UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 11-K
[X] |
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the fiscal year ended October 27, 2013 |
OR
[ ] |
TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the transition period from __________ to __________ |
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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: |
Jennie-O Turkey Store Retirement Savings 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
Jennie-O Turkey Store Retirement Savings Plan
Audited Financial Statements and Supplemental Schedule
Years Ended October 27, 2013 and October 28, 2012
Contents
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Audited Financial Statements |
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Supplemental Schedule |
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Schedule H, Line 4i Schedule of Assets (Held at End of Year) |
Report of Independent Registered Public Accounting Firm
The Employee Benefits Committee and the Trustees
Jennie-O Turkey Store Retirement Savings Plan
We have audited the accompanying statements of net assets available for benefits of the Jennie-O Turkey Store Retirement Savings Plan (the Plan) as of October 27, 2013 and October 28, 2012, and the related statement of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plans management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (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. We were not engaged to perform an audit of the Plans internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plans internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and 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 27, 2013 and October 28, 2012, and the changes in its net assets available for benefits for the years then ended, in conformity with U.S. generally accepted accounting principles.
Our audits were conducted 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 27, 2013, is presented for purposes of additional analysis and is not a required part of the financial statements but is supplementary information required by the Department of Labors Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. Such information 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
Minneapolis, Minnesota
April 25, 2014
Jennie-O Turkey Store Retirement Savings Plan
Statements of Net Assets Available for Benefits
|
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October 27, |
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October 28, |
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Assets |
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|
|
|
| ||
Investments, at fair value |
|
$ |
143,549,254 |
|
$ |
121,060,921 |
|
Receivables: |
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|
|
|
| ||
Contributions from Jennie-O Turkey Store |
|
153,623 |
|
178,267 |
| ||
Contributions from participants |
|
111,647 |
|
202,986 |
| ||
Promissory notes from participants |
|
10,980,458 |
|
10,115,366 |
| ||
Total receivables |
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11,245,728 |
|
10,496,619 |
| ||
Total assets, at fair value |
|
154,794,982 |
|
131,557,540 |
| ||
|
|
|
|
|
| ||
Liabilities |
|
|
|
|
| ||
Administrative fees payable |
|
|
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67,121 |
| ||
Net assets available for benefits, at fair value |
|
154,794,982 |
|
131,490,419 |
| ||
Adjustment from fair value to contract value for interest in fully benefit-responsive investment contracts |
|
(2,095,162 |
) |
(665,524 |
) | ||
Net assets available for benefits |
|
$ |
152,699,820 |
|
$ |
130,824,895 |
|
See accompanying notes.
Jennie-O Turkey Store Retirement Savings Plan
Statements of Changes in Net Assets Available for Benefits
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Year Ended |
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Year Ended |
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Additions: |
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|
|
|
| ||
Contributions from Jennie-O Turkey Store |
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$ |
8,280,686 |
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$ |
7,680,735 |
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Contributions from participants |
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5,918,752 |
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5,329,032 |
| ||
Employee rollover |
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165,853 |
|
9,618 |
| ||
Investment income |
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3,944,195 |
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3,335,935 |
| ||
Interest income promissory notes receivable |
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415,209 |
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390,468 |
| ||
Total additions |
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18,724,695 |
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16,745,788 |
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|
|
|
| ||
Deductions: |
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|
|
|
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Distributions |
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11,718,667 |
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8,486,993 |
| ||
Administrative expenses |
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300,396 |
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371,179 |
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Total deductions |
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12,019,063 |
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8,858,172 |
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|
|
|
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Net realized and unrealized appreciation in fair value of investments |
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15,169,293 |
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4,596,094 |
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Net additions |
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21,874,925 |
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12,483,710 |
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Net assets available for benefits at beginning of year |
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130,824,895 |
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118,341,185 |
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Net assets available for benefits at end of year |
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$ |
152,699,820 |
|
$ |
130,824,895 |
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See accompanying notes.
Jennie-O Turkey Store Retirement Savings Plan
October 27, 2013
1. Significant Accounting Policies
The accounting records of the Jennie-O Turkey Store Retirement Savings Plan (the Plan) are maintained on the accrual basis.
