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 29, 2005

 

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 Trust

 

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

 

Financial Statements and Schedule

 

Years Ended October 29, 2005, and October 30, 2004

 

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 29, 2005, and October 30, 2004, 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 29, 2005, and October 30, 2004, 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 29, 2005, 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 Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement

 

3



 

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 21, 2006

 

4



 

Hormel Foods Corporation

Joint Earnings Profit Sharing Trust

 

Statements of Net Assets Available for Benefits

 

 

 

October 29,
2005

 

October 30,
2004

 

Assets

 

 

 

 

 

Cash and cash equivalents

 

$

20

 

$

2

 

Investments

 

231,536,361

 

215,797,843

 

Contributions receivable from Hormel Foods Corporation

 

9,567,637

 

9,709,428

 

Contributions receivable from participants

 

1,613

 

5,672

 

Net assets available for benefits

 

$

241,105,631

 

$

225,512,945

 

 

See accompanying notes.

 

5



 

Hormel Foods Corporation

Joint Earnings Profit Sharing Trust

 

Statements of Changes in Net Assets Available for Benefits

 

 

 

Year Ended

 

 

 

October 29,
2005

 

October 30,
2004

 

Additions:

 

 

 

 

 

Contributions from Hormel Foods Corporation

 

$

9,569,792

 

$

9,719,555

 

Contributions from participants

 

101,080

 

188,742

 

Interest and dividend income

 

2,363,428

 

2,543,966

 

 

 

12,034,300

 

12,452,263

 

 

 

 

 

 

 

Deductions:

 

 

 

 

 

Distributions

 

16,143,310

 

12,969,586

 

Administrative expenses

 

118,674

 

167,266

 

 

 

16,261,984

 

13,136,852

 

 

 

 

 

 

 

Net realized and unrealized appreciation in fair value of investments

 

19,820,370

 

25,025,678

 

Net additions

 

15,592,686

 

24,341,089

 

Net assets available for benefits at beginning of year

 

225,512,945

 

201,171,856

 

Net assets available for benefits at end of year

 

$

241,105,631

 

$

225,512,945

 

 

See accompanying notes.

 

6



 

Hormel Foods Corporation

Joint Earnings Profit Sharing Trust

 

Notes to Financial Statements

 

October 29, 2005

 

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). 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.

 

Certain prior-year amounts have been reclassified to conform with the current-year presentation.

 

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).

 

7



 

The Plan is a defined contribution plan covering employees of Hormel Foods Corporation (the Company or the Sponsor) 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.

 

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

 

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 discretionary limit for Founders’ Fund contributions. Effective October 31, 2004, the Founders’ Fund investment fund was discontinued.

 

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 account.

 

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.

 

8



 

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 4.0% and 4.5% as of October 29, 2005, and October 30, 2004, respectively. The average yield on the Plan’s investment contract for the years ended October 29, 2005, and October 30, 2004, was 4.0% and 4.5%, respectively. Fair value of the investment contract was estimated to be approximately 98.4% and 97.0% of contract value as of October 29, 2005, and October 30, 2004, 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 year ended October 29, 2005, the Plan’s investments (including investments bought and sold, as well as held during the year) appreciated in fair value by $19,820,370, as follows:

 

 

 

2005

 

Net appreciation in fair value during the year:

 

 

 

Nonpooled separate account

 

$

12,663,798

 

Separate trust accounts

 

1,701,670

 

Pooled separate accounts

 

5,244,115

 

Common stock

 

7,163

 

Mutual funds

 

203,852

 

Other

 

(228

)

 

 

$

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 43% of total investments at October 29, 2005, and 41% of total investments at October 30, 2004.

