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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended October 31, 2021
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________________ to _________________________

Commission File Number: 1-2402

HORMEL FOODS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 41-0319970
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)

1 Hormel Place, Austin Minnesota
55912-3680
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code (507) 437-5611
Securities registered pursuant to Section 12(b) of the Act: 
Title of each classTrading SymbolName of each exchange on which registered
Common Stock $0.01465 par value
HRLNew York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:  None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes   No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes  
No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days.  Yes   No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulations S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes   No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer     
Non-accelerated filer           Smaller reporting company     
Emerging growth company     
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes   No
The aggregate market value of the voting and non-voting common stock held by non-affiliates of the registrant as of April 25, 2021, was $13,101,074,449 based on the closing price of $46.39 on the last business day of the registrant’s most recently completed second fiscal quarter.
As of December 5, 2021, the number of shares outstanding of each of the registrant’s classes of common stock was as follows:
Common Stock, $0.01465 – Par Value 542,569,949 shares
Common Stock Non-Voting, $0.01 Par Value – 0 shares
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement for the Annual Meeting of Stockholders to be held January 25, 2022, are incorporated by reference into Part III, Items 10-14. The Proxy Statement will be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year to which this report relates.
1

HORMEL FOODS CORPORATION
TABLE OF CONTENTS
 

2

PART I
Item 1.  BUSINESS

General Development of Business
 
Hormel Foods Corporation, a Delaware corporation (collectively, the "Company", "we," "us,", "our"), was founded by George A. Hormel in 1891 in Austin, Minnesota, as Geo. A. Hormel & Company. The Company started as a processor of meat and food products and continues in this line of business with emphasis on the manufacturing and distribution of branded, value-added consumer items rather than commodity fresh meat products. The Company builds on its founder's legacy of innovation, quality, and integrity with focus on its purpose statement - Inspired People. Inspired Food.™ Today, the Company is a global branded food company bringing some of the most trusted and iconic brands to tables across the globe with over $11 billion in annual revenue in more than 80 countries.

The Company has continually expanded its product portfolio through organic growth and acquisitions. During fiscal 2021, the Company acquired the Planters® snack nuts business from The Kraft Heinz Company. The acquisition of the Planters® snack nuts business has expanded the Company's product portfolio, adding the Planters®, NUT-rition®, Planters® Cheez Balls, and Corn Nuts® brands. Refer to Note B - Acquisitions and Divestitures for information.

Description of Business

Segments
The Company reports results in the following four segments: Grocery Products, Refrigerated Foods, Jennie-O Turkey Store, and International & Other. Operating results from the Planters® snack nuts business are reported through the Grocery Products, Refrigerated Foods, and International & Other segments. Net sales to unaffiliated customers, segment profit, total assets, and the presentation of certain other financial information by segment is reported in Note P - Segment Reporting of the Notes to Consolidated Financial Statements and in the Management's Discussion and Analysis of Financial Condition and Results of Operations.

Grocery Products: The Grocery Products segment consists primarily of the processing, marketing, and sale of shelf-stable food products sold predominantly in the retail market, along with the sale of nutritional and private label shelf-stable products to retail, foodservice, and industrial customers. This segment also includes the results from the Company’s MegaMex Foods, LLC joint venture.
 
Refrigerated Foods: The Refrigerated Foods segment consists primarily of the processing, marketing, and sale of branded and unbranded pork, beef, and poultry products for retail, foodservice, deli, convenience store, and commercial customers.
 
Jennie-O Turkey Store: The Jennie-O Turkey Store segment consists primarily of the processing, marketing, and sale of branded and unbranded turkey products for retail, foodservice, and commercial customers.
 
International & Other: The International & Other segment includes Hormel Foods International which manufactures, markets, and sells Company products internationally. This segment also includes the results from the Company’s international joint ventures and royalty arrangements.
 
Products and Distribution 
The Company develops, processes, and distributes a wide array of food products in a variety of markets and manufactures its products through various processing facilities and trusted co-manufacturers. The Company’s products primarily consist of meat, nuts, and other food products sold across multiple distribution channels such as U.S. Retail, U.S. Foodservice, U.S. Deli, and International.
 
Domestically, the Company sells its products in all 50 states. The Company’s products are sold through its sales personnel, operating in assigned territories or as dedicated teams serving major customers coordinated from sales offices predominately located in major U.S. cities. The Company also utilizes independent brokers and distributors. Distribution of products to customers is primarily by common carrier.

Internationally, the Company markets its products through Hormel Foods International Corporation (HFIC), a wholly owned subsidiary. HFIC has a global presence within several major international markets including Australia, Brazil, Canada, China, England, Japan, Mexico, Micronesia, the Philippines, Singapore, and South Korea. The distribution of export sales to customers is by common carrier, while the China and Brazil operations own and operate their own delivery systems. The Company, through HFIC, has licensed companies to manufacture various products internationally on a royalty basis, with the primary licensees being Danish Crown UK Ltd., and CJ CheilJedang Corporation. HFIC also has a minority position in a food company in the Philippines (The Purefoods-Hormel Company, Inc., 40 percent holding).

3

Raw Materials 
The Company concentrates on the marketing and sale of branded, value-added food products. The principal raw materials used by the Company include pork, turkey, beef, chicken, and nuts. The company takes a balanced approach to sourcing pork raw materials including hogs purchased for our Austin, Minnesota processing facility, long-term supply agreements for pork, and spot market purchases of pork. The majority of the turkeys needed to meet raw material requirements are raised by the Company. Production costs from raising turkeys are subject to fluctuations in grain prices and fuel costs. To manage these risks, the Company uses futures, swaps, and options contracts to hedge a portion of its anticipated purchases of grain. The Company also purchases raw materials from various suppliers. As the Company shifts its focus towards a more value-added portfolio, the Company has become increasingly dependent on these suppliers to meet its raw material needs. The Company utilizes supply contracts to ensure an adequate supply and mitigate price fluctuations.

During fiscal 2021, the Company’s demand for nuts significantly increased due to the acquisition of the Planters® snack nuts business. Certain nut varieties, such as cashews, are sourced internationally which may cause additional risks to pricing and availability. The Company uses long-term supply contracts and forward buying to manage these risks.

Human Capital
Employees are pivotal resources that directly impact the success of the Company. As of October 31, 2021, the Company had more than 20,000 active employees, with over 90 percent located within the United States. The Company is subject to collective bargaining agreements (CBAs), with approximately 20 percent of employees covered by CBAs.

Diversity, Equity, and Inclusion
The Company welcomes the diversity of all team members, customers, and consumers, and encourages the integration of their unique skills, thoughts, experiences, and identities. The Company’s workforce is made up of approximately 40 percent women and over 50 percent ethnic minority groups. By fostering an inclusive culture, the Company enables every member of the workforce to leverage unique talents and high-performance standards to drive innovation and success.

The Company has nine employee resource groups that support the Company’s mission to create a workplace where all people feel welcomed, respected, and valued. These groups play a critical role in diversity initiatives and provide numerous professional development and mentorship opportunities.

Senior leaders of the Company are held accountable to creating an inclusive, diverse workplace through the annual incentive plan, a component of which focuses on overall belonging scores and the representation of women and underrepresented minorities in salaried positions.

Employee Training, Safety, and Total Rewards
The Company believes investing in the education, training, and development of employees contributes to the overall success of the business. The Company provides learning opportunities for employees through various training courses, including instructor-led internal and external programs and on-the-job training.

Hormel Foods is known for its award-winning safety programs. The Company’s dedicated corporate safety department develops and administers company-wide policies to ensure the safety of each employee and compliance with Occupational Safety and Health Administration standards. The Corporate Safety Steering Committee provides safety leadership and guidance to all Company locations, including monthly safety training and assessments and annual safety audits.

The Company believes its most important asset is its employees and its success is dependent on the attraction, development, and retention of a skilled and experienced workforce. The Company offers a competitive compensation package and a multitude of benefits including medical, life and disability insurance, contributory and non-contributory retirement savings plans, tuition reimbursement, and two years of tuition-free community and technical college for U.S. employees’ dependent children.

The nationwide challenges with labor availability have impacted the business, particularly in the second half of fiscal 2021. To address labor availability, the Company is taking actions to hire and retain team members and implement additional automation across manufacturing facilities.

COVID-19 Response
The ongoing COVID-19 pandemic presents unique challenges to the Company and its daily operations. At the onset in 2020, a COVID Response Committee was established to monitor cases and continuously adjust safety procedures to align with current conditions and guidance from the Centers for Disease Control and Prevention. Most employees working in an office setting transitioned to working remotely, which continued through much of fiscal 2021. As an essential business, plant production team members continued to work in the Company’s manufacturing facilities. The Company’s safety efforts in these facilities included proactive and transparent educational materials; a paid leave and protection program; access to personal protective equipment; enhanced sanitation procedures and daily wellness screenings. The Company also paid over $11.0 million in bonuses to full-time and part-time plant production team members in 2020. As vaccines became available in 2021, the Company coordinated onsite or offsite vaccination clinics at almost all its locations.
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Governmental Regulation and Environmental Matters
The Company’s operations are subject to regulation by various governmental agencies which oversee areas such as food safety, workforce immigration, environmental laws, animal welfare, tax regulations, and the processing, packaging, storage, distribution, advertising, and labeling of the Company’s products. The Company believes it is in compliance with current laws and regulations and does not expect continued compliance to have a material impact on capital expenditures, earnings, or competitive position. The Company continues to monitor existing and pending laws and regulations and while the impact of regulatory changes cannot be predicted with certainty, the Company does not expect compliance to have a material adverse effect. In addition to compliance with environmental laws and regulations, the Company sets goals to further improve its sustainability efforts and reduce its environmental impact. These goals include reducing product packaging, solid waste, water use, energy use, and greenhouse gas emissions. The Company has also put a focus on using renewable energy sources and investing in sustainable agriculture.
 
