UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

 


 

FORM 11-K

 

x

 

ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

 

[NO FEE REQUIRED]

 

 

 

For the fiscal year ended October 28, 2006

 

 

 

OR

 

 

 

o

 

TRANSITION REPORT PURSUANT TO SECTION 15(D) OF THE SECURITIES EXCHANGE ACT OF

 

 

1934 [NO FEE REQUIRED]

 

For the transition period from                  to                 

 

Commission file number   1-2402

 

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

 

Jennie-O Turkey Store Retirement Savings Plan

 

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

 

Hormel Foods Corporation

 

 

1 Hormel Place

 

 

Austin, MN 55912

 

 

 

 

 

507-437-5611

 

 

 

 




 

Jennie-O Turkey Store Retirement Savings Plan

Audited Financial Statements and Schedules

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

 

Contents

Report of Independent Registered Public Accounting Firm

 

 

 

 

 

Audited Financial Statements

 

 

 

 

 

Statements of Net Assets Available for Benefits

 

 

Statements of Changes in Net Assets Available for Benefits

 

 

Notes to Financial Statements

 

 

 

 

 

Schedules

 

 

 

 

 

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

 

 

Schedule H, Line 4j — Schedule of Reportable Transactions

 

 

 

2




 

Report of Independent Registered Public Accounting Firm

The Employee Benefit Committee and

The Trustees of Jennie-O Turkey Store Retirement Savings Plan

 

We have audited the accompanying statements of net assets available for benefits of the Jennie-O Turkey Store Retirement Savings Plan as of October 28, 2006, and October 29, 2005, and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Plan’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan at October 28, 2006, and October 29, 2005, and changes in its net assets available for benefits for the years then ended, in conformity with U. S. generally accepted accounting principles.

Our audit of the Plan’s financial statements as of and for the year ended October 28, 2006, was made for the purpose of forming an opinion on the financial statements taken as a whole. The supplemental schedules of assets (held at end of year) as of October 28, 2006, and reportable transactions for the year then ended are presented for the purpose of additional analysis and are not a required part of the financial statements but are supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. These supplemental schedules are the responsibility of the Plan’s management. The supplemental schedules have been subjected to the auditing procedures applied in the audit of the financial statements for the year ended October 28, 2006, and, in our opinion, are fairly stated in all material respects in relation to the financial statements taken as a whole.

                                                                                                /s/ Ernst & Young LLP

Minneapolis, Minnesota

April 20, 2007

 

3




 

Jennie-O Turkey Store Retirement Savings Plan

 

Statements of Net Assets Available for Benefits

 

 

 

October 28,

 

October 29,

 

 

 

2006

 

2005

 

Assets

 

 

 

 

 

Cash

 

$

17,199

 

$

11,737

 

Investments, at fair value:

 

 

 

 

 

Collective fund

 

26,415,512

 

22,316,287

 

Mutual funds

 

56,108,478

 

47,801,071

 

Participant loans

 

4,143,280

 

3,216,977

 

Contributions receivable:

 

 

 

 

 

Employer

 

237,620

 

259,526

 

Employee

 

139,503

 

131,670

 

Total assets

 

87,061,592

 

73,737,268

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

Administrative fees payable

 

12,992

 

 

Net assets available for benefits

 

$

87,048,600

 

$

73,737,268

 

 

 

 

 

 

 

See accompanying notes.

 

 

 

 

 

 

 

4




 

Jennie-O Turkey Store Retirement Savings Plan

 

Statements of Changes in Net Assets Available for Benefits

 

 

 

 

Year Ended

 

 

 

October 28,

 

October 29,

 

 

 

2006

 

2005

 

Additions:

 

 

 

 

 

Interest and dividend income

 

$

1,190,154

 

$

769,830

 

Net realized and unrealized appreciation

 

 

 

 

 

in fair value of investments

 

8,429,457

 

3,594,989

 

Employee contributions

 

3,712,476

 

3,581,821

 

Employer contributions

 

6,164,339

 

