HRL Hormel Foods Corp /De/ - 10-K

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, terrorist attacks, armed conflicts, public health crises, legal and regulatory actions, immigration policies and trends, and the effects of governmental initiatives to manage economic conditions, including through the imposition of tariffs, quotas, trade barriers, and other restrictions.

Any of these or other changes in national and global economic conditions could adversely impact the Company’s results of operations and financial condition, including as follows:

▪ The financial stability of the Company’s customers and suppliers may be compromised, which could result in challenges in collecting accounts receivable or non-performance by suppliers.

▪ Unfavorable economic conditions may lead customers and consumers to delay or reduce purchases of the Company’s products.

▪ The imposition of tariffs, quotas, trade barriers, or other restrictions could increase the cost of key inputs or reduce their availability. In particular, recent U.S. tariffs imposed or threatened to be imposed on a variety of countries, and any retaliatory actions taken by such countries, could result in the Company incurring additional costs to procure key inputs.

▪ Fuel and transportation costs may become inflated and there may be supply chain shortages and delays, as has occurred in recent years.

▪ Customer demand for products may not materialize to levels required to achieve the Company’s anticipated financial results or may decline as distributors and retailers seek to reduce inventory positions if there is an economic downturn or economic uncertainty in key markets.

▪ The value of the Company’s investments in debt and equity securities may decline, including, most significantly, assets held in pension plans and the trading securities held as part of a rabbi trust to fund supplemental executive retirement plans and deferred compensation 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 provided by operations or explore alternative strategies, such as disposing of assets, to fulfill the payment of principal and interest on its indebtedness.

▪ Volatile fluctuations in market conditions could cause the Company's hedging instruments for its exposure to commodity prices 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 become more favorable than those secured under the Company’s hedging programs.

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The Company’s operations are subject to the risks associated with acquisitions, joint ventures, equity investments, and divestitures. The Company regularly reviews opportunities to support the Company’s strategic initiative of delivering long-term value to shareholders through acquisitions, joint ventures, and equity investments and to divest non-strategic assets. The Company has made several acquisitions, joint ventures, equity investments, and divestitures in recent years, including the purchase of a minority interest in Garudafood in fiscal 2023 and the divestitures of Hormel Health Labs, LLC in fiscal 2024 and Mountain Prairie, LLC in fiscal 2025. 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, loss of key employees and customers of current or acquired companies, inability to integrate or divest operations successfully, assumption of unknown liabilities, disputes with buyers, sellers, or partners, inability to obtain favorable financing terms, and the inherent risks in entering markets or lines of business in which the Company has limited or no prior experience. There is also the risk of post-acquisition impairment charges if purchase assumptions are not achieved, which could adversely affect the Company's results of operations and financial condition. For example, based on an assessment in the fourth quarter of fiscal 2025 and in connection with the preparation of the Company's consolidated financial statements, the Company initiated an impairment review of its investment in Garudafood and concluded that the decline in fair value was no longer believed to be temporary. As a result, the Company recognized a $163.7 million impairment charge to reduce the investment's carrying amount to estimated fair value.

Due to the nature of joint ventures and equity investments, these arrangements involve further risks, including the possibility that the Company is unable to execute business strategies and manage operations given limitations of the Company’s control. Additionally, partners may make business decisions that are inconsistent with the Company’s goals, block or delay necessary decisions, or experience financial difficulties of their own. Acquisitions, joint ventures, or equity investments outside the U.S. may also present unique challenges and increase the Company’s exposure to the risks associated with foreign operations.

The Company’s level of indebtedness may increase to fund acquisitions, joint ventures, or equity investments in the future. Higher levels of debt may, among other things, impact the Company’s liquidity or credit rating and increase the Company’s exposure to fluctuations in interest rates.

Any of these outcomes could adversely impact the Company's reputation, results of operations, and financial condition.

Risks and uncertainties associated with intangible assets, including any future goodwill or intangible asset impairment charges, may negatively impact the Company. 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 significant judgment around estimates and assumptions and is impacted by various factors, including revenue growth rates, operating margins, tax rates, royalty rates, and discount rates. An unfavorable change in any of these factors may lead to the impairment of goodwill and/or intangible assets.

During the Company’s fiscal 2025 quantitative impairment testing, the International reporting unit with a goodwill balance of $258.9 million was identified as having modest fair value in excess of its carrying amount and is considered at heightened risk of impairment. Separately, impairments were recognized on the Planters ® and Chi-Chi's ® trade names for $59.1 million and $2.9 million, respectively. The Justin’s ® trade name was also identified as having heightened risk of impairment. As of October 26, 2025, the total carrying value of indefinite-lived intangible assets considered at heightened risk, including the trade names impaired, was $683.3 million. If the Company continues to face unfavorable changes in any of the factors impacting its intangible assets, the Company may be required to record impairment charges in connection with such assets, which could adversely affect the Company's results of operations and financial condition.