Customers
During fiscal 2021, sales to Walmart Inc. (Walmart) represented approximately 15 percent of the Company's consolidated gross sales excluding returns and allowances. Walmart is a customer in all four segments. The Company's top five customers make up approximately 35 percent of consolidated gross sales excluding returns and allowances. The loss of one or more of the top customers in any of the four reporting segments could have a material adverse effect on the results of such segment.

Competition
The production and sale of meat and food products in the United States and internationally is highly competitive. The Company competes with manufacturers of pork and turkey products as well as national and regional producers of other meat and protein sources, such as beef, chicken, fish, nuts, and plant-based proteins. 
 
All segments compete on the basis of price, product quality and attributes, brand identification, breadth of product line, and customer service. Through effective marketing and strong quality assurance programs, the Company’s strategy is to provide high quality products that possess strong brand recognition, which support higher value perceptions with customers.

Patents and Trademarks
There are numerous patents and trademarks important to the Company’s business. The Company holds 39 U.S. and nine foreign patents. Most of the trademarks the Company uses are registered in the U.S. and other countries. Some of the more significant owned or licensed trademarks used by the Company or its affiliates are:
 
HORMEL, ALWAYS TENDER, APPLEGATE, AUSTIN BLUES, BACON 1, BLACK LABEL, BREAD READY, BURKE, CAFÉ H, CERATTI, CHI-CHI’S, COLUMBUS, COMPLEATS, CORN NUTS, CURE 81, DAN’S PRIZE, DI LUSSO, DINTY MOORE, DON MIGUEL, DOÑA MARIA, EMBASA, FAST ‘N EASY, FIRE BRAISED, FONTANINI, HAPPY LITTLE PLANTS, HERDEZ, HORMEL GATHERINGS, HORMEL VITAL CUISINE, HOUSE OF TSANG, JENNIE-O, JUSTIN’S, LA VICTORIA, LAYOUT, LLOYD’S, MARY KITCHEN, NATURAL CHOICE, NUT-RITION, OLD SMOKEHOUSE, OVEN READY, PILLOW PACK, PLANTERS, ROSA GRANDE, SADLER'S, SKIPPY, SPAM, SPECIAL RECIPE, THICK & EASY, VALLEY FRESH, and WHOLLY.
 
The Company’s patents expire after a term that is typically 20 years from the date of filing, with earlier expiration possible based on the Company’s decision to pay required maintenance fees. As long as the Company continues to use its trademarks, they are renewed indefinitely.
 
Available Information
The Company makes available its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 on its website at www.hormelfoods.com. These reports are accessible under the caption, “Investors – Filings & Reports – SEC Filings” on the Company’s website and are available as soon as reasonably practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission (SEC). These filings are also available on the SEC's website at www.sec.gov. The documents are available in print, free of charge, to any stockholder who requests them.
 

FORWARD LOOKING STATEMENTS

This report contains “forward-looking” information within the meaning of the federal securities laws. The “forward-looking” information may include statements concerning the Company’s outlook for the future as well as other statements of beliefs, future plans, strategies, or anticipated events and similar expressions concerning matters that are not historical facts.

The Private Securities Litigation Reform Act of 1995 (the Reform Act) provides a "safe harbor" for forward-looking statements to encourage companies to provide prospective information. The Company is filing this cautionary statement in connection with the Reform Act. When used in the Company’s Annual Report to Stockholders, other filings by the Company with the U.S. Securities and Exchange Commission, the Company's press releases, and oral statements made by the Company's representatives, the words or phrases "should result," "believe," "intend," "plan," "are expected to," "targeted," "will continue," "will approximate," "is anticipated," "estimate," "project," or similar expressions are intended to identify forward-looking statements within the meaning
5

of the Reform Act. Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical earnings and those anticipated or projected.

In connection with the “safe harbor” provisions of the Reform Act, the Company is identifying risk factors that could affect financial performance and cause the Company’s actual results to differ materially from opinions or statements expressed with respect to future periods. The following discussion of risk factors contains certain cautionary statements regarding the Company’s business, which should be considered by investors and others. Such risk factors should be considered in conjunction with any discussions of operations or results by the Company or its representatives, including any forward-looking discussion, as well as comments contained in press releases, presentations to securities analysts or investors, or other communications by the Company.

In making these statements, the Company is not undertaking, and specifically declines to undertake, any obligation to address or update each or any factor in future filings or communications regarding the Company’s business or results, and is not undertaking to address how any of these factors may have caused changes to discussions or information contained in previous filings or communications. Though the Company has attempted to list comprehensively these important cautionary risk factors, the Company wishes to caution investors and others that other factors may in the future prove to be important in affecting the Company’s business or results of operations.

The Company cautions readers not to place undue reliance on forward-looking statements, which represent current views as of the date made. Forward-looking statements are inherently at risk to any changes in the national and worldwide economic environment, which could include, among other things, changes resulting from the COVID-19 pandemic, economic conditions, political developments, civil unrest, currency exchange rates, interest and inflation rates, accounting standards, taxes, laws, and regulations affecting the Company and its markets.

Item 1A.  RISK FACTORS
 
Business and Operational Risks

Deterioration of economic conditions could harm the Company’s business. The Company's business may be adversely affected by changes in national or global economic conditions, including inflation, interest rates, tax rates, availability of capital, energy availability and costs (including fuel surcharges), political developments, civil unrest, and the effects of governmental initiatives to manage economic conditions. Decreases in consumer spending rates and shifts in consumer product preferences could also negatively impact the Company.

Volatility in financial markets and the deterioration of national and global economic conditions could impact the Company’s operations as follows:
The financial stability of our customers and suppliers may be compromised, which could result in additional bad debts for the Company or non-performance by suppliers.
The value of our investments in debt and equity securities may decline, including most significantly the Company’s trading securities held as part of a rabbi trust to fund supplemental executive retirement plans and deferred income plans, and the Company’s assets held in pension plans.
Future volatility or disruption in the capital and credit markets could impair the Company's liquidity or increase costs of borrowing.
The Company may be required to redirect cash flow from operations or explore alternative strategies, such as disposing of assets, to fulfill the payment of principal and interest on its indebtedness.

The Company utilizes hedging programs to manage its exposure to various market risks, such as commodity prices and interest rates, which qualify for hedge accounting for financial reporting purposes. Volatile fluctuations in market conditions could cause these instruments to become ineffective, which could require any gains or losses associated with these instruments to be reported in the Company’s earnings each period. These instruments may limit the Company’s ability to benefit from market gains if commodity prices and/or interest rates become more favorable than those secured under the Company’s hedging programs.

The Company's goodwill and indefinite lived intangible assets are initially recorded at fair value and are not amortized, but are reviewed for impairment annually or more frequently if impairment indicators arise. Impairment testing requires judgement around estimates and assumptions and is impacted by factors such as revenue growth rates, operating margins, tax rates, royalty rates, and discount rates. An unfavorable change in these factors may lead to the impairment of goodwill and/or intangible assets.

Additionally, if another highly pathogenic human disease outbreak developed in the United States, it may negatively impact the national economy, demand for Company products, and/or the Company’s workforce availability, and the Company’s financial results could suffer. The Company has developed contingency plans to address infectious disease scenarios and the potential impact on its operations, and will continue to update these plans as necessary. There can be no assurance given, however, these plans will be effective in eliminating the negative effects of any such diseases on the Company’s operating results.
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The uncertain and rapidly changing COVID-19 pandemic could adversely affect the Company’s business, financial condition and results of operations. The ongoing COVID-19 global pandemic has had, and will likely continue to have, negative impacts across many of the Company's business units and facilities. The Company's operations and business have been impacted directly and indirectly by various government actions taken to stop or slow the spread of COVID-19, including travel restrictions, border shutdowns, stay-at-home and shelter-in-place orders, shutdowns of non-essential businesses, and emergency declarations.