Investments held by the Plan are stated at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The Plan records financial assets and liabilities at fair value.
The Employee Benefits Committee (the Committee) of Hormel Foods Corporation, the parent company of the Sponsor, is responsible for determining the Plans valuation policies and analyzing information provided by the investment advisors and record keeper that is used to determine the fair value of the Plans investments. The Committee is comprised of officers and a director of Hormel Foods Corporation and reports to the compensation committee of Hormel Foods Corporation. For investments categorized within Level 3 of the fair value hierarchy, the Committee utilizes the record-keeper to obtain information on the fair value of these assets. The record-keeper employs third-party pricing services and obtains selected support from their portfolio managers to determine daily valuations and investment returns. See Note 3 for further discussion of fair value measurements.
In May 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs (ASU 2011-04). ASU 2011-04 amended Accounting Standards Codification 820, Fair Value Measurements and Disclosures (ASC 820), to converge the fair value measurement guidance in U.S. generally accepted accounting principles (GAAP) and International Financial Reporting Standards. Some of the amendments clarify the application of existing fair value measurement requirements, while other amendments change a particular principle in ASC 820. In addition, ASU 2011-04 requires additional fair value disclosures (although certain of these new disclosures will not be required for nonpublic entities). The guidance in ASU 2011-04 has been fully adopted for the plan year ended October 27, 2013. The adoption of this guidance had no material impact on the financial statements.
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.
Jennie-O Turkey Store Retirement Savings Plan
Notes to Financial Statements (continued)
1. Significant Accounting Policies (continued)
The preparation of financial statements in conformity with U.S. GAAP 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.
Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded as earned. Dividends are recorded on the ex-dividend date. Net appreciation includes the Plans gains and losses on investments bought and sold as well as held during the year.
2. Description of the Plan
The following description of the Plan provides only general information. Participants should refer to the Plan document or Summary Plan Description for a more complete description of the Plans provisions.
The Plan is a contributory, defined-contribution plan covering substantially all nonexempt employees of Jennie-O Turkey Store, Inc. (the Company or the Sponsor) who have completed 180 days of continuous service. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended (ERISA). The Plans year-end is the last Sunday of October.
Each year, participants may contribute up to 50% of their pretax annual compensation, subject to Internal Revenue Service (IRS) limitations, as defined in the Plan. An eligible employee who has not made an election to participate shall be deemed a member of the Plan and will automatically contribute 2% to the Plan through payroll deductions. The Companys matching contribution is an amount equal to 50% of the first 2% of pay contributed for the pay period. The Companys fixed contribution to the Plan is an amount equal to 4% of the eligible employees earnings. Participants are eligible to direct the investment of their employee account balance. Forfeitures of terminated employees unvested interests may be used to reduce employer contributions.
The participants employee savings contributions are fully vested immediately. The Companys matching and fixed contributions vest after three years of vesting service.
Jennie-O Turkey Store Retirement Savings Plan
Notes to Financial Statements (continued)
2. Description of the Plan (continued)
Amounts forfeited upon early termination of employment are used either to restore the non-vested accounts of rehired participants or lost distributees, or to reduce future employer contributions. Forfeitures used to reduce employer contributions for the years ended October 27, 2013 and October 28, 2012, were $373,762 and $528,825, respectively. Cumulative forfeited non-vested accounts at October 27, 2013 and October 28, 2012, were $241,284 and $141,319, respectively.
Promissory notes receivable are loans that are recorded at their unpaid principal balance plus any accrued but unpaid interest. Participants may borrow from their account(s) a minimum of $1,000 up to a maximum of $50,000 or 50% of their vested account balances, whichever is less. If a participant has more than one account, the loans shall be deemed to have been made from the accounts in the following sequence: Rollover Account, Employee Savings Account, WCT Employer Contribution Account, and Employer Matching Account.
Loan transactions are treated as transfers from (to) the investment fund to (from) the loan fund. Loan terms range from one year to five years or up to 15 years for the purchase of a primary residence The interest rate is 1% over the prime rate of interest published in The Wall Street Journal on the first business day of the month the loan originates. For the purpose of sharing in any gains or losses of the trust fund, the amount of the accounts will be deemed to have been reduced by the unpaid balance of any outstanding loans. All loan repayments are made through payroll deductions. No allowance for credit losses has been recorded as of October 27, 2013 or October 28, 2012. If a participant ceases to make loan repayments and the plan administrator deems the participant loan to be a distribution, the participant loan balance is reduced and a benefit payment is recorded.