The Company is subject to the risk of disruption of operations, including at owned facilities, co-manufacturers, suppliers, logistics providers, customers, or other third-party service providers. The Company’s ability, and the ability of the Company’s co‑manufacturers, suppliers, and logistics providers to manufacture, supply, and distribute the Company’s products is critical to the Company’s success. A significant disruption in the operation of the Company’s manufacturing, supply, or distribution capabilities, whether Company-owned or supported by third parties, could have a negative impact on the Company’s ability to operate its business, particularly if such a disruption were to occur at a facility that supports a meaningful amount of the Company’s production, such as its Austin, Minnesota manufacturing facility. For example, in the fourth quarter of fiscal 2025 a fire occurred at the Company’s Little Rock, Arkansas, peanut butter production facility, which negatively impacted production at the facility. Actions taken to mitigate the impact of any potential disruption, including investing in capital improvements, redundant supply, or increasing inventory in anticipation of a potential production or supply interruption, may adversely affect the Company’s results of operations. Additionally, labor-related challenges have caused disruptions for Company providers in the past. If the Company’s owned facilities, or key co-manufacturers, suppliers, or logistics providers experience significant labor-related challenges in the future, it could impact the Company’s ability to receive inputs or distribute products. Any of these outcomes could adversely affect the Company's results of operations and financial condition.

The Company relies on its customers to sell its products to ultimate consumers. Any disruption to a significant customer or sales channel could result in a reduction in sales or a change in the mix of products sold, which could adversely affect the Company's results of operations.

The Company also relies on a variety of third-party service providers to support its operations. Any disruption to services from third-party service providers used to support business functions such as benefit plan administration, payroll processing,

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information technology (IT), and cloud computing services could adversely affect the Company's business, results of operations, and financial condition.

The Company may not realize the anticipated cost savings or operating profit improvements associated with strategic initiatives, including its Transform and Modernize initiative. The Company implements strategic initiatives to achieve a profitable cost structure, operate more efficiently, better serve customers, and optimize cash flow. These initiatives may focus on opportunities to improve the procurement, manufacturing, and logistics within the Company’s supply chain as well as general and administrative processes. A failure or delay in implementing the improvements associated with these strategic initiatives could adversely impact the Company’s results of operations, ability to meet its long-term growth expectations, and ability to fund future initiatives.

The Company began its Transform and Modernize initiative in the second half of fiscal 2023 with a goal of contributing meaningful operating profit growth through fiscal 2026. If this initiative does not achieve the expected financial impact in the aggregate or on the expected timeline, the Company’s results of operations and ability to meet its long-term growth expectations could be adversely impacted.

Furthermore, in the fourth quarter of fiscal 2025, the Company commenced a corporate restructuring plan, the focus of which is to reduce administrative expenses, improve efficiencies, and align the workforce to the Company’s future needs, while enabling continued investment in the Company’s growth. The program includes a voluntary early retirement program for certain groups of employees, the closing of certain open roles, involuntary role reductions, and making select changes to benefit programs. If the Company is unable to fully realize the anticipated benefits of this corporate restructuring plan, including the reduction of expenses and the enablement of continued investment in the Company's growth, the Company's results of operations could be adversely impacted.

In addition, the Company is in the midst of multi-year data and technology transformation projects to achieve better analytics, customer service, and process efficiencies and to upgrade technologies. The projects, including updating the Company’s order-to-cash process, are expected to improve the efficiency and effectiveness of certain financial and business transaction processes and the underlying systems environment. Multiple phases of these projects have already been implemented, and additional phases are expected to be implemented in the upcoming years. These implementations are a major undertaking from a financial, management, and personnel perspective and may prove to be more difficult, costly, or time consuming than expected, and there can be no assurance that these projects will be beneficial to the extent anticipated. Any of these outcomes could adversely affect the Company's results of operations and financial condition.

The Company is subject to the risk of unfavorable changes in the Company’s relationships with significant customers, suppliers, distributors, and other third parties. Sales to the Company's largest customer, Walmart, accounted for approximately 16 percent of consolidated gross sales less returns and allowances during fiscal 2025. Walmart is a customer for the Company’s Retail and International segments. The Company’s top five customers collectively represented approximately 38 percent of consolidated gross sales less returns and allowances during fiscal 2025. The loss of one or more of the top customers in any of the reportable segments could adversely affect the Company's results of operations and financial condition.

The Company relies on suppliers, distributors, and other third parties to source key inputs, deliver products to customers, and support its operations. Any termination of, or adverse change in, the Company's relationship with any of these companies could decrease the Company's sales, increase the Company's costs, and negatively impact the Company's results of operations.