The near- and long-term impacts of COVID-19 are unknown and impossible to predict with any level of certainty. The following potential risk factors arising from COVID-19 pandemic have had and/or may continue to have one or more of the following impacts on the Company's operations:
One or more of the Company's manufacturing facilities may be shut down or have their operations significantly impacted due to employee illnesses, increased absenteeism, and/or actions by government agencies. Capital projects may be delayed as additional capacity is no longer currently needed or materials are unavailable. The Company's co-manufacturers and material suppliers may face similar impacts.
Regulatory restrictions and measures taken at the Company's facilities to prevent or slow down the spread of COVID-19 may impact the facilities’ efficiency.
Operating costs may increase as measures are put in place to prevent or slow down the spread of COVID-19, such as facility improvements, employee testing, short-term disability policies, and manufacturing employee bonus payments.
Any new or additional measures required by national, state or local governments to combat COVID-19, such as a COVID-19 vaccine mandate, may similarly add additional operational costs.
Ongoing closure or reduced operations at foodservice establishments may impact results for the Company's foodservice business. Bankruptcy filings and/or delinquent payments from foodservice industry or other customers may negatively impact cash flow.
A national and/or global economic downturn may impact consumer purchase behavior such as reduced volume for foodservice products and premium brands.
It may become more difficult and/or expensive to obtain debt or equity financing necessary to sustain the Company's operations, make capital expenditures, and/or finance future acquisitions.
The Company may face litigation by stockholders, employees, suppliers, customers, consumers, and others relating to COVID-19 and its effects.
The Company relies on its dedicated employees, many of whom have a long tenure with the Company. Operations may be negatively impacted if members of the Company's leadership team, or other key employees, become ill with COVID-19 or otherwise terminate their employment as a result of COVID-19. Further, the Company may face challenges hiring, onboarding, and training new employees, including leadership, which may impact results. The Company also may face operational challenges if government quarantine orders restrict movement of employees.
It is possible that the COVID-19 pandemic has and continues to negatively affect the Company's labor availability, relations, or labor costs.
Many of the Company's office-based employees continue to work remotely on occasion, which may bring additional information technology and data security risks.
Supply chain disruptions of various types arising from COVID-19 may impact the Company's ability to make products, the cost for such products, and the ability to deliver products to customers. Closure or reduced operations of material suppliers could result in shortages of key raw materials, as well as impact prices for those materials. The volatility in the market for raw material and supplies could impact the Company's profitability.
National, state, and local government orders closing or limiting operation of borders and ports, or imposing quarantine, could impact the Company's ability to obtain raw materials and to deliver finished goods to customers.
COVID-19 has wide-reaching impacts to society and the business, making all decisions, interactions, and transactions significantly more complex.
The Company is committed to being transparent through communications to inform shareholders, employees, customers, consumers, and others about the enhanced safety protocols implemented. The Company must keep pace with a rapidly changing media environment. If the Company's public relations efforts are not effective or if consumers perceive them to be irresponsible, the Company's competitive position, reputation, and market share may suffer.

The extent of the impact on the Company’s business, financial condition, and results of operations is dependent on the length and severity of the pandemic. Vaccines to prevent COVID-19 were approved by health agencies in the U.S. and other countries in which the Company operates, which began to be administered near the end of calendar year 2020. New variants of the virus appear to have increased transmissibility, which could complicate treatment and vaccination programs. The COVID-19 pandemic is an unprecedented situation and the Company's understanding of and response to its impacts is changing and evolving. The additional risk factors identified here are based upon information known at this time. The COVID-19 pandemic may adversely impact the Company's operations in one or more ways not identified to date.





7

The Company’s operations are subject to the general risks associated with acquisitions and divestitures. The Company has made several acquisitions and divestitures in recent years, including the acquisition of the Planters® snack nuts business in June 2021, that align with the Company’s strategic initiative of delivering long-term value to shareholders. The Company regularly reviews strategic opportunities to grow through acquisitions and to divest non-strategic assets. Potential risks associated with these transactions include the inability to consummate a transaction timely or on favorable terms, diversion of management's attention from other business concerns, potential loss of key employees and customers of current or acquired companies, inability to integrate or divest operations successfully, possible assumption of unknown liabilities, potential disputes with buyers or sellers, inability to obtain favorable financing terms, potential impairment charges if purchase assumptions are not achieved, and the inherent risks in entering markets or lines of business in which the Company has limited or no prior experience. Any or all of these risks could impact the Company’s financial results and business reputation. In addition, acquisitions outside the United States may present unique challenges and increase the Company's exposure to the risks associated with foreign operations. The Company's level of indebtedness increased significantly to fund the purchase of the Planters® snack nuts business and may continue to increase to fund future acquisitions. Higher levels of debt may among other things, impact the Company's liquidity and increase the Company's exposure to negative fluctuations in interest rates.

The Company is subject to disruption of operations at co-manufacturers, suppliers, logistics providers, customers, or other third-party service providers.
Disruption of operations at co‑manufacturers, suppliers, or logistics providers have and may continue to impact the Company’s product and input supplies as well as the ability to distribute products.
Disruptions related to significant customers or sales channels has and could continue to result in a reduction in sales or change in the mix of products sold.
Disruption in services from partners such as third-party service providers used to support various business functions such as benefit plan administration, payroll processing, information technology and cloud computing services could have an adverse effect on the Company's business.

Any of these disruptions could have an adverse effect on the Company’s financial results. Actions taken to mitigate the impact of any potential disruption, including increasing inventory in anticipation of a potential production or supply interruption, may adversely affect the Company’s financial results. Additionally, labor shortages have caused disruptions for many of these providers and may continue to impact the Company's ability to receive inputs or distribute products.

The Company is subject to the loss of a material contract. The Company is a party to several supply, distribution, contract packaging and other material contracts. The loss of a material contract or failure to obtain new material contracts could adversely affect the Company’s financial results.

The Company may be adversely impacted if the Company is unable to protect information technology systems against, or effectively respond to, cyber attacks or security breaches. Information technology systems are an important part of the Company’s business operations. In addition, the Company increasingly relies upon third-party service providers for a variety of business functions, including cloud-based services. Cyber incidents are occurring more frequently and are being made by groups and individuals with a wide range of motives and expertise. From time to time, the Company has experienced, and may experience in the future, breaches of our security measures due to human error, malfeasance, insider threats, system errors or vulnerabilities or other irregularities, none of which have been material to date.

In addition, the Company is in the midst of a multi-year transformation project (Project Orion) to achieve better analytics, customer service, and process efficiencies through the use of Oracle Cloud Solutions. This project is expected to improve the efficiency and effectiveness of certain financial and business transaction processes and the underlying systems environment. The initial phase to implement the human resource and payroll process was deployed during the first quarter of fiscal 2020. During the third quarter of fiscal 2020, the Company implemented the finance phase of the project. Additional integrations are expected to take place over the next few years. Such an implementation is a major undertaking from a financial, management, and personnel perspective. The implementation of the enterprise resource planning system may prove to be more difficult, costly, or time consuming than expected, and there can be no assurance that this system will be beneficial to the extent anticipated.

In an attempt to mitigate these risks, the Company has implemented and continues to evaluate security initiatives and business continuity plans.

Deterioration of labor relations, labor availability or increases in labor costs could harm the Company’s business. As of October 31, 2021, the Company employed more than 20,000 people worldwide, of which approximately 20 percent were represented by labor unions, principally the United Food and Commercial Workers Union. A significant increase in labor costs or a deterioration of labor relations at any of the Company’s facilities or co-manufacturing facilities resulting in work slowdowns or stoppages could harm the Company’s financial results. Labor and skilled labor availability challenges could continue to have an adverse effect on the Company's business.

8

Industry Risks

The Company’s operations are subject to the general risks of the food industry. The food products manufacturing industry is subject to the risks posed by:
food spoilage;
food contamination caused by disease-producing organisms or pathogens, such as Listeria monocytogenes, Salmonella, and pathogenic E coli.;
food allergens;
nutritional and health-related concerns;
federal, state, and local food processing controls;
consumer product liability claims;
product tampering; and
the possible unavailability and/or expense of liability insurance.

The pathogens that may cause food contamination are found generally in livestock and in the environment and thus may be present in our products. These pathogens can also be introduced to our products as a result of improper handling by customers or consumers. We do not have control over handling procedures once our products have been shipped for distribution. If one or more of these risks were to materialize, the Company’s brand and business reputation could be negatively impacted. In addition, revenues could decrease, costs of doing business could increase, and the Company’s operating results could be adversely affected.

Outbreaks of disease among livestock and poultry flocks could harm the Company’s revenues and operating margins.
The Company is subject to risks associated with the outbreak of disease in pork and beef livestock, and poultry flocks, including African swine fever (ASF), Bovine Spongiform Encephalopathy (BSE), pneumo-virus, Porcine Circovirus 2 (PCV2), Porcine Reproduction & Respiratory Syndrome (PRRS), Foot-and-Mouth Disease (FMD), Porcine Epidemic Diarrhea Virus (PEDv), and Highly Pathogenic Avian Influenza (HPAI). The outbreak of such diseases could adversely affect the Company’s supply of raw materials, increase the cost of production, reduce utilization of the Company’s harvest facilities, and reduce operating margins. Additionally, the outbreak of disease may hinder the Company’s ability to market and sell products both domestically and internationally.

In recent years, the outbreak of ASF has impacted hog herds in China, Asia, Europe, and the Caribbean. If an outbreak of ASF were to occur in the United States, the Company's supply of hogs and pork could be materially impacted.

The Company has developed business continuity plans for various disease scenarios and will continue to update these plans as necessary. There can be no assurance given, however, that these plans will be effective in eliminating the negative effects of any such diseases on the Company’s operating results.