Upon retirement, death, or termination of employment, the participant or beneficiary may, after approval by the Company, receive a lump-sum amount equal to the vested value of the funds allocated to his or her account. Annuities are available in certain circumstances, as described in the plan document.
Each participants account is credited with the participants and the Companys contributions and plan earnings and is charged with an allocation of administrative expenses if the employer does not pay those expenses from its own assets. Allocations are based on account balances. The benefit to which a participant is entitled is the benefit that can be provided from the participants account. Benefits are recorded when paid.
Jennie-O Turkey Store Retirement Savings Plan
Notes to Financial Statements (continued)
2. Description of the Plan (continued)
The Company may, at its sole discretion, discontinue contributions or terminate the Plan at any time, subject to the provisions of ERISA. Upon the Plans termination, all amounts credited to participants would become fully vested, and the assets of the Plan would be distributed to participants based on amounts previously credited to their respective accounts.
3. Investments and Fair Value Measurement
During the years ended October 27, 2013 and October 28, 2012, the Plans investments (including investments bought, sold, as well as held during the year) appreciated in fair value as follows:
|
|
Year Ended |
|
Year Ended |
| ||
Net appreciation in fair value during the year: |
|
|
|
|
| ||
Mutual funds |
|
$ |
8,521,709 |
|
$ |
4,214,041 |
|
Collective trusts |
|
6,574,798 |
|
382,053 |
| ||
Non-pooled separate account (containing Hormel Foods Corporation common stock) |
|
72,786 |
|
|
| ||
|
|
$ |
15,169,293 |
|
$ |
4,596,094 |
|
Jennie-O Turkey Store Retirement Savings Plan
Notes to Financial Statements (continued)
3. Investments and Fair Value Measurement (continued)
The fair value of individual investments that represent 5% or more of the Plans net assets is as follows:
|
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October 27, |
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October 28, |
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Insurance company general account: |
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|
|
|
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Massachusetts Mutual Life Insurance Company: |
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|
|
|
| ||
General Investment Account |
|
$ |
24,863,712 |
|
$ |
|
|
|
|
|
|
|
| ||
Collective trusts: |
|
|
|
|
| ||
Orchard Trust Company, LLC: |
|
|
|
|
| ||
Wells Fargo Stable Return Fund C |
|
- |
|
22,134,050 |
| ||
State Street Corporation: |
|
|
|
|
| ||
BlackRock LifePath Index 2015 Fund |
|
8,152,292 |
|
|
| ||
BlackRock LifePath Index 2020 Fund |
|
15,717,157 |
|
|
| ||
BlackRock LifePath Index 2025 Fund |
|
17,596,773 |
|
|
| ||
BlackRock LifePath Index 2030 Fund |
|
15,924,144 |
|
|
| ||
BlackRock LifePath Index 2035 Fund |
|
12,374,869 |
|
|
| ||
|
|
|
|
|
| ||
Mutual funds: |
|
|
|
|
| ||
Orchard Trust Company, LLC: |
|
|
|
|
| ||
PIMCO total Return II Institutional Class Fund |
|
|
|
34,582,844 |
| ||
Nuveen Equity Index Fund I |
|
|
|
15,829,950 |
| ||
Harbor Capital Appreciation Fund Institutional Class |
|
|
|
10,062,461 |
| ||
Invesco International Growth Fund Y |
|
|
|
8,541,189 |
| ||
MFS Value Fund Class R4 |
|
|
|
8,482,568 |
| ||
Black Rock International Opportunities Portfolio Institutional Shares |
|
|
|
7,536,850 |
| ||
American Century Small Cap Value Fund Institutional |
|
|
|
7,277,524 |
| ||
Jennie-O Turkey Store Retirement Savings Plan
Notes to Financial Statements (continued)
3. Investments and Fair Value Measurement (continued)
The Plan accounts for its financial assets and liabilities in accordance with ASC 820, which are carried at fair value on a recurring basis in its financial statements. ASC 820 establishes a fair value hierarchy that requires assets and liabilities measured at fair value to be categorized into one of three levels based on the inputs used in the valuation. Assets and liabilities are classified in their entirety based on the lowest level of input significant to the fair value measurement. 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: Inputs other than quoted prices in active markets for identical assets and liabilities that are observable, either directly or indirectly, for substantially the full term of the asset or liability. Level 2 inputs include the following:
Quoted prices for similar assets and liabilities in active markets
Quoted prices for identical or similar assets or liabilities in markets that are not active
Observable inputs other than quoted prices that are used in the valuation of the assets or liabilities (e.g., interest rate and yield curve quotes at commonly quoted intervals)
Inputs that are derived principally from or corroborated by observable market data by correlation or other means
· Level 3: Unobservable inputs that reflect an entitys 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.