The Company may be adversely impacted if the Company is affected by cybersecurity attacks or other security breaches. IT systems are an important part of the Company’s business operations. The Company also increasingly relies upon third-party service providers for a variety of business functions, including cloud-based services. The Company has programs in place to prevent, detect, contain, and respond to cyber incidents. However, the Company may be unable to anticipate security incidents, detect attacks, or implement adequate preventive measures as cyber threats continue to evolve and cyberattacks have become more sophisticated and frequent, including through the use of enhanced technologies and capabilities (such as artificial intelligence) by threat actors with a wide range of expertise and motives. For example, threat actors have increasingly targeted organizations in the U.S. and internationally with sophisticated ransomware attacks, which the Company may be unable to anticipate, detect, or contain. In addition, hardware or software that the Company develops or obtains from third parties may contain defects that could compromise the Company's IT systems. Unauthorized parties may also attempt to gain access to the Company's IT systems or facilities, or those of third parties with whom the Company does business, through fraud, deception, social engineering, or other bad acts. Errors or malicious actions by the Company's team members or contractors and other vulnerabilities or irregularities could also negate the Company's security measures or those of third parties with whom the Company does business and result in a compromise or breach of the Company's or their IT systems. The utilization of hybrid and remote work by the Company's team members, suppliers, and other third parties has amplified the Company's already extensive reliance on IT systems and unimpeded internet access. Furthermore, the training the Company conducts as part of information security and cybersecurity efforts may not be effective in preventing or limiting successful attacks.

The Company and third parties with whom it does business face attempts by others to gain unauthorized access to, sabotage, take control of, and corrupt, its or their IT systems and data. As a result of these types of attempts, both the Company and third

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parties with whom it does business have experienced information security, cybersecurity, and data privacy incidents. None of these incidents have had a material impact on the Company's business strategy, results of operations, or financial condition. If the Company or third parties with whom the Company does business experience additional significant information security, cybersecurity, or data privacy incidents or fail to detect and appropriately respond to significant incidents, the Company's business operations could be severely disrupted and it could be exposed to costly government enforcement actions and private litigation. In addition, the Company's customers and consumers could delay, reduce, or cease purchases of the Company's products. Any of these outcomes could adversely affect the Company's reputation, results of operations, and financial condition.

A significant disruption to the Company's IT systems and the Company's failure to adequately maintain and update those systems could adversely affect the Company's operations. The Company relies extensively on IT systems throughout its business. The Company also relies on continued and unimpeded access to the internet to use its IT systems. These systems are subject to possible damage or interruption from many events, including power and other outages, telecommunications failures, third-party failures, malicious attacks, security breaches, unplanned downtime, program transitions, and implementation errors. Any damage or disruption to the Company's IT systems could severely interrupt the Company's business operations, including the Company's ability to develop, process, and distribute its products, which could adversely affect its reputation, results of operations, and financial condition. The Company has been evolving its IT infrastructure, but continues to rely on a variety of legacy technologies across its business. The Company has invested, and expects to continue investing, in updates to its IT and security infrastructure and capabilities. If the Company fails to effectively implement these updates, the risk of an adverse cybersecurity incident may increase, including for example if vendors fail to continue to provide security updates for legacy technologies. Reliance on legacy technology for an extended period may also increase the Company’s IT maintenance expense and risk of system downtime, as well as slow the Company’s adoption of more innovative technologies or ability to benefit from more sophisticated data analytics. In addition, problems and interruptions associated with implementing technology initiatives could adversely affect the Company's operational efficiency. Any of these outcomes could adversely affect the Company's results of operations and financial condition.

Deterioration of labor relations, labor availability or increases in labor costs could harm the Company’s business. The Company's ability to meet its labor needs while controlling its costs is subject to external factors such as labor laws and regulations, labor availability, unemployment levels, prevailing wage rates, benefit costs, changing demographics, immigration laws, regulations, and enforcement policies, and the Company's reputation within the labor market. If the Company is unable to attract and retain a workforce meeting its needs (including for specialized roles with significant competition for talent) or is unable to successfully execute on succession planning and continuity at all levels of the organization, including as a result of the Company's recent corporate restructuring plan, the Company's operations, strategy, and competitiveness could suffer. Any of these outcomes could adversely affect the Company's reputation, results of operations, and financial condition. In addition, a significant increase in labor costs, a reduction of available labor, or a deterioration of labor relations at any of the Company’s owned facilities or co-manufacturing facilities could result in work slowdowns or stoppages, which could adversely affect the Company's reputation, results of operations, and financial condition.

The Company periodically renegotiates its collective bargaining agreements as such agreements expire. New or increased unionization efforts at a facility or failure to successfully negotiate with existing unions could lead to disruptions in the Company's supply chain, increases in operating costs, and constraints on operating flexibility. Any of these outcomes could adversely affect the Company's reputation, results of operations, and financial condition.

If the Company fails to achieve its projected results or otherwise fails to meet market expectations regarding its financial performance, the price and volatility of its stock could be adversely affected. The Company's results of operations have previously fluctuated from quarter to quarter and may do so again in the future. If the Company fails to achieve its projected results, if its outlook is not aligned with market expectations, if the Company modifies its outlook, if the Company modifies its approach to dividend distributions, or if the Company fails to meet the expectations of investors or securities analysts, the Company's stock price may decline (as it has recently), and the decrease in the stock price may be disproportionate to any shortfall in the Company's financial performance. Additionally, factors such as performance results for the Company's competitors and news or announcements by the Company, its competitors, and other third parties (including governmental entities and officials and non-governmental organizations) may result in a decline and volatility in the Company's stock price.