Fluctuations in commodity prices and availability of raw materials and other inputs could harm the Company’s earnings. The Company’s results of operations and financial condition are largely dependent upon the cost and supply of pork, poultry, beef, feed grains, and nuts as well as supplies, energy and other inputs and the selling prices for many of our products, which are determined by constantly changing market forces of supply and demand.

The company takes a balanced approach to sourcing pork raw materials including hogs purchased for our Austin, Minnesota processing facility, long-term supply agreements for pork, and spot market purchases of pork. This approach ensures a more stable supply of raw materials while minimizing extreme fluctuations in costs over the long-term. This may result, in the short-term, in higher or lower live hog costs compared to the cash spot market. Market-based pricing on certain product lines, and lead time required to implement pricing adjustments, may prevent all or part of these cost increases from being recovered, and these higher costs could adversely affect our short-term financial results.

Jennie-O Turkey Store raises turkeys and contracts with turkey growers to meet its raw material requirements for whole birds and processed turkey products. Results in these operations are affected by the cost and supply of feed grains, which fluctuates due to climate conditions, production forecasts, and supply and demand conditions at local, regional, national, and worldwide markets. The Company attempts to manage some of its short-term exposure to fluctuations in feed prices by forward buying, using futures contracts, and pursuing pricing advances. However, these strategies may not be adequate to overcome sustained increases in market prices due to alternate uses for feed grains or other changes in these market conditions.

The Company may be subject to decreased availability or less favorable pricing for nuts, tomatoes, avocados, or other produce if poor growing conditions have a negative affect on agricultural productivity. Reductions in crop size or quality due to unfavorable growing conditions may have an adverse effect on the Company’s results.

The supplies of natural and organic proteins may impact the Company’s ability to ensure a continuing supply of these products. To mitigate this risk, the Company partners with multiple long-term suppliers.

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International trade barriers and other restrictions or disruptions could result in decreased foreign demand and increased domestic supply of proteins, thereby potentially lowering prices. The Company occasionally utilizes in-country production to limit this exposure.

Market demand for the Company’s products may fluctuate. The Company faces competition from producers of alternative meats and protein sources, including pork, beef, turkey, chicken, fish, nuts, nut butters, whey, and plant-based proteins. The factors on which the Company competes include:
price;
product quality and attributes;
brand identification;
breadth of product line; and
customer service.

Demand for the Company’s products is also affected by competitors’ promotional spending, the effectiveness of the Company’s advertising and marketing programs, and consumer perceptions. Failure to identify and react to changes in food trends such as sustainability of product sources and animal welfare could lead to, among other things, reduced demand for the Company’s brands and products. The Company may be unable to compete successfully on any or all of these factors in the future.

Legal and Regulatory Risks

The Company’s operations are subject to the general risks of litigation. The Company is involved on an ongoing basis in litigation arising in the ordinary course of business. Trends in litigation may include class actions involving employees, consumers, competitors, suppliers, shareholders, or others, and claims relating to product liability, contract disputes, antitrust regulations, intellectual property, advertising, labeling, wage and hour laws, employment practices or environmental matters. Neither litigation trends nor the outcomes of litigation can be predicted with certainty and adverse litigation trends and outcomes could negatively affect the Company’s financial results.

Government regulation, present and future, exposes the Company to potential sanctions and compliance costs that could adversely affect the Company’s business. The Company’s operations are subject to extensive regulation by the U.S. Department of Homeland Security, the U.S. Department of Agriculture, the U.S. Food and Drug Administration, federal and state taxing authorities and other federal, state, and local authorities which oversee workforce immigration, taxation, animal welfare, food safety, and the processing, packaging, storage, distribution, advertising, and labeling of the Company’s products. The Company’s manufacturing facilities and products are subject to ongoing inspection by federal, state and local authorities. Claims or enforcement proceedings could be brought against the Company in the future. The availability of government inspectors due to a government furlough could also cause disruption to the Company’s manufacturing facilities. Additionally, the Company is subject to new or modified laws, regulations, and accounting standards. The Company’s failure or inability to comply with such requirements could subject the Company to civil remedies, including fines, injunctions, recalls or seizures, as well as potential criminal sanctions. A recent federal district court ruling has had a negative impact on harvest capacity and labor costs. Harvest facilities the Company uses are negotiating to resolve the situation and expect to reach a solution, but harvest capacity and labor costs will continue to be negatively impacted until a solution is reached. There can be no assurance a solution will be reached, in which case the negative impacts of the ruling would continue.

The Company is subject to stringent environmental regulation and potentially subject to environmental litigation, proceedings, and investigations. The Company’s past and present business operations and ownership and operation of real property are subject to stringent federal, state, and local environmental laws and regulations pertaining to the discharge of materials into the environment and the handling and disposition of wastes (including solid and hazardous wastes) or otherwise relating to protection of the environment. Compliance with these laws and regulations, as well as any modifications, is material to the Company’s business. Some of the Company’s facilities have been in operation for many years and, over time, the Company and other prior operators of these facilities may have generated and disposed of wastes that now may be considered hazardous. Future discovery of contamination of property underlying or in the vicinity of the Company’s present or former properties or manufacturing facilities and/or waste disposal sites could require the Company to incur additional expenses related to additional investigation, assessment or other requirements. The occurrence of any of these events, the implementation of new laws and regulations or stricter interpretation of existing laws or regulations could adversely affect the Company’s financial results.

The Company’s foreign operations pose additional risks to the Company’s business. The Company operates its business and markets its products internationally. The Company’s foreign operations are subject to the risks described above, as well as risks related to fluctuations in currency values, foreign currency exchange controls, compliance with foreign laws, compliance with applicable U.S. laws, including the Foreign Corrupt Practices Act, and other economic or political uncertainties. International sales are subject to risks related to general economic conditions, imposition of tariffs, quotas, trade barriers and other restrictions, enforcement of remedies in foreign jurisdictions and compliance with applicable foreign laws, and other economic and political uncertainties. All of these risks could result in increased costs or decreased revenues, which could adversely affect the Company’s financial results.

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Item 1B.  UNRESOLVED STAFF COMMENTS
 
None.

Item 2.  PROPERTIES

The Company's global headquarters are located in Austin, Minnesota. The Company has various processing plants, warehouses and operational facilities, mainly located in the United States. The Company maintains a national sales force through strategic placement of sales offices throughout the United States. Properties are also maintained internationally to support global processing and sales. The majority of Company property is owned. Leased property is used as needed for Company production and sales. Property leases range in duration from one to twelve years.

Area*
(Square feet, in thousands)
Refrigerated FoodsGrocery ProductsJennie-O Turkey StoreInternational & OtherCorporateTotal
Production Facilities5,090 2,768 2,012 1,261 — 11,131 
Warehouse/Distribution Centers717 1,211 142 33 — 2,103 
Live Production861 — 314 — — 1,175 
Administrative/Sales/Research60 66 31 575 738 
Total6,728 3,985 2,534 1,325 575 15,147 
*Many of the Company's properties are utilized by more than one segment. These facilities are reflected in the principle segment for presentation purposes. Additionally, turkey growout facilities are excluded.

The Company believes its operating facilities are well maintained and suitable for current production volumes. The Company regularly engages in construction and other capital improvement projects with a focus on value-added capacity projects and automation. In fiscal 2021, the Company acquired the Planters® snack nut business which included three production facilities primarily reflected within the Grocery Products segment.

Item 3.  LEGAL PROCEEDINGS
 
The Company is a party to various legal proceedings related to the ongoing operation of its business, including claims both by and against the Company. At any time, such proceedings typically involve claims related to product liability, labeling, contracts, antitrust regulations, intellectual property, competition laws, employment practices, or other actions brought by employees, customers, consumers, competitors or suppliers. The Company establishes accruals for its potential exposure, as appropriate, for claims against the Company when losses become probable and reasonably estimable. However, future developments or settlements are uncertain and may require the Company to change such accruals as proceedings progress. Resolution of any currently known matters, either individually or in the aggregate, is not expected to have a material effect on the Company’s financial condition, results of operations, or liquidity.

The Company is a defendant in three sets of antitrust lawsuits broadly targeting the pork and turkey industries. None of these cases involve allegations of bid rigging or other criminal conduct. The Company has not established reserves as it does not believe it will have liability in any of these cases.