During 2013, the Plan adjusted certain investment options for participant accounts. The following is a description of the valuation methodologies used for instruments held by the Plan by Plan year measured at fair value, including the general classification of such instruments pursuant to the valuation hierarchy.
Jennie-O Turkey Store Retirement Savings Plan
Notes to Financial Statements (continued)
3. Investments and Fair Value Measurement (continued)
2013 Investments
Separate Trust Accounts Mutual Funds
The mutual funds are public investment vehicles valued using the net asset value (NAV) provided by the administrator of the fund. The NAV is based on the value of the underlying assets owned by the fund, less its liabilities, and then divided by the number of shares outstanding. The NAV is a quoted price in an active market and, thus, these investments are classified within Level 1 of the valuation hierarchy.
· The U.S. equities investments include a mix of predominately U.S. common stocks, bonds, and cash.
· The international equities investment includes a mix of predominately foreign common stocks and cash.
· The fixed income investment includes a mix of domestic and foreign securities, including corporate obligations, government securities, and mortgage-backed and other asset-backed securities, preferred stocks, and cash.
Separate Trust Accounts Collective Trust Funds
The fair value of the collective trust funds, which are deemed to be Level 2, represents the NAV 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. The investments are public investment vehicles, which are valued using the NAV provided by the administrator of the fund. The NAV is based on the value of the underlying assets owned by the fund, excluding transaction costs, minus its liabilities, and then divided by the number of shares outstanding.
· The LifePath funds are target retirement date funds and include investments in highly diversified funds designed to remain appropriate for investors in terms of risk through a variety of life circumstances. These funds contain a mix of domestic and foreign equities, fixed income investments, and cash.
· The U.S. equities funds include a mix of predominately U.S. common stocks, bonds, and cash.
Jennie-O Turkey Store Retirement Savings Plan
Notes to Financial Statements (continued)
3. Investments and Fair Value Measurement (continued)
· The international equities fund includes a mix of predominately foreign common stocks and cash.
· The fixed income fund includes a mix of domestic and foreign securities, including corporate obligations, government securities, and mortgage-backed and other asset-backed securities, domestic and foreign common stocks, and cash.
Non-Pooled Separate Account
The non-pooled separate account consists of common stock of Hormel Foods Corporation, which is valued at the last reported sales price on the last business day of the year, and a portion of uninvested cash, which is reported at carrying value as maturities are less than three months. This non-pooled separate account is deemed to be a Level 1 investment. The Company has implemented a dividend pass through election for its participants.
Participants are authorized to invest up to 100% of the fair value of their net assets available for benefits in this fund. Each participant in this fund is entitled to exercise voting rights attributable to the shares allocated to their account and is notified by the Company prior to the time that such rights may be exercised. The trustee is not permitted to vote any allocated shares for which instructions have not been given by a participant. The trustee votes any unallocated shares in the same proportion as those shares that were allocated, unless the Committee directs the trustee otherwise. Participants have the same voting rights in the event of a tender or exchange offer.
This fund is approximately 0.56% and 0.39% of the total investments in the Plan at October 27, 2013 and October 28, 2012, respectively.
General Investment Account
The General Investment Account is a stable value fund and is reported at fair value with a reported adjustment to contract value shown in the statements of net assets available for benefits; therefore, the General Investment Account is deemed to be a Level 3 investment. The statements of changes in net assets available for benefits are prepared on a contract value basis. The Plans insurance company general account contract is fully benefit responsive. Benefit responsiveness is defined as the extent to which a contracts terms and the Plan permit or require participant-initiated withdrawals at contract value.