Industry Risks

The Company’s operations are subject to food safety and other risks inherent to the food industry. The Company's development, production, and distribution of food products for human consumption subjects it to many risks, including:

▪ food contamination caused by disease-producing organisms or pathogens, such as Listeria monocytogenes , Salmonella , and pathogenic E coli ., including contamination caused by the introduction of pathogens as a result of improper handling by customers or consumers (over which the Company has no control);

▪ food contamination caused by operational errors by suppliers, co-manufacturers, or in Company-owned facilities;

▪ mislabeling, including with respect to food allergens;

▪ food spoilage;

▪ claims of false or deceptive advertising;

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▪ 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 Company may face litigation, investigations, and regulatory proceedings and be subject to liability if any of these risks materialize, including if consumption of any of the Company's products causes injury, illness, or death. Furthermore, any such events could damage the Company's relationship with its customers and lead to adverse perceptions of the Company's business and consumer boycotts. In addition, the Company may take marketplace action such as a voluntary product recall in the event of contamination or damage to any of the Company's products. For example, during the fourth quarter of fiscal 2025, the Company issued a voluntary, class 1 recall related to certain chicken products sold in foodservice channels. In addition, during the third quarter of fiscal 2024, the Company voluntarily recalled a limited number of Planters ® products due to the potential for contamination of the product with Listeria monocytogenes . Although the Company has not been made aware of any reports of illness related to the recalled products in connection with either of these recalls, the Company has experienced costs and business impacts associated with the events. If similar events occur in the future or if any other food safety or food industry risks materialize, the Company's reputation, results of operations, and financial condition 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 any 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 earnings. Although the Company has developed business continuity plans for various disease scenarios, there can be no assurance that these plans will be effective in reducing the negative effects of any such diseases on the Company’s results of operations. In recent years, outbreaks of ASF have impacted hog herds in China, Asia, Europe, and the Caribbean. If an outbreak of ASF were to occur in the U.S., the Company’s supply of hogs and pork could be significantly impacted. Furthermore, HPAI was detected within the Company’s turkey supply chain during fiscal 2024 and fiscal 2025. HPAI could continue to be detected in the future. Future impacts of HPAI could reduce the production volume in the Company’s turkey facilities. The Company continues to monitor the situation and will take appropriate actions to protect the health of the turkeys across the supply chain.

The impact of a changing climate may also increase disease risks due to changes in weather or migratory patterns, which may result in certain types of diseases occurring more frequently or with more intense effects. Additionally, the outbreak of disease may hinder the Company’s ability to market and sell products both domestically and internationally.

Any of these outcomes could adversely affect the Company's results of operations and financial condition.

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

The Company takes a balanced approach to sourcing pork raw materials, including hogs purchased for the Austin, Minnesota processing facility, long-term supply agreements for pork, and spot market purchases of pork. This approach is designed to ensure a more stable supply of raw materials while minimizing extreme fluctuations in costs over the long term. However, 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 the Company’s short-term financial results.

The Company 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 fluctuate 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 effect 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.

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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.

Any fluctuations in commodity prices or the availability of raw materials and other inputs necessary for the Company's business could adversely affect the Company's results of operations and financial condition.

Market demand for the Company’s products may fluctuate, including due to private-label products and lower-priced alternatives. The Company faces competition from a variety of sources, including other national brands, private label producers, and 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.

For certain products and product categories there has been, and the Company expects there to continue to be, a consumer shift towards more generic, lower-priced, or other value offerings, including private label products, which could result in lower sales, reduced margins, and lower market share for the Company's products.

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, including those related to food trends such as sustainability of product sources and animal welfare. The Company’s failure to compete successfully on any of these or other factors could lead to, among other things, reduced demand for the Company’s brands and products, which could negatively impact the Company’s results of operations and financial condition.

The Company faces risks related to its ability to respond to changing consumer preferences, diets and eating patterns, including through its innovation and marketing investments. The Company invests in consumer insights and research and development to deliver innovative products that resonate with consumers, appeal to customers, and support sales growth. Consumer preferences for food products are impacted by a variety of factors, including convenience, flavor variety, and developments in options for weight management (e.g., the use of medications). If the Company is unsuccessful in developing and introducing new products that resonate with consumers, the return on the Company’s investment in new product development will be less than anticipated and the Company’s efforts to grow sales through innovation will be less successful than expected. Any of these outcomes could adversely affect the Company's results of operations and financial condition.

Damage to the Company’s reputation or brand image could adversely affect its business. Maintaining and enhancing the reputation of the Company and its key brands is critical to the Company's business success. The Company's reputation is largely based on perceptions. It may be difficult to address negative publicity or sensationalism across media channels, regardless of its accuracy or the reputability of its source, including as a result of fictitious media content (such as content produced by artificial intelligence or bad actors). Negative incidents (including those based on differing perspectives or opinions) involving the Company, its brands, its workforce, or others with whom the Company does business could quickly erode trust and confidence and result in changes in behavior including consumer boycotts, workforce unrest or walkouts, government investigations, and litigation. Negative reputational incidents or negative perceptions of the Company or its brands could adversely affect the Company's business and results of operations, including through lower sales, the termination of business relationships, higher costs, and team member engagement, retention, and recruiting difficulties. The Company has previously experienced negative perceptions of its business, and it could experience similar occurrences in the future. Any of these outcomes could negatively impact the Company's reputation, results of operations, and financial condition.

