormel Foods Corporation

Joint Earnings Profit Sharing Plan

 

Notes to Financial Statements

 

October 25, 2003

 

1. Significant Accounting Policies

 

The accounting records of the Hormel Foods Corporation Joint Earnings Profit Sharing Plan (the Plan) are maintained on the accrual basis.

 

Marketable securities are stated at fair value. Mutual funds are valued based on quoted market prices. For pooled separate accounts, fair value represents the net asset value of the fund shares, which is calculated based on the valuation of the funds’ underlying investments at fair value at the end of the year. Securities which are traded on a national securities exchange are valued at the last reported sales price on the last business day of the year; investments traded in the over-the-counter market and listed securities for which no sale was reported on that date are valued at the average of the last reported bid and ask prices. The fair value of units in insurance company general accounts is reported at contract value. The Plan’s insurance company general account contract is fully benefit responsive. Benefit responsiveness is defined as the extent to which a contract’s terms and the Plan permit or require participant-initiated withdrawals at contract value.

 

All costs and expenses incurred in connection with the operation of the Plan with regard to the purchase and sale of investments and certain professional fees are paid by the Plan.

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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.

 

2. Description of the Plan

 

The following description of the Plan provides only general information. Participants should refer to the plan agreement for a more complete description of the Plan’s provisions.

 

The Plan is a defined contribution plan which covers substantially all employees exempt from the minimum wage and maximum hour provisions of the Fair Labor Standards Act of 1938 or salaried employees subject to the minimum wage and

 

4



 

maximum hour provisions of the Fair Labor Standards Act of 1938. The amount contributed by Hormel Foods Corporation (the Company) each year is discretionary, authorized by the Board of Directors. The amount available to all participants is allocated in proportion of individual recognized compensation for the plan year to the recognized compensation for the plan year for all such eligible participants. The Plan contains a diversified selection of funds intended to satisfy the Internal Revenue Code (the Code) Section 404(c). Certain restrictions exist, as defined in the plan document, for investing of funds in other contribution accounts.

 

Plan participants may elect to make after-tax contributions to the Thrift account in amounts not to exceed statutory limits. Effective with the 2001 plan year, participants may invest in self-directed brokerage accounts.

 

Employees may also direct the Company to contribute their annual joint earnings allocation, or a portion thereof, to a Founders’ Fund investment fund within the Plan. The Company contributes a 50% additional contribution not to exceed $200 per year (discretionary limit) for Founders’ Fund contributions.

 

Employee and employer contributions are always 100% vested in the participants’ plan account.

 

The Company has the right under the plan agreement to terminate the Plan. In the event of termination of the Plan, the assets of the Plan shall be distributed to the participants.

 

Effective at the end of fiscal year 2003, the employer pension accounts maintained under West Central Turkey Inc.’s 401(k) Plan were merged into the Hormel Foods Corporation JEPST Plan.

 

Effective December 31, 2002 and August 1, 2003, eligible employees under Diamond Crystal Brands and Century Foods Inc., respectively, became covered under the Plan. Assets were not merged into the Plan, but employees were given the option to rollover their investments under the previous plans.

 

Effective April 27, 2003, JOTS International, Inc. and JOTS LLC eligible employees may now participate in the Plan.

 

5



 

3. Investments

 

Interest rates paid by the investment contracts are determined at the time of purchase. The crediting interest rate on the Fixed Income Fund was 5% and 5.75% as of October 25, 2003 and October 26, 2002, respectively. The average yield on the Plan’s investment contract for the years ended October 25, 2003 and October 26, 2002 was 5% and 5.75%, respectively. Fair value of the investment contract was estimated to be approximately 97% and 95% of contract value as of October 25, 2003 and October 26, 2002, respectively. Fair value was estimated based upon discounting future cash flows under the contracts at current interest rates for similar investments with comparable terms.

 

During the years ended October 25, 2003 and October 26, 2002, the Plan’s investments (including investments bought, sold, as well as held during the year) appreciated in fair value by $3,820,812 and $2,197,886, respectively, as follows:

 

 

 

2003

 

2002

 

Net appreciation (depreciation) in fair value during the year:

 

 

 

 

 

Nonpooled separate account

 

$

(3,684,894

)

$

8,958,718

 

Mutual funds

 

1,063,643

 

(410,603

)

Pooled separate accounts

 

6,442,063

 

(6,350,229

)

 

 

$

3,820,812

 

$

2,197,886

 

 

The Plan is authorized to invest up to 100% of the fair value of its net assets available for benefits in the common stock of the Company. Such investment totaled approximately 42% at October 25, 2003 and 48% at October 26, 2002.

 

The fair value of individual investments that represent 5% or more of the Plan’s net assets is as follows:

 

6



 

 

 

October 25,
2003

 

October 26,
2002

 

Nonpooled separate accounts:

 

 

 

 

 

Hormel Foods Corporation common stock

 

$

84,617,418

 

$

94,010,715

 

IBT Money Market Fund

 

1,014,574

 

1,100,960

 

Total nonpooled separate accounts

 

85,631,992

 

95,111,675

 

 

 

 

 

 

 

Insurance company general accounts:

 

 

 

 

 

Massachusetts Mutual Life Insurance Company:

 

 

 

 

 

Fixed Income Fund

 

53,421,446

 

53,212,013

 

 

 

 

 

 

 

Pooled separate accounts:

 

 

 

 

 

Massachusetts Mutual Life Insurance Company:

 

 

 

 

 

Aggressive Growth Fund

 

11,177,531

 

 

*

 


*Investments did not equal 5% or more of the Plan’s net assets at plan year-end.