Jennie-O Turkey Store Retirement Savings Plan
Notes to Financial Statements (continued)
3. Investments and Fair Value Measurement (continued)
The benefit-responsive investment contract with Massachusetts Mutual Life Insurance Company (MassMutual) is a general account evergreen group annuity contract. MassMutual maintains the contributions in a general account. Specific securities within the general account are not attributed to the investment contract with the Plan. The Plan owns a series of guarantees that are embedded in the insurance contract. The contractual guarantees are backed up by the full faith and credit of MassMutual, the contract issuer. The account is credited with earnings on the underlying investments and charged for participant withdrawals and administrative expenses. MassMutual is contractually obligated to repay the principal and a specified interest rate that is guaranteed to the Plan. There are no reserves against contract value for credit risk of the contract issuer or otherwise. The crediting interest rate is based on a formula agreed upon with the issuer and includes such factors as the investment-year method experience of the underlying contract or pool, projected levels of cash flows within the current interest rate environment, and the projected maturity of the underlying investments. Such interest rates are reviewed on a semiannual basis for resetting.
Certain events limit the ability of the Plan to transact at contract value with the issuer. Such events include the following: (i) amendments to the plan documents (including complete or partial plan termination or merger with another plan); (ii) changes to the Plans prohibition on competing investment options or deletion of equity wash provisions; (iii) bankruptcy of the Sponsor or other Sponsor event (e.g., divestures or spin-offs of a subsidiary) that causes a significant withdrawal from the Plan; or (iv) the failure of the trust to qualify for exemption from federal income taxes or any required prohibited transaction exemption under ERISA. The plan administrator does not believe that the occurrence of any such event, which would limit the Plans ability to transact at contract value with participants, is probable.
The Guaranteed Income Account contract does not allow the insurance company to terminate the agreement prior to a breach of the contract terms by the investor. The Plan may terminate the contract on the contract anniversary date with 90 days prior notice.
The General Investment Account is principally valued using a market value formula approach. The market value of the investment is determined to be the estimated liquidation value of the contract. The liquidation value is derived considering factors such as: (i) the observable interest rate being earned by investments underlying the contract; (ii) the unobservable assumed interest rate obtained by the record-keeper on new investments where a proxy is the Barclays Capital U.S. Aggregate Index (excluding Treasuries) with an adjustment made to duration; and (iii) the unobservable comparison between investments supporting the contract and the current market
Jennie-O Turkey Store Retirement Savings Plan
Notes to Financial Statements (continued)
3. Investments and Fair Value Measurement (continued)
rates where historic investments are either at a premium or discount to current market rates, i.e., the experience rate.
The following table presents the Plans Level 3 investment, the valuation technique used to measure the fair value and the significant unobservable inputs and the values for those inputs.
|
|
October 27, 2013 |
| |||||||
Investment |
|
Fair Value |
|
Valuation |
|
Significant |
|
Weighted |
| |
|
|
|
|
|
|
|
|
|
| |
General investment account |
|
$ |
24,863,712 |
|
Liquidation |
|
Assumed interest rate |
|
1.20% |
|
Generally, the General Investment Account crediting rates will typically show less volatility than current market rates. In a rising interest rate environment, credited rates will lag market rates because much of the contracts assets are backed by investment made in prior years with earnings that reflect the lower rates that prevailed in those years. Over time, as new contributions are made and investments mature and are reinvested at current interest rates, rates could be expected to move toward market levels. Conversely, as market rates decrease, the General Investment Account crediting rates would also be expected to fall, but generally more slowly than market rates.
The crediting interest rate on the General Investment Account was 3.10% as of October 27, 2013. The average yield was 3.34% during the 2013 Plan year, which approximates the actual interest rate credited to the Plan participants.
2012 Investments
Mutual Funds
These investments are public investment vehicles valued using the NAV provided by the administrator of the fund. The NAV is based on the value of the underlying assets owned by the fund, less its liabilities, and then divided by the number of shares outstanding. The NAV is a quoted price in an active market, and thus, these investments are classified within Level 1 of the valuation hierarchy.