The Company previously established, and may continue to establish, various goals and initiatives regarding environmental, social, and governance matters, including with respect to sustainability. The Company has modified, and may continue to modify, certain of these goals and initiatives from time to time. The Company's establishment and continuation of any goals or initiatives regarding environmental, social, and governance matters, any modification or termination of such goals or initiatives, or any failure or perceived failure by the Company to achieve them, could result in negative reactions from the Company's shareholders, customers, consumers, team members, suppliers, and other third parties (including governmental entities and officials and non-governmental organizations) and lead to adverse perceptions of the Company's business, consumer boycotts, litigation, investigations, and regulatory proceedings. Any of these outcomes could negatively impact the Company's reputation, results of operations, and financial condition.

Reputational harm can also occur indirectly through companies and others with whom the Company does business or who sell the Company's products. In addition, the Company has previously had, and may in the future have, relationships with celebrities, influencers, and other individuals, including for advertising campaigns and marketing programs. If consumers have negative experiences with, or view unfavorably, any of the companies or individuals with whom the Company has relationships, it could

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cause them to reduce or stop purchasing the Company's products, which could adversely affect the Company's results of operations.

The potential impacts of a changing climate could have an adverse impact on the Company’s results of operations and financial condition. The potential impacts of a changing climate may be widespread and unpredictable and present a variety of risks in the short-term and long-term. The physical effects of a changing climate, such as natural disasters, extreme weather conditions, drought, and rising sea levels, could adversely affect the Company's results of operations, including by reducing the availability of necessary raw materials, increasing the cost of raw materials, increasing its energy costs, disrupting its supply chain, negatively impacting its workforce, damaging its facilities, and threatening the habitability of the locations in which the Company operates. In addition to physical risks, the potential impacts of a changing climate also present transition risks, including regulatory and reputational risks. For example, the Company uses commodities and energy inputs in its operations that may face increased regulation due to a changing climate or other environmental concerns, which could increase the Company's costs. Furthermore, the Company's establishment and continuation of sustainability goals and initiatives, or any modification, conclusion, failure, or perceived failure by the Company to achieve them, or to otherwise meet evolving, varied, and potentially conflicting expectations from the Company's shareholders, customers, consumers, team members, suppliers, and other third parties (including governmental entities and officials and non-governmental organizations) regarding the environment and the Company's goals and initiatives, could lead to adverse perceptions of the Company's business, consumer boycotts, litigation, investigations, and regulatory proceedings. Any of these outcomes could adversely affect the Company's reputation, results of operations, and financial condition.

Legal and Regulatory Risks

Litigation and other legal proceedings may adversely affect the Company's reputation, results of operations, and financial condition. The Company is regularly involved in a variety of legal proceedings, including litigation, arbitration, claims, investigations, and inquiries. The frequency of any such proceedings could increase in the future. These proceedings relate to a wide range of matters, including class actions involving employees, consumers, competitors, suppliers, shareholders, or others, commercial disputes, product liability, contract disputes, antitrust regulations, tax regulations, intellectual property, advertising, labeling, wage and hour laws, employment practices, environmental matters, shareholder actions, securities claims, and other matters relating to the Company's compliance with applicable laws and regulations. These matters are inherently uncertain, and the Company may not be successful in defending itself. Determining applicable reserves and possible losses related to such matters involves judgment and may not reflect the full range of uncertainties and unpredictable outcomes. In addition, the Company's assessment of the materiality and likely outcome of these matters may not be consistent with the ultimate outcome of such matters. Responding to these matters has required, and may in the future require, the Company to devote significant resources and incur significant expenses, even for those that are non-meritorious, which could adversely affect the Company's results of operations and financial condition. Any of these proceedings could also generate negative publicity that adversely affects the Company's reputation.

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, and those of its suppliers, are subject to extensive regulation in the U.S. and abroad, by the U.S. Department of Agriculture, the U.S. Food and Drug Administration, the U.S. Department of Homeland Security, international, federal, and state taxing authorities, and other international, federal, state, and local authorities, including those that oversee workforce mobility, taxation, animal welfare, food safety, and the processing, packaging, storage, distribution, advertising, and labeling of the Company’s products. Claims or enforcement proceedings could be brought against the Company in the future. In addition, these regulations could become more restrictive, which could lead to increased costs for the Company. For example, multiple states in the U.S. have implemented, or are considering implementing, extended producer responsibility laws that will require the Company to enact policies and processes and will increase expenses, including through fees paid to state governments in connection with such laws. In addition, pork harvest facilities that the Company relies upon in its supply chain are currently relying on government-issued waivers to regulations that otherwise limit maximum production line speeds. While rulemaking and legislation are underway to permanently increase permissible line speeds, if these waivers are not made permanent and line speeds are required to be slowed, harvest capacity and costs may be negatively impacted. Any of these outcomes could adversely affect the Company's results of operations and financial condition.

