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 [NO FEE REQUIRED]

 

 

 

For the fiscal year ended October 28, 2006

 

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

 

 




Hormel Foods Corporation

Joint Earnings Profit Sharing Trust

 

Audited Financial Statements and Schedule

Years Ended October 28, 2006, and October 29, 2005

Contents

Report of Independent Registered Public Accounting Firm

 

 

 

 

 

Audited 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)

 

 

 

2




Report of Independent Registered Public Accounting Firm

The Employee Benefits Committee

Hormel Foods Corporation

Joint Earnings Profit Sharing Trust

 

We have audited the accompanying statements of net assets available for benefits of the Hormel Foods Corporation Joint Earnings Profit Sharing Trust (the Plan) as of October 28, 2006, and October 29, 2005, 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 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 Plan’s 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 Plan’s 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 28, 2006, and October 29, 2005, 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 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 28, 2006, 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. This 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

Minneapolis, Minnesota

April 20, 2007

 

3




Hormel Foods Corporation

Joint Earnings Profit Sharing Trust

 

Statements of Net Assets Available for Benefits

 

 

 

October 28,
2006

 

October 29,
2005

 

Assets

 

 

 

 

 

Cash and cash equivalents

 

$

8,424

 

$

20

 

Investments

 

247,523,692

 

231,536,361

 

Contributions receivable from Hormel Foods

 

 

 

 

 

Corporation

 

9,983,455

 

9,567,637

 

Contributions receivable from participants

 

176

 

1,613

 

Net assets available for benefits

 

$

257,515,747

 

$

241,105,631

 

 

See accompanying notes.

4




Hormel Foods Corporation

Joint Earnings Profit Sharing Trust

 

Statements of Changes in Net Assets Available for Benefits

 

 

 

Year Ended

 

 

 

October 28,
2006

 

October 29,
2005

 

Additions:

 

 

 

 

 

Contributions from Hormel Foods Corporation

 

$

9,996,710

 

$

9,569,792

 

Contributions from participants

 

97,757

 

101,080

 

Interest and dividend income

 

3,678,862

 

2,363,428

 

 

 

13,773,329

 

12,034,300

 

 

 

 

 

 

 

Deductions:

 

 

 

 

 

Distributions

 

23,333,214

 

16,143,310

 

Administrative expenses

 

115,642

 

118,674

 

 

 

23,448,856

 

16,261,984

 

 

 

 

 

 

 

Net realized and unrealized appreciation in fair

 

 

 

 

 

value of investments

 

26,085,643

 

19,820,370

 

Net additions

 

16,410,116

 

15,592,686

 

Net assets available for benefits at beginning of year

 

241,105,631

 

225,512,945

 

Net assets available for benefits at end of year

 

$

257,515,747

 

$

241,105,631

 

 

See accompanying notes.

5




Hormel Foods Corporation

Joint Earnings Profit Sharing Trust

 

Notes to Financial Statements

October 28, 2006

1. Significant Accounting Policies

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

Marketable securities are stated at fair value (the last reported sales price on the last business day of the year). The nonpooled separate account consists of common stock of Hormel Foods Corporation (the Company or the Sponsor) and a portion of uninvested cash. For 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. The investment 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 U.S. generally accepted accounting principles 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 subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA).

The Plan is a defined contribution plan covering employees of the Company and certain eligible subsidiaries. The amount contributed by the Company each year is discretionary, as 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 Section 404(c) of ERISA. Certain restrictions exist, as defined in the plan document, for investing of funds in other contribution accounts.

6




Plan participants may elect to make after-tax contributions to the Thrift account in amounts not to exceed statutory limits.

Each participant’s account is credited with the participant’s and the Company’s contributions and plan earnings and is charged with an allocation of administrative expenses. Allocations are based on account balances. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s account.

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

Most benefits are paid upon termination of service in a lump-sum amount equal to the vested value of a participant’s account, unless an eligible participant elects to defer the payment. Complete details of payment provisions are described in a Summary Plan Description, available from the Sponsor.

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

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 4.25% and 4.0% as of October 28, 2006, and October 29, 2005, respectively. The average yield on the Plan’s investment contract for the years ended October 28, 2006, and October 29, 2005, was 4.0% and 4.0%, respectively. Fair value of the investment contract was estimated to be approximately 97.5% and 98.4% of contract value as of October 28, 2006, and October 29, 2005, respectively. Fair value was estimated based upon discounting future cash flows under the contracts at current interest rates for similar investments with comparable terms.