 

9



 

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

 

 

 

October 29,
2005

 

October 30,
2004

 

Nonpooled separate account:

 

 

 

 

 

Hormel Foods Corporation common stock

 

$

98,663,502

 

$

91,809,485

 

IBT Money Market Fund

 

1,022,848

 

1,156,880

 

Total nonpooled separate account

 

99,686,350

 

92,966,365

 

 

 

 

 

 

 

Insurance company general account:

 

 

 

 

 

Massachusetts Mutual Life Insurance Company:

 

 

 

 

 

Fixed Income Fund

 

56,422,112

 

56,974,444

 

 

 

 

 

 

 

Pooled separate account:

 

 

 

 

 

Massachusetts Mutual Life Insurance Company:

 

 

 

 

 

Aggressive Growth Fund

 

15,689,564

 

13,835,963

 

 

10



 

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 29,
2005

 

October 30,
2004

 

Net assets:

 

 

 

 

 

Hormel Foods Corporation common stock

 

$

 

$

30,505,029

 

IBT Money Market Fund

 

 

384,390

 

Total nonparticipant-directed investments

 

$

 

$

30,889,419

 

 

 

 

Year Ended

 

 

 

October 29,
2005

 

October 30,
2004

 

Changes in net assets:

 

 

 

 

 

Contributions

 

$

1,752,351

 

$

1,792,516

 

Net appreciation

 

5,158,998

 

5,336,587

 

Benefits paid to participants

 

(1,096,046

)

(1,454,415

)

Administrative expenses

 

(375

)

(1,466

)

Transfers

 

(36,704,347

)

 

 

 

$

(30,889,419

)

$

5,673,222

 

 

Effective October 31, 2004, nonparticipant-directed investments in the Hormel Stock Fund were discontinued. The assets were transferred into the participant-directed portion of the Hormel Stock Fund.

 

5. 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.

 

11



 

6. 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.

 

12



 

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 29, 2005

 

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

 

5,010,547 units

 

$

99,686,350

 

 

 

 

 

 

 

Insurance company general account:

 

 

 

 

 

Massachusetts Mutual Life Insurance Company:*

 

 

 

 

 

Fixed Income Fund

 

3,833,792 units

 

56,422,112

 

 

 

 

 

 

 

Pooled separate accounts:

 

 

 

 

 

Massachusetts Mutual Life Insurance Company:*

 

 

 

 

 

Aggressive Growth Fund

 

1,186,427 units

 

15,689,564

 

Moderate Growth Fund

 

806,989 units

 

10,971,715

 

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

 

42,177 units

 

6,307,656

 

Select Fundamental Value (Wellington)

 

45,731 units

 

5,280,183

 

Conservative Growth Fund

 

363,433 units

 

4,930,052

 

Select Large Cap Value Fund (Davis)

 

25,802 units

 

4,256,280

 

Select Aggressive Growth Fund (Sands)

 

39,095 units

 

2,443,625

 

Select Indexed Equity Fund (Northern Trust)

 

7,280 units

 

2,287,845

 

Premier Core Bond (Babson Capital)

 

722 units

 

992,692

 

Conservative Journey

 

4,839 units

 

634,996

 

Total pooled separate accounts

 

 

 

53,794,608

 

 

 

 

 

 

 

Separate trust accounts:

 

 

 

 

 

Investors Bank & Trust Company:*

 

 

 

 

 

American Funds Euro Pacific Fund

 

383,929 units

 

6,463,924

 

Manager’s Special Equity Fund

 

424,131 units

 

4,936,581

 

American Funds Growth R4 Fund

 

290,645 units

 

3,770,725

 

Black Rock High Yield Bond

 

160,201 units

 

1,663,637

 

Total separate trust accounts

 

 

 

16,834,867

 

 

 

 

 

 

 

Self-directed brokerage assets

 

 

 

4,798,424

 

Total assets held for investment purposes at end of year

 

 

 

$

231,536,361

 

 


*Indicates a party in interest to the Plan.

 

13



 

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 27, 2006

 

By

/s/M. J. McCOY

 

 

 

M. J. McCOY

 

 

Executive Vice President

 

 

and Chief Financial Officer

 

14



 

EXHIBIT INDEX

 

Exhibit
Number
 
Description

23

 

Consent of Independent Registered Public Accounting Firm

 

15