The Company’s manufacturing facilities and products are also subject to ongoing inspection by federal, state, and local authorities. The loss of the availability of government inspectors, including due to a government furlough or reduction in force, could cause disruption to the Company’s manufacturing facilities, which could adversely impact the Company's results of operations.

There have been, and may continue to be, changes in the legal or regulatory environment (including as a result of executive orders) affecting many areas related to the Company's business, including raw material costs and availability, energy costs and availability, workforce availability, transport costs and capacity, information security, cybersecurity, and data privacy, supply chain requirements, food safety, environmental, social, and governance matters, and climate and emissions disclosure. The ultimate impact of any changes in the legal or regulatory environment (including as a result of executive orders) is not possible to predict and could negatively affect the Company's results of operations and financial condition, including by increasing its expenses,

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reducing customer and consumer demand for the Company's products, limiting workforce availability for the Company, its suppliers, and its customers, and resulting in litigation, investigations, and regulatory proceedings against the Company. In addition, if the Company is unable or perceived to be unable to comply with any changes in the legal or regulatory environment (including as a result of executive orders), the Company's reputation, results of operations, and financial condition could be adversely affected.

The Company is subject to stringent environmental regulations and may be subject to environmental litigation, proceedings, and investigations. The Company’s past and present business operations and the Company’s ownership and operation of real property are subject to stringent international, 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. 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 waste 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 reputation, results of operations, and financial condition.

The Company’s foreign operations pose additional risks to the Company’s business. The Company operates its business and markets its products internationally as well as sourcing a variety of inputs from around the world. 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 regulations and tax laws, compliance with applicable U.S. laws, including the Foreign Corrupt Practices Act, and other economic or political uncertainties. The Company's 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. Any of these risks could result in increased costs and decreased revenues, which could adversely affect the Company’s results of operations and financial condition.

Item 7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The Company is a global manufacturer and marketer of branded food products and remains focused on driving long-term growth through a balanced business model, a diverse portfolio, and a commitment to creating value for all stakeholders. The Company reports its results in the following three reportable segments: Retail, Foodservice, and International.

A review of the Company’s fiscal 2025 performance compared to fiscal 2024 appears in the following section. A review of fiscal 2024 performance compared to fiscal 2023 is set forth in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended October 27, 2024, under the caption "Management’s Discussion and Analysis of Financial Condition and Results of Operations," which is incorporated herein by reference.

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The Company discloses certain measures not defined by U.S. Generally Accepted Accounting Principles (GAAP), including organic volume, organic net sales, adjusted selling, general and administrative (SG&A), adjusted SG&A as a percent of net sales, adjusted operating income, adjusted net earnings, adjusted diluted earnings per share, and adjusted segment profit. The Company utilizes these non-GAAP measures to understand and evaluate operating performance on a consistent basis. For additional information and reconciliations to the most closely comparable measures calculated in accordance with GAAP, see the "Non-GAAP Measures" section of this Item. All forward-looking comparisons for fiscal 2026 are comparing fiscal 2025 GAAP figures to projected fiscal 2026 GAAP figures, unless otherwise noted.

Results of Operations

OVERVIEW

Fiscal 2025: The Company believes fiscal 2025 was a challenging year, as strong net sales performance did not translate into net earnings growth. Net sales totaled $12.1 billion, an increase of 2 percent compared to the prior year. Growth was driven by all three segments, and the Company delivered four consecutive quarters of net sales gains.

In fiscal 2025, the Company experienced persistent input cost inflation, primarily related to commodity markets, which significantly pressured earnings. Pork belly, beef, and nut input costs caused the most earnings pressure during the year.

The Company continued to support its strategic programs during fiscal 2025, including its multi-year Transform and Modernize (T&M) initiative. The Company made meaningful progress on the initiative, which is expected to deliver long-term value to the organization. The Company also recognized expenses associated with a corporate restructuring plan designed to reduce administrative expenses, improve efficiencies, and align its workforce to the Company’s future needs, while enabling continued investment in the Company’s growth.

SG&A decreased in fiscal 2025 primarily due to the lapping of antitrust settlements incurred in the prior year, lower advertising spend, and proceeds from a legal settlement. Adjusted SG&A as a percent of net sales was comparable to the prior year.

Operating income decreased 33 percent compared to the prior year, as earnings were significantly impacted by non-cash impairment charges recorded in the International and Retail segments. Adjusted operating income decreased 11 percent.

Net earnings decreased 41 percent compared to the prior year due to the above factors and a higher effective tax rate primarily driven by impairment charges. Adjusted net earnings declined 13 percent. Diluted earnings per share and adjusted diluted earnings per share for fiscal 2025 were $0.87 and $1.37, respectively, compared to $1.47 and $1.58 in the prior year.