Item 4.  MINE SAFETY DISCLOSURES
 
Not applicable.
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Information About Executive Officers 
CURRENT OFFICE AND PREVIOUS
NAMEAGEFIVE YEARS EXPERIENCEDATES
James P. Snee54Chairman of the Board, President and Chief Executive Officer11/20/17 to Present
President & Chief Executive Officer10/31/16 to 11/19/17
James N. Sheehan66Executive Vice President and Chief Financial Officer01/29/19 to Present
(Retires 12/31/21)
Senior Vice President and Chief Financial Officer10/31/16 to 01/28/19
Jacinth C. Smiley53Executive Vice President and Chief Financial OfficerEffective 01/01/2022
Group Vice President (Corporate Strategy)04/05/21 to 12/31/21
Vice President and Chief Accounting Officer, LyondellBasell, a multinational chemical company04/01/18 to 04/04/21
Chief Financial Officer, GE Oil and Gas North America, an oil and gas company02/01/16 to 03/31/18
Deanna T. Brady56Executive Vice President (Refrigerated Foods)10/28/19 to Present
Group Vice President/President Consumer Product Sales10/26/15 to 10/27/19
Mark A. Coffey59Group Vice President (Supply Chain)04/26/21 to Present
Senior Vice President (Supply Chain and Manufacturing)03/28/17 to 04/25/21
Vice President (Supply Chain)02/06/17 to 03/27/17
Vice President (Affiliated Businesses)10/31/11 to 02/05/17
PJ Connor52Group Vice President/President Consumer Product Sales10/28/19 to Present
Vice President (Senior Vice President Consumer Product Sales)10/31/11 to 10/27/19
Jeffery R. Frank45Group Vice President (Grocery Products)11/01/21 to Present
Vice President (Grocery Products Marketing)03/01/21 to 10/31/21
Vice President (Foodservice Marketing)04/30/18 to 02/28/21
President & Chief Executive Officer (MegaMex)10/28/13 to 04/29/18
Steven J. Lykken51Group Vice President (Jennie-O Turkey Store, Inc.)03/22/21 to Present
Senior Vice President/President Jennie-O Turkey Store, Inc.12/04/17 to 03/21/21
President Applegate Farms, LLC04/11/16 to 12/03/17
Luis G. Marconi55Group Vice President (Grocery Products)10/31/16 to Present
(Retires 05/01/22)
Swen Neufeldt48Group Vice President (Hormel Foods International Corporation)06/29/20 to Present
Vice President (Meat Products)10/31/16 to 06/28/20
Janet L. Hogan57Senior Vice President (Human Resources)03/28/17 to Present
Vice President (Human Resources)01/18/17 to 03/27/17
Senior Vice President (Human Resources), ProQuest LLC10/10/16 to 01/17/17
Pierre M. Lilly50Senior Vice President and Chief Compliance Officer10/26/20 to Present
Director of Internal Audit05/30/16 to 10/25/20
Lori J. Marco54Senior Vice President (External Affairs) and General Counsel03/30/15 to Present
Kevin L. Myers, Ph.D.56Senior Vice President (Research and Development, Quality Control)03/30/15 to Present
Wendy A. Watkins55Senior Vice President and Chief Communications Officer11/01/21 to Present
Vice President (Corporate Communications)04/13/15 to 10/31/21
Jana L. Haynes49Vice President and Controller05/30/16 to Present
Gary L. Jamison56Vice President and Treasurer05/30/16 to Present

No family relationship exists among the executive officers. 

Executive officers are designated annually by the Board of Directors at the first meeting following the Annual Meeting of Stockholders. Vacancies may be filled and additional officers elected at any time. The Company's Chief Executive Officer has the authority to appoint and remove Vice Presidents (other than Executive Vice Presidents, Group Vice Presidents, and Senior Vice Presidents).
12

PART II

Item 5.  MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES
 
Market Information
Hormel Foods Corporation’s common stock is traded on the New York Stock Exchange under the symbol HRL. The CUSIP number is 440452100.

Holders
There are approximately 12,300 record stockholders and 186,000 stockholders whose shares are held in street name by brokerage firms and financial institutions.

Issuer Purchases of Equity Securities
Fourth Quarter Ended October 31, 2021
Period
Total Number of Shares Purchased1
Average Price Paid Per Share
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs1
Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs1
July 26, 2021 -
August 29, 2021
— — — 4,239,594 
August 30, 2021 -
September 26, 2021
— — — 4,239,594 
September 27, 2021 -
October 31, 2021
252,100 $40.88 252,100 3,987,494 
Total252,100 252,100 
1 On January 29, 2013, the Company's Board of Directors authorized the repurchase of 10,000,000 shares of its common stock with no expiration date. On January 26, 2016, the Board of Directors approved a two-for-one split of the Company’s common stock to be effective January 27, 2016. As part of the stock split resolution, the number of shares remaining to be repurchased was adjusted proportionately.

Dividends
The Company has paid dividends for 373 consecutive quarters. The annual dividend rate for fiscal 2022 was increased 6 percent to $1.04 per share, representing the 56th consecutive annual dividend increase. The Company is dedicated to returning excess cash flow to shareholders through dividend payments.

13

Shareholder return performance graph
The following graph shows a comparison of cumulative total shareholder return, calculated on a dividend-reinvested basis, for the Company, the S&P 500 Index, and the S&P 500 Packaged Foods & Meats Index for the five years ended October 31, 2021. The graph assumes $100 was invested in each, as of the market close on October 31, 2016. Note that historic stock price performance is not necessarily indicative of future stock price performance.

hrl-20211031_g1.jpg


Item 6.  RESERVED



Item 7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
 
Executive Overview
 
Fiscal 2021: The Company achieved record sales of $11.4 billion, a 19 percent increase from fiscal 2020, driven by double-digit growth from all four business segments and from all four go-to-market channels (U.S. retail, U.S. foodservice, U.S. deli, and international). Organic volume and organic net sales1 increased 1 percent and 14 percent, respectively (1See explanation of non-GAAP financial measures in the Consolidated Results section). Strong growth from the foodservice businesses, higher pricing across all segments, and the inclusion of the Planters® snack nuts business were the primary drivers of net sales growth. Demand remained elevated across the domestic retail, domestic deli, and international channels, while the domestic foodservice business experienced a significant recovery after the sharp decline experienced last year as a result of the COVID-19 pandemic. Net earnings were in line with last year as improved volume and sales were unable to offset higher costs as a result of inflation on raw materials, freight, labor, and supplies. Diluted earnings per share for fiscal 2021 was $1.66, flat to last year. The net impact to after-tax earnings from one-time acquisition costs and accounting adjustments related to the acquisition of the Planters® snack nuts business were approximately $37 million, or six cents per share, for fiscal 2021.

Refrigerated Foods segment profit for the full year increased as higher earnings from the foodservice business and the impact of numerous pricing actions fully offset significantly higher raw material costs, increased freight expenses, and higher operational costs. Grocery Products segment profit increased due to the addition of the Planters® snack nuts business and improved organic sales. International & Other segment profit improved significantly for the full year, driven by gains from exports, higher income from the Company's partners in the Philippines, South Korea, and Europe, and strong results in China. Earnings for Jennie-O Turkey Store declined due primarily to higher feed costs and increased freight expenses. Volume, net sales, and segment profit for all business segments were constrained by production labor shortages and supply chain disruptions during the second half of the fiscal year.

14

During fiscal 2021, the Company continued to prioritize investments to ensure the safety of all team members. For the full year, we absorbed approximately $21 million in direct incremental supply chain costs related to the COVID-19 pandemic to enhance safety measures in its production facilities related to the COVID-19 pandemic. The Company estimates most of these incremental supply chain costs are temporary and will eventually decline as the pandemic subsides. In addition to COVID-related investments, volume, net sales, and segment profit were negatively impacted by labor shortages and supply chain disruption.

The Company reinvested into the business through capital expenditures and returned a record amount of cash back to shareholders in the form of dividends. Capital expenditures in fiscal 2021 were $232 million, including investments in a pizza toppings expansion at our manufacturing facility in Nevada, Iowa, expanding capacity for Columbus® charcuterie in Omaha, Nebraska, significant progress on new production capabilities for retail and foodservice pepperoni, Project Orion, and many other projects to support growth of branded products. The annual dividend for 2022 will be $1.04 per share and marks the 56th consecutive year of dividend increases, representing an increase of 6 percent.

In June 2021, the Company acquired the Planters® snack nuts business for $3.4 billion in cash. Included in the acquisition were the Planters® , NUT-rition® , Planters® Cheez Balls and Corn Nuts® brands. This acquisition amplifies our scale in snacking and entertaining by complementing its other brands in the space, including Hormel® Gatherings®, Herdez®, Wholly®, SKIPPY®, and Columbus®.

Fiscal 2022 Outlook: The Company expects all four segments to deliver sales and earnings growth in fiscal 2022. On a consolidated basis, growth is expected in excess of our long-term growth algorithm due to strength in the Planters® snack nuts business, continued elevated demand across all businesses, improved production throughput, incremental capacity on high-growth categories such as pizza toppings and dry sausage, and the benefit from numerous pricing actions executed during fiscal 2021. The operating environment is expected to remain complex. Industry-wide labor shortages, incremental inflationary pressures, and further supply chain disruption pose the greatest risks to the outlook.

The Company remains in a strong financial position due to its consistent cash flow, liquidity, and strong balance sheet. We plan to continue to support the business through marketing and advertising investments for our leading brands as well as investments into our production capabilities, including new capacity for retail and foodservice pepperoni and a new production line for the SPAM® family of products. We also expect to benefit from the progress we have made on our Project Orion and One Supply Chain initiatives to transform our company and position it for long-term growth. Lastly, we remain committed to returning cash to shareholders in the form of dividends.

A detailed review of the Company's fiscal 2021 performance compared to fiscal 2020 appears in following section. A detailed review of the fiscal 2020 performance compared to fiscal 2019 is set forth in Part II, Item 7 of the Company's Form 10-K for the fiscal year ended October 25, 2020 under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which is incorporated herein by reference.