 

4. Nonparticipant-Directed Investments

 

Information about the net assets and the significant components of the changes in net assets relating to the nonparticipant-directed investments (a subaccount within the nonpooled separate account) is as follows:

 

 

 

October 25,
2003

 

October 26,
2002

 

Net assets:

 

 

 

 

 

Hormel Foods Corporation common stock

 

$

24,917,434

 

$

25,138,442

 

IBT Money Market Fund

 

298,763

 

276,320

 

Total nonparticipant-directed investments

 

$

25,216,197

 

$

25,414,762

 

 

 

 

Year Ended

 

 

 

October 25,
2003

 

October 26,
2002

 

Changes in net assets:

 

 

 

 

 

Contributions

 

$

1,416,813

 

$

1,429,466

 

Net (depreciation) appreciation

 

(855,300

)

2,091,054

 

Benefits paid to participants

 

(759,881

)

(1,133,441

)

Administrative expenses

 

(197

)

(401

)

 

 

$

(198,565

)

$

2,386,678

 

 

7



 

5. Income Tax Status

 

The Plan has received a determination letter from the Internal Revenue Service dated September 6, 1996, stating that the Plan is qualified under Section 401(a) of the Code and, therefore, the related trust is exempt from taxation. Once qualified, the Plan is required to operate in conformity with the Code to maintain its qualification. The Plan was amended subsequent to the IRS determination letter. The plan administrator believes the Plan is being operated in compliance with the applicable requirements of the Code and, therefore, believes that the Plan is qualified and the related trust is tax-exempt.

 

8



 

Hormel Foods Corporation

Joint Earnings Profit Sharing Plan

EIN: 41-0319970

Plan: 030

 

Schedule H, Line 4i – Schedule of Assets (Held at End of Year)

 

October 25, 2003

 

Identity of Issue, Borrower,
Lessor, or Similar Party

 

Description of
Investment, Including
Maturity Date, Rate of
Interest, Par, or
Maturity Value

 

Cost

 

Current
Value

 

 

 

 

 

 

 

 

 

Nonpooled separate account:

 

 

 

 

 

 

 

Hormel Stock Fund*

 

5,881,700 units

 

$

59,865,049

 

$

85,631,992

 

 

 

 

 

 

 

 

 

Insurance company general accounts:

 

 

 

 

 

 

 

Massachusetts Mutual Life Insurance Company:*

 

 

 

 

 

 

 

Fixed Income Fund

 

3,953,819 units

 

 

53,421,446

 

 

 

 

 

 

 

 

 

Pooled separate accounts:

 

 

 

 

 

 

 

Massachusetts Mutual Life Insurance Company:*

 

 

 

 

 

 

 

Aggressive Growth Fund

 

1,071,853 units

 

 

11,177,531

 

Conservative Growth Fund

 

320,956 units

 

 

3,604,377

 

Moderate Growth Fund

 

699,900 units

 

 

7,716,417

 

High Yield Fund

 

13,523 units

 

 

1,688,141

 

MM Small Core Value Fund

 

39,338 units

 

 

4,306,872

 

MM Aggressive Growth Fund

 

43,118 units

 

 

2,033,206

 

MM Indexed Equity Fund

 

11,329 units

 

 

2,975,736

 

MM Large Cap Value Fund

 

21,561 units

 

 

2,786,017

 

MM Core Bond Fund

 

1,066 units

 

 

1,375,085

 

Conservative Journey Fund

 

1,674 units

 

 

197,673

 

MM Fundamental Value Fund

 

43,504 units

 

 

4,017,621

 

Total pooled separate accounts

 

 

 

 

41,878,676

 

 

 

 

 

 

 

 

 

Mutual funds:

 

 

 

 

 

 

 

Manager’s Special Equity Fund

 

475,364 units

 

 

4,475,847

 

American Funds Euro Pacific Fund

 

218,668 units

 

 

2,601,772

 

American Funds Growth R4 Fund

 

138,965 units

 

 

1,407,769

 

Total mutual funds

 

 

 

 

8,485,388

 

 

 

 

 

 

 

 

 

Self-directed brokerage assets

 

 

 

 

2,540,188

 

Total assets held for investment purposes at end of year

 

 

 

$

59,865,049

 

$

191,957,690

 

 


*Indicates a party in interest to the Plan.

 

9



 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on their behalf by the undersigned hereunto duly authorized.

 

 

 
HORMEL FOODS CORPORATION
JOINT EARNINGS PROFIT SHARING
PLAN

 

 

 

 

Date:

April 22, 2004

 

By

/s/ M. J. McCOY

 

 

 

M. J. McCOY

 

 

Executive Vice President
and Chief Financial Officer

 

10



 

EXHIBIT INDEX

 

Exhibit
Number
 
Description

23

 

Consent of Independent Auditors

 

11