Capital expenditures in fiscal 2025 were $311 million, including investments in capacity expansions for Hormel ® Fire Braised™ and Applegate ® products, data and technology, people and animal safety, and the Jiaxing, China, facility. The Company continues to prioritize investments in growth, innovation, cost savings, automation, and maintenance.

Dividends paid to shareholders were a record $633 million.

Changes in global trade policies, including tariffs and retaliatory tariffs, had a minor impact on the Company’s results of operations during fiscal 2025. The Company continues to monitor and evaluate the impact of proposed and enacted tariffs, including proposed and enacted retaliatory tariffs, and other trade restrictions, as well as its ability to mitigate their impacts.

Fiscal 2026 Outlook: The Company continues to navigate through a dynamic consumer and operating environment. Organic net sales growth of 1 percent to 4 percent is expected in fiscal 2026, which the Company anticipates being driven by growth across a broad range of categories, increased brand support and innovation, market-based pricing actions, and the Company’s current assumptions for raw material costs. From a bottom-line perspective, segment profit growth from all three segments is expected in fiscal 2026. Diluted earnings per share are expected to be $1.29 to $1.39 and adjusted diluted earnings per share are expected to be $1.43 to $1.51. Earnings are expected to decline in the first quarter of the year, followed by growth in each of the remaining three quarters. Major risks to the outlook include incremental inflationary pressures and the impact of deteriorating macroeconomic conditions on the Company’s customers, consumers, and operators.

The Company remains in a strong financial position due to its operating cash flow, liquidity, and solid balance sheet. The Company plans to continue to support the business through increased marketing and advertising investments for its leading brands. Further, continued capital expenditure investments are expected, including investments in data and technology and value-added capacity expansions.

The implied annualized dividend rate for 2026 is $1.17 per share, representing an increase of 1 percent and marking the 60th consecutive year of dividend increases. Returning cash to shareholders in the form of dividends remains a top priority for the Company.

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CONSOLIDATED RESULTS

Volume, Net Sales, Net Earnings (Loss) and Diluted Earnings (Loss) Per Share

Fourth Quarter Ended

Fiscal Year Ended

In thousands, except per share amounts

October 26, 2025

October 27, 2024

% Change

October 26, 2025

October 27, 2024

% Change

Volume (lbs.)

Organic Volume (lbs.)

Net Sales

Organic Net Sales

Net Earnings (Loss) Attributable to Hormel Foods Corporation

Diluted Earnings (Loss) Per Share

Adjusted Diluted Earnings Per Share

Net sales increased for the fourth quarter and full year of fiscal 2025 while volume declined over both periods.

For the fourth quarter of fiscal 2025, net sales growth across the Retail and Foodservice segments offset declines in the International segment. Net sales growth across the enterprise was driven primarily by the Jennie-O ® turkey portfolio, Foodservice customized solutions business, Planters ® snack nuts, Applegate ® natural and organic meats, and premium prepared proteins, and the SPAM ® family of products.

For the full year fiscal 2025, net sales increased in each segment. Net sales growth for the full year was driven primarily by the Jennie-O ® turkey portfolio, the SPAM ® family of products, Foodservice customized solutions business, Planters ® snack nuts, Applegate ® natural and organic meats, the bacon portfolio, and the Mexican foods portfolio.

For the fourth quarter of fiscal 2025, volume in the Retail segment was comparable to the prior year and declined in the International segment. For the fourth quarter of fiscal 2025, organic volume increased in the Foodservice segment. For the full year of fiscal 2025, organic volume in the Foodservice segment increased compared to the prior year. Volume declined in the Retail segment and was comparable to the prior year in the International segment for the full year of fiscal 2025.

In fiscal 2026, the Company expects net sales growth, which assumes growth across a broad range of categories, increased brand support and innovation, and market-based pricing actions. Risks to this outlook include slowing consumer demand and commodity price fluctuations.

Cost of Products Sold

Fourth Quarter Ended

Fiscal Year Ended

In thousands

October 26, 2025

October 27, 2024

% Change

October 26, 2025

October 27, 2024

% Change

Cost of Products Sold

Cost of products sold for the fourth quarter and full year of fiscal 2025 increased due to higher commodity input costs, mainly for pork bellies, beef, and nuts.

In fiscal 2026, the Company expects raw material costs for beef and nuts to remain above historical averages. Pork costs are anticipated to be lower than fiscal 2025 levels; however, they are expected to remain elevated compared to long-term averages. Inflationary pressures on employee-related, packaging, and production expenses are expected to persist at normalized levels. The Company’s T&M initiative is projected to continue delivering cost savings in fiscal 2026, with a focus on procurement of ingredients and supplies, production-related costs, and logistics.

Gross Profit

Fourth Quarter Ended

Fiscal Year Ended

In thousands

October 26, 2025

October 27, 2024

% Change

October 26, 2025

October 27, 2024

% Change

Gross Profit

Percent of Net Sales

Gross profit as a percentage of net sales decreased in both the fourth quarter and full year of fiscal 2025 compared to the prior year. Each segment experienced a decline in gross profit as a percentage of net sales versus fiscal 2024. All segments benefited from cost savings generated through the Company’s T&M initiative, which were more than offset by inflationary pressures.