Results of Operations
 
Overview
 
The Company is a processor of branded and unbranded food products for retail, foodservice, deli, and commercial customers.

The Company operates in the following four reportable segments:
SegmentBusiness Conducted
Grocery ProductsThis segment consists primarily of the processing, marketing, and sale of shelf-stable food products sold predominantly in the retail market, along with the sale of nutritional and private label shelf-stable products to retail, foodservice, and industrial customers. This segment also includes the results from the Company’s MegaMex Foods, LLC (MegaMex) joint venture.
Refrigerated FoodsThis segment consists primarily of the processing, marketing, and sale of branded and unbranded pork, beef, and poultry products for retail, foodservice, deli, convenience store, and commercial customers.
Jennie-O Turkey StoreThis segment consists primarily of the processing, marketing, and sale of branded and unbranded turkey products for retail, foodservice, and commercial customers.
International & OtherThis segment includes Hormel Foods International, which manufactures, markets, and sells Company products internationally. This segment also includes the results from the Company’s international joint ventures and royalty arrangements.
 
The Company’s fiscal year consisted of 53 weeks in fiscal year 2021 and 52 weeks in fiscal years 2020 and 2019. Fiscal 2022 will consist of 52 weeks.
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CONSOLIDATED RESULTS
 
Net Earnings and Diluted Earnings Per Share 
 Fourth Quarter EndedYear Ended
(in thousands, except per share amounts)October 31, 2021October 25, 2020% ChangeOctober 31, 2021October 25, 2020% Change
Net Earnings$281,738 $234,356 20.2 $908,839 $908,082 0.1 
Diluted Earnings Per Share0.51 0.43 18.6 1.66 1.66 — 
Adjusted Diluted Earnings Per Share (1)
0.51 0.43 18.6 1.73 1.66 4.2 
 
Volume and Net Sales 
 Fourth Quarter EndedYear Ended
(in thousands)October 31, 2021October 25, 2020% ChangeOctober 31, 2021October 25, 2020% Change
Volume (lbs.)1,379,848 1,209,434 14.1 4,933,136 4,794,706 2.9 
Organic Volume(1)
1,308,606 1,209,434 8.2 4,818,820 4,794,706 0.5 
Net Sales$3,454,751 $2,420,105 42.8 $11,386,189 $9,608,462 18.5 
Organic Net Sales(1)
3,185,297 2,420,105 31.6 10,940,372 9,608,462 13.9 
 
(1)  See the "Non-GAAP Financial Measures" section below for a description of the Company's use of measures not defined by Generally Accepted Accounting Principles (GAAP)
 
Net sales for the fourth quarter were an all-time record, benefiting from pricing actions across the entire portfolio, organic volume growth, and the inclusion of the Planters® snack nuts business. Results from the foodservice businesses in Refrigerated Foods and Jennie-O Turkey Store were particularly strong due to the continued recovery in the foodservice industry after a significant decline in net sales in the fourth quarter of 2020.
For fiscal 2021, net sales were an all-time record. Strong growth from the foodservice businesses, higher pricing across all segments, and the inclusion of the Planters® snack nuts business were the primary drivers.

In fiscal 2022, the Company expects net sales growth from all four business segments, driven primarily by the impact of higher pricing across the portfolio, volume growth from the value-added businesses, and the benefit of a full year of the Planters® snack nuts business. Offsetting a portion of this growth will be the impact from the new pork supply agreement, which is expected to have a negative cumulative impact on the Refrigerated Foods and International & Other business segments of approximately $350 million.

Cost of Products Sold 
 Fourth Quarter EndedYear Ended
 October 31,October 25, October 31,October 25, 
(in thousands)20212020% Change20212020% Change
Cost of Products Sold$2,876,669 $1,962,340 46.6 $9,458,283 $7,782,498 21.5 
 
For fiscal 2021, cost of products sold for the fourth quarter and full year increased due to inflationary pressures stemming from raw materials, packaging, freight, labor, and many other inputs. The inclusion of the Planters® snack nuts business during the third quarter was also a driver of higher costs.

Direct incremental supply chain costs related to the COVID-19 pandemic for fiscal 2021 were approximately $21 million. This compares to approximately $80 million of higher operational costs related to the COVID-19 pandemic incurred during fiscal 2020.

In fiscal 2022, the Company expects cost of products sold to be higher due to the inclusion of the Planters® snack nuts business and continued inflation. Raw material input costs for pork, beef, turkey, and feed are anticipated to remain above historical levels.
 
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Gross Profit 
 Fourth Quarter EndedYear Ended
 October 31,October 25, October 31,October 25, 
(in thousands)20212020% Change20212020% Change
Gross Profit$578,081 $457,765 26.3 $1,927,906 $1,825,963 5.6 
Percentage of Net Sales16.7 %18.9 % 16.9 %19.0 % 

Consolidated gross profit as a percentage of net sales for the fourth quarter and full year declined, driven primarily by broad-based inflationary pressures and a lag in mitigating pricing actions. Gross profit as a percentage of net sales for the fourth quarter of fiscal 2021 increased sequentially compared to the third quarter of fiscal 2021 as pricing actions across the entire portfolio became effective. Gross profit as a percentage of net sales declined for all four business segments in the fourth quarter and for the full year compared to fiscal 2020.

In fiscal 2022, the Company expects gross profit as a percentage of net sales to improve due to the impact of pricing actions taken across all business segments during fiscal 2021. Incremental cost inflation poses the largest risk to this assumption. The Company also expects to benefit in the first half of fiscal 2022 from the positive mix impact from the addition of the Planters® snack nuts business.

Selling, General, and Administrative (SG&A) 
 Fourth Quarter EndedYear Ended
 October 31,October 25, October 31,October 25, 
(in thousands)20212020% Change20212020% Change
SG&A$230,441 $190,797 20.8 $853,071 $761,315 12.1 
Percentage of Net Sales6.7 %7.9 %7.5 %7.9 %

SG&A expenses for the fourth quarter and full year increased due to the incremental and one-time acquisition-related costs related to the Planters® snack nuts business and higher employee-related expenses. As a percentage of sales, SG&A declined for both the fourth quarter and full year due to record net sales and disciplined expense management.

Advertising investments in the fourth quarter were $43 million compared to $29 million in fiscal 2020, an increase of 48 percent. Advertising investments increased 12 percent for the full year.

In fiscal 2022, the Company intends to continue investing in key brands including Planters®, SPAM®, SKIPPY®, Columbus®, Hormel® Black Label®, Hormel® pepperoni, and Jennie-O®.

Research and development continues to be a vital part of the Company's strategy to grow existing brands and expand into new branded items. Research and development expenses were $8.3 million and $33.6 million for the fiscal 2021 fourth quarter and year, respectively, compared to $8.4 million and $31.9 million for the corresponding periods in fiscal 2020.
 
Equity in Earnings of Affiliates 
 Fourth Quarter EndedYear Ended
 October 31,October 25, October 31,October 25, 
(in thousands)20212020% Change20212020% Change
Equity in Earnings of Affiliates$10,041 $9,729 3.2 $47,763 $35,572 34.3 
 
Equity in earnings of affiliates for the fourth quarter of fiscal 2021 increased due to improved earnings from the Company's joint venture in the Philippines. For the full year, equity in earnings of affiliates increased significantly due to strength at MegaMex and in the Philippines.

17

The Company accounts for its majority-owned operations under the consolidation method. Investments in which the Company owns a minority interest, and for which there are no other indicators of control, are accounted for under the equity or cost method. These investments, along with receivables from other affiliates, are included in the Consolidated Statements of Financial Position as investments in and receivables from affiliates. The composition of this line item as of October 31, 2021, was as follows: 
(in thousands)Investments/Receivables
United States$205,413 
Foreign93,606 
Total$299,019 

Interest and Investment Income and Interest Expense
 Fourth Quarter EndedYear Ended
 October 31,October 25, October 31,October 25, 
(in thousands)20212020% Change20212020% Change
Interest and Investment Income$10,138 $10,306 (1.6)$46,878 $35,596 31.7 
Interest Expense(15,589)(8,270)(88.5)(43,307)(21,069)(105.5)

Effective Tax Rate 
 Fourth Quarter EndedYear Ended
 October 31,October 25,October 31,October 25,
 2021202020212020
Effective Tax Rate20.0 %15.9 %19.3 %18.5 %
 
The effective tax rate for fiscal 2021 was impacted by stock-based compensation. The effective tax rate for fiscal 2020 was impacted by stock-based compensation and state tax settlements. For additional information, refer to Note N - Income Taxes.

The Company expects the effective tax rate in fiscal 2022 to be between 20.5 and 22.5 percent.