Jennie-O Turkey Store Retirement Savings Plan
Notes to Financial Statements (continued)
3. Investments and Fair Value Measurement (continued)
The U.S. equities investments include a mix of predominately U.S. common stocks, bonds, and cash.
The international equities investments include a mix of predominately foreign common stocks and cash.
The fixed income investment includes a mix of domestic and foreign securities, including corporate obligations, government securities, and mortgage-backed and other asset-backed securities, preferred stocks, and cash.
Collective Trusts
The Plan held an investment in the Wells Fargo Stable Return Fund C (the Stable Return Fund), which invested in a collective trust fund that carries investments at contract value. The Stable Return Fund is reported at fair value with a reported adjustment to contract value as shown in the statement of net assets available for benefits. The value of the Stable Return Fund is based on the underlying unit value of the collective trust fund, and a NAV can be calculated for the Stable Return Fund. The collective trust fund invested in investment contracts and security-backed contracts. An investment contract is a contract issued by a financial institution to provide a stated rate of return to the buyer of the contract for a specified period of time. A security-backed contract has similar characteristics as a traditional investment contract and is comprised of two parts: the first part is a fixed income security or portfolio of fixed income securities; the second part is a contract value guarantee (wrapper) provided by a third party. Wrappers provide contract value payments for certain participant-initiated withdrawals and transfers, a floor crediting rate, and return of the fully accrued contract value at maturity. The investment in the Stable Return Fund contained several redemption restrictions: the right to require a 12-month notice for withdrawal of assets from the Stable Return Fund initiated by the Company; withdrawals initiated by participants of the Plan were honored when received unless payments were being delayed to all Stable Return Fund unit holders as provided in the Declaration of Trust; and redemptions by plan participants to reinvest in options that compete with the Stable Return Fund may have been delayed for up to 90 days.
Jennie-O Turkey Store Retirement Savings Plan
Notes to Financial Statements (continued)
3. Investments and Fair Value Measurement (continued)
The crediting interest rate on the Stable Return Fund was 1.34% as of July 24, 2013 and 0.94% as of October 28, 2012. The average yield was 1.75% for the period October 29, 2012 to July 24, 2013 and 2.03% during the 2012 plan year, which approximates the actual interest rate credited to the plan participants. Audited financial statements are available for this investment, and it is classified as a Level 2 investment. Effective July 24, 2013, at the completion of the required 12-month redemption notice, the Company redeemed this fund, at the contract value, and invested the cash proceeds in a similar investment. See above for a description of the General Investment Account.
The remaining fund held within collective trusts was also managed by a third party and included equity securities and cash for which there was an active quoted market. Therefore, this fund is classified as Level 1.
Jennie-O Turkey Store Retirement Savings Plan
Notes to Financial Statements (continued)
3. Investments and Fair Value Measurement (continued)
The investments of the Plan that are measured at fair value on a recurring basis as of October 27, 2013 and October 28, 2012, and their level within the fair value hierarchy, are as follows:
|
|
Fair Value Measurements at October 27, 2013 |
| ||||||||||
|
|
Total |
|
Quoted Prices |
|
Significant |
|
Significant |
| ||||
Investments at fair value: |
|
|
|
|
|
|
|
|
| ||||
Separate trust accounts: |
|
|
|
|
|
|
|
|
| ||||
Mutual funds: |
|
|
|
|
|
|
|
|
| ||||
U.S. equities |
|
$ |
11,766,383 |
|
$ |
11,766,383 |
|
$ |
|
|
$ |
|
|
International equities |
|
2,587,885 |
|
2,587,885 |
|
|
|
|
| ||||