5,787,190

 

Rollover contributions

 

12,065

 

12,545

 

Total additions

 

19,508,491

 

13,746,375

 

 

 

 

 

 

 

Deductions:

 

 

 

 

 

Distributions to participants

 

6,127,083

 

4,720,935

 

Administrative expenses

 

70,076

 

43,987

 

Total deductions

 

6,197,159

 

4,764,922

 

Increase in net assets available for benefits

 

13,311,332

 

8,981,453

 

 

 

 

 

 

 

Transfers in from other plans

 

 

 

 

 

 

 

 

 

Net assets available for benefits:

 

 

 

 

 

Beginning of year

 

73,737,268

 

64,755,815

 

End of year

 

$

87,048,600

 

$

73,737,268

 

 

 

 

 

 

 

See accompanying notes.

 

 

 

 

 

 

 

5




 

Jennie-O Turkey Store Retirement Savings Plan

Notes to Financial Statements

October 28, 2006

1. Description of the Plan

The following description of the Jennie-O Turkey Store Retirement Savings Plan (the Plan) provides only general information. Participants should refer to the plan document or Summary Plan Description for a more complete description of the Plan’s provisions. Effective October 26, 2003, the Jennie-O Pension Plan and Trust and the accounts for all participants who were not exempt from minimum wage and maximum hour provisions of the Fair Labor Standards Act of 1938 in the West Central Turkeys Retirement Savings Plan were merged into and with the Jennie-O Foods, Inc. Hourly Employee 401(k) Savings Plan. The new combined plan was renamed the Jennie-O Turkey Store Retirement Savings Plan. Assets from the previously terminated Turkey Store Company Employees’ Stock Ownership Plan were rolled into the Plan on December 31, 2003.

General

The Plan is a contributory defined contribution plan covering substantially all nonexempt employees of Jennie-O Turkey Store (the Company) who have completed six months of continuous service with at least 500 hours of service. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). The Plan year-end is the last Saturday in October.

Contributions

Each year, participants may contribute up to 50% of pretax annual compensation, subject to Internal Revenue Service (IRS) limitations, as defined in the Plan. Effective October 26, 2003, the company matching contribution is an amount equal to 50% of the first 2% of pay contributed for the pay period. Effective October 26, 2003, the Company’s fixed contribution to the Plan is an amount equal to 4% of the eligible employees’ earnings, less any forfeitures of terminated employees’ unvested interests.

Vesting

Participants’ employee savings contributions are fully vested immediately. The Company’s 4% (fixed) contribution vests after five years of vesting service, and the company matching contribution vests after three years of vesting service.

6




 

Amounts forfeited upon early termination of employment are used to either restore the non-vested accounts of rehired participants, reduce further employer contributions, or reduce plan expenses. The value of forfeited non-vested accounts at October 28, 2006, and October 29, 2005, were $139,097 and $77,651, respectively.

Participant Accounts

Participants are eligible to direct the investment of their employee savings contributions into any of the available fund options. Effective October 30, 2005, participants are also eligible to direct the investment of any employer matching or fixed contributions they receive for plan years beginning on or after October 26, 2003. Previously, participants were eligible to direct the investment of any employer matching or fixed contributions they received for plan years beginning on or after October 26, 2003, as soon as administratively possible following the end of the plan year in which they complete three years or five years of vesting service, respectively.

Participant Loans

Participants may borrow from their participant-directed fund accounts a minimum of $1,000 up to a maximum of $50,000 or 50% of their vested account balances, whichever is less.

Loan transactions are treated as transfers (from) to the investment fund to (from) the loan fund. Loan terms are up to five years, unless the loan is used to acquire a primary residence. The interest rate is 1% over the prime rate of interest charged by large United States money center commercial banks. For the purpose of sharing in any gains or losses of the trust fund, the amount of the accounts will be deemed to have been reduced by the unpaid balance of any outstanding loans. All loan repayments are made through payroll deductions.