SEGMENT RESULTS
 
Net sales and operating profits for each of the Company’s reportable segments are set forth below. The Company is an integrated enterprise, characterized by substantial intersegment cooperation, cost allocations, and sharing of assets. Therefore, the Company does not represent that these segments, if operated independently, would report the operating profit and other financial information shown below. Additional segment financial information can be found in Note P - Segment Reporting. 
 Fourth Quarter EndedYear Ended
 October 31,October 25, October 31,October 25, 
(in thousands)20212020% Change20212020% Change
Net Sales      
Grocery Products$905,030 $580,617 55.9 $2,809,445 $2,385,291 17.8 
Refrigerated Foods1,888,311 1,308,842 44.3 6,333,410 5,271,061 20.2 
Jennie-O Turkey Store459,754 373,471 23.1 1,495,151 1,333,459 12.1 
International & Other201,655 157,175 28.3 748,183 618,650 20.9 
Total Net Sales$3,454,751 $2,420,105 42.8 $11,386,189 $9,608,462 18.5 
Segment Profit
Grocery Products$111,235 $81,642 36.2 $382,197 $358,008 6.8 
Refrigerated Foods196,819 157,810 24.7 664,558 609,406 9.1 
Jennie-O Turkey Store30,492 32,618 (6.5)76,006 105,585 (28.0)
International & Other31,343 27,047 15.9 115,943 93,782 23.6 
Total Segment Profit369,888 299,116 23.7 1,238,704 1,166,782 6.2 
   Net Unallocated Expense17,669 20,553 (14.0)112,836 52,307 115.7 
Noncontrolling Interest12 169 (93.1)301 272 10.8 
Earnings Before Income Taxes$352,230 $278,732 26.4 $1,126,170 $1,114,747 1.0 

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Grocery Products
 Fourth Quarter EndedYear Ended
 October 31,October 25, October 31,October 25, 
(in thousands)20212020% Change20212020% Change
Volume (lbs.)403,550 317,743 27.0 1,340,895 1,281,562 4.6 
Net Sales$905,030 $580,617 55.9 $2,809,445 $2,385,291 17.8 
Segment Profit111,235 81,642 36.2 382,197 358,008 6.8 

Net sales for the fourth quarter of fiscal 2021 increased significantly due to the inclusion of the Planters® snack nuts business, higher pricing, and organic volume growth from the center store and Mexican foods portfolios. Growth from brands such as SPAM®, Hormel® Compleats®, Wholly®, and SKIPPY® contributed to the strong results. For fiscal 2021, net sales increased due to the contribution from the Planters® snack nuts business and the benefit of pricing actions across the portfolio, especially in the fourth fiscal quarter.

For the fourth quarter and full year, segment profit increased due to the addition of the Planters® snack nuts business and improved organic sales. Higher pricing across the portfolio helped mitigate inflationary pressure. Volume, net sales, and segment profit were constrained by production labor shortages and supply chain disruptions.

Looking ahead to fiscal 2022, Grocery Products expects to continue to benefit from the addition of the Planters® snack nuts business, pricing actions taken on most product lines, and strong demand for many of its leading retail and Mexican foods brands. Risks to profitability include additional inflationary pressures and labor shortages impacting production on key product lines.

Refrigerated Foods 
 Fourth Quarter EndedYear Ended
 October 31,October 25, October 31,October 25, 
(in thousands)20212020% Change20212020% Change
Volume (lbs.)657,488 572,873 14.8 2,437,217 2,360,571 3.2 
Net Sales$1,888,311 $1,308,842 44.3 $6,333,410 $5,271,061 20.2 
Segment Profit196,819 157,810 24.7 664,558 609,406 9.1 

The continued recovery in the foodservice industry, numerous pricing actions, and strong demand led to significant net sales growth in the fourth quarter of fiscal 2021. Compared to last year, the foodservice business delivered volume and net sales gains in every category. Retail and deli net sales benefited from higher pricing and continued elevated demand for products such as Columbus® grab-and-go items, Hormel® Gatherings® party trays, Hormel® Black Label® bacon, Hormel® pepperoni, and Applegate® natural and organic meats. For the full year, net sales increased due to strong growth from the retail, deli, and foodservice businesses within Refrigerated Foods, which benefited from pricing actions impacting the second half of the year.

Segment profit for the fourth quarter increased primarily due to higher foodservice sales. Higher pricing across the portfolio helped mitigate inflationary pressure. For fiscal 2021, higher earnings from the foodservice business and the impact of numerous pricing actions fully offset significantly higher raw material costs, increased freight expenses, and higher operational expenses. Volume, net sales, and segment profit were constrained by production labor shortages and supply chain disruptions.

In fiscal 2022, Refrigerated Foods is expecting continued net sales growth from the retail, deli, and foodservice businesses due to strong demand and pricing actions taken throughout fiscal 2021. Net sales will be negatively impacted by lower commodity sales due to the new pork supply contract. Profitability is expected to improve due to higher pricing and a more profitable product mix. Risks to profitability include additional inflationary pressures and labor shortages impacting production on key product lines.


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Jennie-O Turkey Store
 Fourth Quarter EndedYear Ended
 October 31,October 30, October 31,October 30, 
(in thousands)20212020% Change20212020% Change
Volume (lbs.)240,771 237,435 1.4 824,184 815,425 1.1 
Net Sales$459,754 $373,471 23.1 $1,495,151 $1,333,459 12.1 
Segment Profit30,492 32,618 (6.5)76,006 105,585 (28.0)
 
For the fourth quarter of fiscal 2021, volume and sales increased as the continued recovery in foodservice, strong demand for Jennie-O® retail items, and higher prices across the portfolio more than offset the negative impact from shifting whole bird shipments to earlier in the year. For the full year, sales increased significantly due to favorable commodity prices and higher value-added volumes and pricing.

Segment profit for the fourth quarter and full year 2021 declined due primarily to higher feed costs and increased freight expenses.

Looking ahead to fiscal 2022, Jennie-O Turkey Store expects momentum from its value-added and commodity businesses to continue due to the benefit of improved pricing and strong demand. Segment profit is expected to improve in fiscal 2022 due to higher pricing. Increased feed, operational, and logistics costs are expected to weigh on profitability near-term, with improvement expected in the back half of the year.

International & Other
 Fourth Quarter EndedYear Ended
 October 31,October 25, October 31,October 25, 
(in thousands)20212020% Change20212020% Change
Volume (lbs.)78,039 81,383 (4.1)330,841 337,149 (1.9)
Net Sales$201,655 $157,175 28.3 $748,183 $618,650 20.9 
Segment Profit31,343 27,047 15.9 115,943 93,782 23.6 
 
Net sales growth for the fourth quarter and full year was broad-based, driven by strong demand and higher prices for branded exports and improved results in China. Fresh pork export volume declined for the quarter and for the full year due to labor shortages.

For the fourth quarter of fiscal 2021, all areas of the business delivered growth in segment profits, led by higher export margins and China. Segment profit improved significantly for the full year, driven by gains from exports, higher income from the Company's partners in the Philippines, South Korea, and Europe, and strong results in China.

The International & Other segment anticipates business momentum to continue, led by growth in China, strong export demand, and the impact of higher prices in fiscal 2022. Net sales and profits will be modestly impacted by lower commodity sales due to the new pork supply contract. International shipping interruptions pose a risk to export sales and profit growth.
 
Unallocated Income and Expense
The Company does not allocate deferred compensation, investment income, interest expense, or interest income to its segments when measuring performance. The Company also retains various other income and unallocated expenses at the corporate level. Equity in Earnings of Affiliates is included in segment profit; however, earnings attributable to the Company’s noncontrolling interests are excluded. These items are included in the segment table for the purpose of reconciling segment results to Earnings Before Income Taxes.
 Fourth Quarter EndedYear Ended
 October 31,October 25,October 31,October 25,
(in thousands)2021202020212020
Net Unallocated Expense$17,669 $20,553 $112,836 $52,307 
Noncontrolling Interest12 169 301 272 
 
Net Unallocated Expense decreased for the fourth quarter of fiscal 2021 as favorable reserve adjustments more than offset higher interest expense and lower investment income. For the full year, Net Unallocated Expense increased significantly due to one-time acquisition costs and accounting adjustments related to the acquisition of the Planters® snack nuts business of $43 million and higher interest expense. These increases were partially offset by higher investment income.
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Non-GAAP Financial Measures

The non-GAAP adjusted financial measurements of adjusted operating income, adjusted selling, general, and administrative expenses, and adjusted diluted earnings per share are presented to provide investors with additional information to facilitate the comparison of past and present operations. These measurements exclude the impact of the acquisition-related expenses and accounting adjustments related to the acquisition of the Planters® snack nuts business. The tax impact was calculated using the effective tax rate for the quarter in which the expenses and accounting adjustments were incurred.

The non-GAAP adjusted financial measurements of organic net sales and organic volume are presented to provide investors with additional information to facilitate the comparison of past and present operations. Organic net sales and organic volume are defined as net sales and volume, excluding the impact of acquisitions and divestitures. Organic net sales and organic volume exclude the impacts of the acquisition of the Planters® snack nuts business (June 2021) in the Grocery Products, Refrigerated Foods, and International & Other segments and the Sadler's Smokehouse acquisition (March 2020) in the Refrigerated Foods segment.

The Company provides Earnings before interest and taxes (EBIT) and Earnings before interest, taxes, depreciation and amortization (EBITDA) because these measures are useful to management and investors as indicators of operating strength relative to prior years and are commonly used to benchmark the Company’s performance.