Fixed income |
|
3,669,430 |
|
3,669,430 |
|
|
|
|
| ||||
Total mutual funds |
|
18,023,698 |
|
18,023,698 |
|
|
|
|
| ||||
Collective trusts: |
|
|
|
|
|
|
|
|
| ||||
LifePath funds |
|
96,207,209 |
|
|
|
96,207,209 |
|
|
| ||||
U.S. equities |
|
3,512,721 |
|
|
|
3,512,721 |
|
|
| ||||
International equities |
|
67,921 |
|
|
|
67,921 |
|
|
| ||||
Fixed income |
|
72,142 |
|
|
|
, 72,142 |
|
|
| ||||
Total collective trusts |
|
99,859,993 |
|
|
|
99,859,993 |
|
|
| ||||
Total separate trust accounts |
|
117,883,691 |
|
18,023,698 |
|
99,859,993 |
|
|
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Non-pooled separate account: |
|
|
|
|
|
|
|
|
| ||||
Hormel Foods Corporation |
|
|
|
|
|
|
|
|
| ||||
Stock Fund |
|
801,851 |
|
801,851 |
|
|
|
|
| ||||
General Investment Account |
|
24,863,712 |
|
|
|
|
|
24,863,712 |
| ||||
|
|
$ |
143,549,254 |
|
$ |
18,825,549 |
|
$ |
99,859,993 |
|
$ |
24,863,712 |
|
Jennie-O Turkey Store Retirement Savings Plan
Notes to Financial Statements (continued)
3. Investments and Fair Value Measurement (continued)
|
|
Fair Value Measurements at October 28, 2012 |
| ||||||||||
|
|
Total |
|
Quoted Prices |
|
Significant |
|
Significant |
| ||||
Investments at fair value: |
|
|
|
|
|
|
|
|
| ||||
Mutual funds: |
|
|
|
|
|
|
|
|
| ||||
U.S. equities |
|
$ |
47,794,693 |
|
$ |
47,794,693 |
|
$ |
|
|
$ |
|
|
International equities |
|
16,078,039 |
|
16,078,039 |
|
|
|
|
| ||||
Fixed income |
|
34,582,844 |
|
34,582,844 |
|
|
|
|
| ||||
Total mutual funds |
|
98,455,576 |
|
98,455,576 |
|
|
|
|
| ||||
Collective trusts: |
|
|
|
|
|
|
|
|
| ||||
Stable Return Fund |
|
22,134,050 |
|
|
|
22,134,050 |
|
|
| ||||
Hormel Foods Corporation Stock Fund |
|
471,295 |
|
471,295 |
|
|
|
|
| ||||
Total collective trusts |
|
22,605,345 |
|
471,295 |
|
22,134,050 |
|
|
| ||||
|
|
$ |
121,060,921 |
|
$ |
98,926,871 |
|
$ |
22,134,050 |
|
$ |
|
|
A reconciliation of the beginning and ending balance of the investments measured at fair value using significant unobservable inputs (Level 3) is as follows:
|
|
General |
| |
|
|
|
| |
Balance, October 28, 2012 |
|
$ |
|
|
Purchases |
|
133,377,179 |
| |
Sales |
|
(110,805,707 |
) | |
Interest and dividend income* |
|
197,078 |
| |
Unrealized gains relating to investments still held at the report date** |
|
2,095,162 |
| |
Balance, October 27, 2013 |
|
$ |
24,863,712 |
|
* Included in investment income, statements of changes in net assets available for benefits
** Included in net realized and unrealized appreciation in fair value of investments, statements of changes in net assets available for benefits
Jennie-O Turkey Store Retirement Savings Plan
Notes to Financial Statements (continued)
4. Income Tax Status
The Plan has received a determination letter from the IRS dated October 22, 2013, stating that the Plan is qualified under Section 401(a) of the Internal Revenue Code (the Code) and, therefore, the related trust is exempt from taxation.
U.S. GAAP requires plan management to evaluate uncertain tax positions taken by the Plan. The financial statement effects of a tax position are recognized when the position is more likely than not, based on the technical merits, to be sustained upon examination by the IRS. The plan administrator has analyzed the tax positions taken by the Plan and has concluded that as of October 27, 2013, there are no uncertain positions taken or expected to be taken. The Plan has recognized no interest or penalties related to uncertain tax positions. The Plan is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress. The plan administrator believes the Plan is no longer subject to income tax examinations for years prior to the Plan year ended October 31, 2010.
5. Risks and Uncertainties
The Plan invests in various investment securities. Investment securities are exposed to various risks, such as interest rate, market volatility, and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities could occur in the near term and that such changes could materially affect participants account balances and the amounts reported in the statements of net assets available for benefits.