Payment of Benefits

Upon retirement, death, or termination of employment, the participant or beneficiary may, after consulting with the trustee, receive a lump-sum amount equal to the vested value of the funds allocated to his or her account. Annuities are available in certain circumstances, as described in the plan document.

7




 

Reclassifications

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

2. Summary of Accounting Policies

Investment Valuation and Income Recognition

The Plan’s investments are stated at fair value. The investments held by the Plan at year-end are valued at quoted market prices. Participant loans are valued at their outstanding principal balances, which approximate fair value.

Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend basis. Gain or loss on sales of securities is based on specific identification.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

8




 

3. Investments

The Plan’s assets are held for investment purposes by a bank-administered trust fund.

The Plan’s investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated in value during 2006 and 2005 as follows:

 

Year Ended
October 28,

 

Year Ended
October 29,

 

 

 

2006

 

2005

 

 

 

 

 

 

 

Collective funds

 

$

938,942

 

$

743,474

 

Mutual funds

 

7,490,515

 

2,851,515

 

 

 

$

8,429,457

 

$

3,594,989

 

 

The following investments represent 5% or more of the Plan’s net assets as of 2006 and 2005:

 

October 28,

 

October 29,

 

 

 

2006

 

2005

 

 

 

 

 

 

 

American Growth Fund of America

 

$

12,421,902

 

$

10,110,898

 

U.S. Bank National Association Stable Asset Fund

 

26,307,826

 

22,316,287

 

First American Equity Index Fund

 

8,236,425

 

7,002,845

 

American Century Small Cap Value Fund

 

6,045,023

 

5,635,443

 

MFS Value Fund Class A

 

8,127,552

 

6,909,684

 

AIM International Growth Fund Class A

 

*

 

4,830,637

 

Franklin Strategic Income Fund

 

10,345,959

 

8,664,596

 


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

4. Plan Termination

Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of plan termination, participant accounts would become 100% vested. After payment of the applicable expenses, accounts would be revalued and distributed to the participants.

5. Income Tax Status

The Plan has received a determination letter from the IRS dated December 16, 2005, 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. Subsequent to this determination by the IRS, the Plan was amended. Once qualified, the Plan is required to operate in conformity with the Code to maintain its qualifications. The plan administrator believes the Plan is being operated

9




 

with the applicable requirements of the Code and, therefore, believes the Plan, as amended, is qualified and the related trust is tax exempt.

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 will 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.

 

10




 

Jennie-O Turkey Store Retirement Savings Plan

 

EIN: 41-0734466

Plan #: 003

 

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

 

October 28, 2006

 

 

Number of

 

Current

 

Description of Asset

 

Shares/Units Held

 

Value

 

 

 

 

 

 

 

 

 

Collective fund:

 

 

 

 

 

 

 

U.S. Bank National Association:*

 

 

 

 

 

 

 

Stable Asset Fund

 

741,692

 

units

 

$

26,307,826

 

Hormel Foods Stock Fund

 

10,182

 

shares

 

107,686

 

Total collective funds

 

 

 

 

 

26,415,512

 

 

 

 

 

 

 

 

 

Mutual funds:

 

 

 

 

 

 

 

American Growth Fund of America Class R4

 

375,057

 

shares

 

12,421,902

 

Franklin Strategic Income Fund

 

1,010,348

 

shares

 

10,345,959

 

First American Equity Index Fund Class Y

 

319,489

 

shares

 

8,236,425

 

MFS Value Fund Class A

 

305,432

 

shares

 

8,127,552

 

American Century Small Cap Value Fund

 

562,328

 

shares

 

6,045,023

 

AIM International Growth Fund Class A

 

148,560

 

shares

 

4,141,862

 

First American Small Cap Select Fund Cl Y

 

242,891

 

shares

 

3,891,117

 

Blackrock International Opportunity Cl 1

 

35,677

 

shares

 

1,584,080

 

First American Strategy Income Allocation Fund Cl A

 

113,422

 

shares

 

1,314,558

 

Total mutual funds

 

 

 

 

 

56,108,478

 

 

 

 

 

 

 

 

 

Participant loans

 

Interest rates range from 5.0% to 9.25%, maturing

 

 

 

 

through 10/15/2011

 

4,143,280

 

Total assets held at end of year

 

 

 

 

 

$

86,667,270

 


*Indicates a party in interest to the Plan.