The Company believes these non-GAAP financial measurements provide useful information to investors because they are the measurements used to evaluate performance on a comparable year-over-year basis. Non-GAAP measurements are not intended to be a substitute for U.S. GAAP measurements in analyzing financial performance. These non-GAAP measurements are not in accordance with generally accepted accounting principles and may be different from non-GAAP measures used by other companies.

The tables below show the calculations to reconcile from the GAAP measures to the non-GAAP adjusted measures.

ADJUSTED DILUTED EARNINGS PER SHARE (NON-GAAP)
Year Ended
October 31, 2021October 25, 2020
(in thousands, except per share amounts)Reported
GAAP
Acquisition Costs and AdjustmentsNon-GAAPReported
GAAP
Non-GAAP
% Change
Net Sales$11,386,189 $ $11,386,189 $9,608,462 18.5 
Cost of Products Sold9,458,283 (12,900)9,445,383 7,782,498 21.4 
Gross Profit1,927,906 12,900 1,940,806 1,825,963 6.3 
Selling, General, and Administrative853,071 (30,303)822,768 761,315 8.1 
Equity in Earnings of Affiliates47,763  47,763 35,572 34.3 
Operating Income1,122,599 43,203 1,165,802 1,100,220 6.0 
Interest and Investment Income (Expense)46,878  46,878 35,596 31.7 
Interest Expense(43,307) (43,307)(21,069)105.5 
Earnings Before Income Taxes1,126,170 43,203 1,169,373 1,114,747 4.9 
Provision for Income Taxes217,029 5,975 223,004 206,393 8.0 
Net Earnings909,140 37,228 946,368 908,354 4.2 
Less: Net Earnings Attributable to Noncontrolling Interest301  301 272 10.7 
Net Earnings Attributable to Hormel Foods Corporation$908,839 $37,228 $946,067 $908,082 4.2 
Diluted Net Earnings Per Share$1.66 $0.06 $1.73 $1.66 4.2 

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ORGANIC VOLUME (NON-GAAP)
Fourth Quarter Ended
 October 31, 2021October 25, 2020
(lbs., in thousands)Reported
(GAAP)
AcquisitionsOrganic
(Non-GAAP)
Reported
(GAAP)
Organic
% Change
Grocery Products403,550 (58,665)344,885 317,743 8.5 
Refrigerated Foods657,488 (10,738)646,750 572,873 12.9 
Jennie-O Turkey Store240,771  240,771 237,435 1.4 
International & Other78,039 (1,838)76,201 81,383 (6.4)
Total Volume1,379,848 (71,242)1,308,606 1,209,434 8.2 

Year Ended
 October 31, 2021October 25, 2020
(lbs., in thousands)Reported
(GAAP)
AcquisitionsOrganic
(Non-GAAP)
Reported
(GAAP)
Organic
% Change
Grocery Products1,340,895 (88,789)1,252,106 1,281,562 (2.3)
Refrigerated Foods2,437,217 (22,688)2,414,529 2,360,571 2.3 
Jennie-O Turkey Store824,184  824,184 815,425 1.1 
International & Other330,841 (2,840)328,001 337,149 (2.7)
Total Volume4,933,136 (114,316)4,818,820 4,794,706 0.5 

ORGANIC NET SALES (NON-GAAP)
Fourth Quarter Ended
 October 31, 2021October 25, 2020
(in thousands)Reported
(GAAP)
AcquisitionsOrganic
(Non-GAAP)
Reported
(GAAP)
Organic
% Change
Grocery Products$905,030 $(221,689)$683,341 $580,617 17.7 
Refrigerated Foods1,888,311 (41,418)1,846,893 1,308,842 41.1 
Jennie-O Turkey Store459,754  459,754 373,471 23.1 
International & Other201,655 (6,346)195,309 157,175 24.3 
Total Net Sales$3,454,751 $(269,454)$3,185,297 $2,420,105 31.6 

Year Ended
 October 25, 2020October 25, 2020
(in thousands)Reported
(GAAP)
AcquisitionsOrganic
(Non-GAAP)
Reported
(GAAP)
Organic
% Change
Grocery Products$2,809,445 $(339,370)$2,470,075 $2,385,291 3.6 
Refrigerated Foods6,333,410 (97,444)6,235,966 5,271,061 18.3 
Jennie-O Turkey Store1,495,151  1,495,151 1,333,459 12.1 
International & Other748,183 (9,003)739,180 618,650 19.5 
Total Net Sales$11,386,189 $(445,817)$10,940,372 $9,608,462 13.9 

EBIT and EBITDA
 Year Ended
(in thousands)October 31, 2021October 25, 2020
EBIT:
Net Earnings Attributable to Hormel Foods Corporation$908,839 $908,082 
Plus: Income Tax Expense217,029 206,393 
Plus: Interest Expense43,307 21,069 
Less: Interest and Investment Income46,878 35,596 
EBIT$1,122,297 $1,099,948 
EBITDA:
EBIT per above1,122,297 1,099,948 
Plus: Depreciation and Amortization228,406 205,781 
EBITDA$1,350,704 $1,305,729 

22

LIQUIDITY AND CAPITAL RESOURCES
When assessing liquidity and capital resources, the Company evaluates cash and cash equivalents, short-term and long-term investments, income from operations, and borrowing capacity.

Cash Flow Highlights
Year Ended
(in millions)October 31, 2021October 25, 2020
Cash and Cash Equivalents$614 $1,714 
Cash Provided By (Used in) Operating Activities1,002 1,128 
Cash Provided by (Used in) Investing Activities(3,626)(656)
Cash Provided by (Used in) Financing Activities1,521 566 

Cash and cash equivalents declined in fiscal 2021 as the Company made significant investments in the acquisition of the Planters® snack nuts business, dividend payments, repayment of long-term debt, and capital expenditures. Additional details related to significant drivers of cash flows are provided below.

Cash Provided by (Used in) Operating Activities
Cash flows from operating activities were largely impacted by changes in operating assets and liabilities.
Accounts receivable increased $192 million in fiscal 2021 primarily due to increased sales and the incremental impact of the Planters® snack nuts business. The $120 million increase in fiscal 2020 is largely due to increased sales and the timing of collections.
In fiscal 2021, inventory increased $145 million due to inflation in raw material and supplies and the acquisition of the Planters® snack nuts business.
Accounts payable and accrued expenses increased $115 million in fiscal 2021 related to the incremental impact of the Planters® snack nuts business. In fiscal 2020, cash flows benefited from a $111 million increase due to the timing of payments.

Cash Provided by (Used in) Investing Activities
In fiscal 2021, the Company acquired the Planters® snack nuts business for $3.4 billion. In fiscal 2020, the Company acquired the assets of Sadler's Smokehouse for $271 million.
Capital expenditures were $232 million and $368 million in fiscal 2021 and 2020, respectively. Significant spending included several multi-year projects including the pizza toppings expansion at our manufacturing facility in Nevada, Iowa, a new dry sausage facility in Omaha, Nebraska, and Project Orion, as well as ongoing investments to support food and employee safety and the growth of branded products.

Cash Provided by (Used in) Financing Activities
The Company issued $2.3 billion and $1.0 billion of long-term debt in fiscal 2021 and 2020, respectively. Proceeds from these issuances, along with cash on hand, were used to fund the acquisition of the Planters® snack nuts business. See Note L - Long-term Debt and Other Borrowing Arrangements for more information.
Cash dividends paid to the Company’s shareholders continues to be an ongoing financing activity for the Company with payments totaling $523 million in fiscal 2021 and $487 million in fiscal 2020. The dividend rate was $0.98 per share in fiscal 2021, which reflected a 5 percent increase over the fiscal 2020 rate of $0.93 per share.
The Company repaid $250 million of its senior unsecured notes upon maturity in fiscal 2021.

Sources and Uses of Cash

The Company believes its balanced business model, with diversification across raw material inputs, channels, and categories, provides stability in ever changing economic environments. The Company applies a waterfall approach to capital resource allocation, which focuses first on required uses of cash such as capital expenditures to maintain facilities, dividend returns to investors, and mandatory debt repayments. Next, the Company looks to strategic items in support of growth initiatives such as acquisitions and innovation investments, which is followed by opportunistic uses including incremental debt repayment and share repurchases. The Company believes its anticipated income from operations, cash on hand, and borrowing capacity under the current credit facility will be adequate to meet all short-term and long-term commitments. The Company's ability to leverage its balance sheet through the issuance of debt provides the flexibility to take advantage of strategic opportunities which may require additional funding.

Capital expenditures for fiscal 2022 are estimated to be $310 million. The largest projects are expected to include new capacity for retail and foodservice pepperoni and a new production line for the SPAM® family of products.

23

The Company remains committed to providing a return to investors through cash dividends. The annual dividend rate for fiscal 2022 was increased 6 percent to $1.04 per share, representing the 56th consecutive annual dividend increase.

The following table shows the Company's other material cash commitments as of October 31, 2021:
 (in millions)Payments Due by Periods
TotalLess than 1 year1-3 years3-5 yearsMore than 5 years
Purchase Commitments(1)
$3,650 $1,180 $1,391 $776 $302 
Debt Repayments(2)