6. Related Parties
The Plan holds units of collective trust funds managed by State Street Global Markets, LLC. The Plan invests in the common stock of Hormel Foods Corporation. The Plan invests in the General Investment Account of the record-keeper, the Massachusetts Mutual Life Insurance Company. These transactions qualify as party-in-interest transactions; however, they are exempt from the prohibited transactions rules under ERISA.
Jennie-O Turkey Store Retirement Savings Plan
Schedule H, Line 4i Schedule of Assets
(Held at End of Year)
EIN: 41-0734466 Plan Number: 003
October 27, 2013
Identity of Issuer, Borrower, |
|
Number of |
|
Current |
| ||
|
|
|
|
|
| ||
Non-pooled separate account: |
|
|
|
|
| ||
State Street Corporation*: |
|
|
|
|
| ||
Hormel Foods Corporation Stock Fund* |
|
73,374 units |
|
|
$ |
801,851 |
|
|
|
|
|
|
|
| |
Insurance company general account: |
|
|
|
|
|
| |
Massachusetts Mutual Life Insurance Company*: |
|
|
|
|
|
| |
General Investment Account, contract value |
|
1,141,725 units |
|
|
22,768,550 |
| |
|
|
|
|
|
|
| |
Separate trust accounts: |
|
|
|
|
|
| |
State Street Corporation*: |
|
|
|
|
|
| |
BlackRock LifePath Index 2015 |
|
800,241 units |
|
|
8,152,292 |
| |
BlackRock LifePath Index 2020 |
|
1,529,983 units |
|
|
15,717,157 |
| |
BlackRock LifePath Index 2025 |
|
1,703,234 units |
|
|
17,596,773 |
| |
BlackRock LifePath Index 2030 |
|
1,532,062 units |
|
|
15,924,144 |
| |
BlackRock LifePath Index 2035 |
|
1,184,264 units |
|
|
12,374,869 |
| |
BlackRock LifePath Index 2040 |
|
674,306 units |
|
|
7,076,940 |
| |
BlackRock LifePath Index 2045 |
|
634,854 units |
|
|
6,688,306 |
| |
BlackRock LifePath Index 2050 |
|
562,797 units |
|
|
5,955,039 |
| |
BlackRock LifePath Index 2055 |
|
278,378 units |
|
|
2,954,398 |
| |
BlackRock LifePath Index Retirement |
|
370,748 units |
|
|
3,767,291 |
| |
BlackRock MSCI ACWI ex-US Index |
|
6,440 units |
|
|
67,921 |
| |
BlackRock Russell 2500 Index |
|
3,780 units |
|
|
42,814 |
| |
BlackRock US Debt Index |
|
7,309 units |
|
|
72,142 |
| |
BlackRock S&P 500 Stock Fund |
|
317,766 units |
|
|
3,469,907 |
| |
Loomis Sayles Value Y |
|
218,529 units |
|
|
2,407,765 |
| |
Harbor Capital Appreciation |
|
415,032 units |
|
|
4,830,655 |
| |
Dodge & Cox International Stock Fund |
|
185,184 units |
|
|
2,587,885 |
| |
Wells Fargo Advantage Intrinsic Small Cap Value |
|
285,368 units |
|
|
3,187,841 |
| |
Wasatch Small Cap Growth Fund |
|
96,229 units |
|
|
1,340,122 |
| |
PIMCO Total Return Institutional |
|
375,839 units |
|
|
3,669,430 |
| |
|
|
|
|
|
| ||
Total separate trust accounts |
|
|
|
117,883,691 |
| ||
|
|
|
|
|
| ||
Promissory notes* |
|
Varying maturity dates with interest rates ranging from 4.25% to 8.25% |
|
10,980,458 |
| ||
Total assets (held at end of year) |
|
|
|
$ |
152,434,550 |
|
*Indicates a party in interest to the Plan.
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.
|
JENNIE-O TURKEY STORE | ||
|
| ||
|
|
| |
Date: April 25, 2014 |
By: |
/s/ JODY H. FERAGEN |
|
|
|
JODY H. FERAGEN |
EXHIBIT INDEX
Exhibit |
|
Description |
23 |
|
Consent of Independent Registered Public Accounting Firm |