7




During the years ended October 28, 2006, and October 29, 2005, the Plan’s investments (including investments bought and sold, as well as held during the year) appreciated in fair value by $26,085,643 and $19,820,370, respectively, as follows:

 

2006

 

2005

 

Net appreciation in fair value during the year:

 

 

 

 

 

Nonpooled separate account (containing company stock)

 

$

13,727,842

 

$

12,663,798

 

Separate trust accounts

 

3,592,591

 

1,701,670

 

Pooled separate accounts

 

7,869,910

 

5,244,115

 

Common and preferred stock

 

64,141

 

7,163

 

Mutual funds

 

827,642

 

203,852

 

Federal bond

 

(485

)

 

Other

 

4,002

 

(228

)

 

 

$

26,085,643

 

$

19,820,370

 

 

The Plan, at the discretion of the participants, 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% of total investments at October 28, 2006, and 43% of total investments at October 29, 2005.

8




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

 

October 28,
2006

 

October 29,
2005

 

Nonpooled separate account:

 

 

 

 

 

Hormel Foods Corporation common stock

 

$

101,315,668

 

$

98,663,502

 

IBT Money Market Fund

 

1,415,285

 

1,022,848

 

Total nonpooled separate account

 

102,730,953

 

99,686,350

 

 

 

 

 

 

 

Insurance company general account:

 

 

 

 

 

Massachusetts Mutual Life Insurance Company:

 

 

 

 

 

Fixed Income Fund

 

52,471,356

 

56,422,112

 

 

 

 

 

 

 

Pooled separate account:

 

 

 

 

 

Massachusetts Mutual Life Insurance Company:

 

 

 

 

 

Aggressive Growth Fund

 

17,906,780

 

15,689,564

 

 

4. Income Tax Status

The Plan has received a determination letter from the Internal Revenue Service (IRS) dated March 13, 2003, 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. 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 the Plan is qualified and the related trust is tax-exempt.

5. Risks and Uncertainties

The Plan invests in various investment securities. Investment securities are exposed to various risks, such as interest rate, market, 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.

 

9




Hormel Foods Corporation

Joint Earnings Profit Sharing Trust

EIN: 41-0319970

Plan: 030

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

 

October 28, 2006

 

Identity of Issuer, Borrower,
Lessor, or Similar Party

 

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

 

Current
Value

 

Nonpooled separate account:

 

 

 

 

 

 

 

Investors Bank & Trust Company:*

 

 

 

 

 

 

 

Hormel Stock Fund

 

4,523,698

 

units

 

$

102,730,953

 

 

 

 

 

 

 

 

 

Insurance company general account:

 

 

 

 

 

 

 

Massachusetts Mutual Life Insurance Company:*

 

 

 

 

 

 

 

Fixed Income Fund

 

3,425,533

 

units

 

52,471,356

 

 

 

 

 

 

 

 

 

Pooled separate accounts:

 

 

 

 

 

 

 

Massachusetts Mutual Life Insurance Company:*

 

 

 

 

 

 

 

Aggressive Growth Fund

 

1,170,670

 

units

 

17,906,780

 

Moderate Growth Fund

 

650,366

 

units

 

10,041,859

 

Select Small Co. Value (Clover/TRP/EARNEST)

 

45,389

 

units

 

7,957,517

 

Select Fundamental Value (Wellington)

 

48,775

 

units

 

6,852,598

 

Conservative Growth Fund

 

441,157

 

units

 

6,698,299

 

Select Large Cap Value Fund (Davis)

 

25,759

 

units

 

4,893,846

 

Select Indexed Equity Fund (Northern Trust)

 

7,687

 

units

 

2,818,391

 

Select Aggressive Growth Fund (Sands)

 

25,005

 

units

 

1,570,461

 

Premier Core Bond (Babson Capital)

 

840

 

units

 

1,203,961

 

Conservative Journey

 

4,562

 

units

 

645,853

 

Total pooled separate accounts

 

 

 

 

 

60,589,565

 

 

 

 

 

 

 

 

 

Separate trust accounts:

 

 

 

 

 

 

 

Investors Bank & Trust Company:*

 

 

 

 

 

 

 

American Funds Euro Pacific Fund

 

575,317

 

units

 

12,372,689

 

Manager’s Special Equity Fund

 

348,059

 

units

 

4,681,929

 

American Funds Growth R4 Fund

 

335,511

 

units

 

5,068,734

 

Black Rock High Yield Bond

 

148,968

 

units

 

1,691,792

 

Total separate trust accounts

 

 

 

 

 

23,815,144

 

 

 

 

 

 

 

 

 

Self-directed brokerage assets

 

 

 

 

 

7,916,674

 

Total assets held for investment purposes at end of year

 

 

 

 

 

$

247,523,692

 


* Indicates a party in interest to the Plan.

10




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 TRUST

 

 

 Date: April 23, 2007

By:

/s/ JODY H. FERAGEN

 

 

JODY H. FERAGEN
Senior Vice President
and Chief Financial Officer

 

11




EXHIBIT INDEX

 

Exhibit
Number

 

Description

23

 

Consent of Independent Registered Public Accounting Firm

 

12