11




 

 

 

 

 

Jennie-O Turkey Store Retirement Savings Plan

 

EIN: 41-0734466
Plan #: 003

 

Schedule H, Line 4j — Schedule of Reportable Transactions

 

Year Ended October 28, 2006

 

 

 

 

 

 

 

 

 

 

 

Current Value of

 

 

 

 

 

Description

 

Purchase

 

Selling

 

Cost of

 

Asset on Date of

 

Net Gain

 

Identity of Party Involved

 

of Transaction

 

Price

 

Price

 

Asset

 

Transaction

 

(Loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Category (iii) — Series of transactions in excess of 5% of plan assets

 

 

 

 

 

 

 

 

 

 

 

AIM International Growth A

 

2,377 transactions

 

$

1,032,175

 

$

 

$

1,032,175

 

$

1,032,175

 

$

 

 

 

2,321 transactions

 

 

 

3,221,374

 

2,070,274

 

3,221,374

 

1,151,100

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

American Century Small Cap Value Fund

 

2,314 transactions

 

1,957,210

 

 

1,957,210

 

1,957,210

 

 

 

 

2,471 transactions

 

 

 

1,816,981

 

1,639,230

 

1,816,981

 

177,751

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

US Bank Stable Asset Fund

 

2,648 transactions

 

8,343,987

 

 

8,343,987

 

8,343,987

 

 

 

 

2,636 transactions

 

 

 

5,286,693

 

4,955,094

 

5,286,693

 

331,599

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Franklin Strategic Income Fund

 

2,329 transactions

 

3,776,182

 

 

3,776,182

 

3,776,182

 

 

 

 

2,355 transactions

 

 

 

2,247,281

 

2,255,204

 

2,247,281

 

(7,923

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12




 

Jennie-O Turkey Store Retirement Savings Plan

 

EIN: 41-0734466

Plan #: 003

 

Schedule H, Line 4j — Schedule of Reportable Transactions (continued)

 

 

 

 

 

 

 

 

 

 

 

 

 

Current Value of

 

 

 

 

 

 

 

Purchase

 

Selling

 

Cost of

 

Asset on Date of

 

Net Gain

 

Identity of Party Involved

 

Description of Transaction

 

Price

 

Price

 

Asset

 

Transaction

 

(Loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Category (iii) — Series of transactions in excess of 5% of plan assets (continued)

 

 

 

 

 

 

 

 

 

 

 

 

 

American Growth Fund of America Cl R4

 

2,381 transactions

 

$

3,173,533

 

$

 

$

3,173,533

 

$

3,173,533

 

$

 

 

 

2,256 transactions

 

 

 

2,409,106

 

2,195,592

 

2,409,106

 

213,514

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MFS Value Fund Class A

 

2,291 transactions

 

2,409,136

 

 

2,409,136

 

2,409,136

 

 

 

 

2,376 transactions

 

 

 

2,121,913

 

1,800,005

 

2,121,913

 

321,908

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

There were no category (i), (ii), or (iv) reportable transactions for the year ended October 28, 2006.

 

 

 

 

 

 

 

 

 

 

 

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.

 

JENNIE-O TURKEY STORE

 

 

RETIREMENT SAVINGS PLAN

 

 

 

 

 

 

 

 

Date:

April 23, 2007

 

 

By:

 

/s/ JODY H. FERAGEN

 

 

 

 

 

 

JODY H. FERAGEN

 

 

 

 

Senior Vice President and

 

 

 

 

Chief Financial Officer

 

14




 

EXHIBIT INDEX

 

Exhibit
Number

 

Description

 

 

23

 

Consent of Independent Registered Public Accounting Firm

 

15