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In fiscal 2026, the Company expects gross profit as a percent of net sales to increase compared to the prior year. Incremental cost inflation and unfavorable sales mix pose the largest risks to this outlook.

Selling, General, and Administrative (SG&A)

Fourth Quarter Ended

Fiscal Year Ended

In thousands

October 26, 2025

October 27, 2024

% Change

October 26, 2025

October 27, 2024

% Change

Adjusted SG&A

Percent of Net Sales

Adjusted Percent of Net Sales

SG&A for the fourth quarter of fiscal 2025 decreased due to proceeds from a legal settlement and lower advertising expenses. Adjusted SG&A for the fourth quarter of fiscal 2025 decreased due to lower advertising expenses.

For full year fiscal 2025, SG&A decreased, primarily due to the lapping of antitrust settlements incurred in fiscal 2024, lower advertising spend, and proceeds from a legal settlement recognized in fiscal 2025. These benefits were partially offset by a loss on a non-core sow operation, higher employee-related expenses, and higher external expenses. Adjusted SG&A increased compared to the prior year, as the reduction in advertising spend was more than offset by higher employee-related expenses and higher external expenses.

Advertising investments in fiscal 2025 were $148 million, representing a 9 percent decrease compared to fiscal 2024.

In fiscal 2026, the Company intends to continue investing in its leading brands and for full year advertising expense to increase compared to the prior year.

Equity in Earnings of Affiliates

Fourth Quarter Ended

Fiscal Year Ended

In thousands

October 26, 2025

October 27, 2024

% Change

October 26, 2025

October 27, 2024

% Change

Equity in Earnings of Affiliates

Equity in earnings of affiliates decreased for the fourth quarter and full year of fiscal 2025 as growth for MegaMex Foods was more than offset by a $164 million non-cash impairment charge related to a minority investment in Indonesia.

Goodwill and Intangible Impairment

During the fourth quarter of fiscal 2025, the Company recognized $71 million of intangible asset impairments related to the Planters ® trade name, a private label customer relationship, and the Chi-Chi's ® trade name, all recorded within the Retail segment.

Interest Income, Interest Expense, and Other Income (Expense), Net

Fourth Quarter Ended

Fiscal Year Ended

In thousands

October 26, 2025

October 27, 2024

% Change

October 26, 2025

October 27, 2024

% Change

Interest Income

Interest Expense

Other Income (Expense), Net

Interest income declined in both the fourth quarter and full year of fiscal 2025, primarily as a result of lower average cash balances. Interest expense was comparable during the fourth quarter and decreased for the full year of fiscal 2025. Other expense increased in the fourth quarter of fiscal 2025, primarily due to costs related to the Company's recently announced corporate restructuring plan. For the full year of fiscal 2025, other expense increased due to one-time costs related to the corporate restructuring plan and lower rabbi performance, which were partially offset by lower on-going pension costs.

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Effective Tax Rate

Fourth Quarter Ended

Fiscal Year Ended

October 26, 2025

October 27, 2024

October 26, 2025

October 27, 2024

Effective Tax Rate

The effective tax rate for fiscal 2025 reflected a detriment related to the non-cash impairment charges on a minority investment recorded in the fourth quarter. The fiscal 2024 effective tax rate included a benefit from the purchase of federal energy tax credits. For additional information, refer to Note O - Income Taxes of the Notes to the Consolidated Financial Statements.

The Company expects the effective tax rate in fiscal 2026 to be between 21.5 and 22.5 percent.

SEGMENT RESULTS

Net sales and segment profit for each of the Company’s reportable segments are set forth below. The Company does not allocate deferred compensation, non-recurring expenses associated with the T&M initiative, corporate restructuring plan costs, and interest and other income and expense to its segments when measuring performance. The Company also retains various other income and expenses at the corporate level. Equity in earnings of affiliates is included in segment profit; however, earnings attributable to the Company’s corporate venturing investments and noncontrolling interests are excluded. These items are included below as Net Unallocated Expense and Noncontrolling Interest when reconciling to Earnings Before Income Taxes.

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 profit and other financial information shown below.

Fourth Quarter Ended

Fiscal Year Ended

In thousands

October 26, 2025

October 27, 2024

% Change

October 26, 2025

October 27, 2024

% Change

Net Sales

Retail

Foodservice

International

Total Net Sales

Segment Profit (Loss)

Retail

Foodservice

International

Total Segment Profit (Loss)

Net Unallocated Expense

Noncontrolling Interest

Earnings (Loss) Before Income Taxes

Retail

Fourth Quarter Ended

Fiscal Year Ended

In thousands

October 26, 2025

October 27, 2024

% Change

October 26, 2025

October 27, 2024

% Change

Volume (lbs.)

Net Sales

Segment Profit

Adjusted Segment Profit

Volume results and net sales growth in the Retail segment in the fourth quarter of fiscal 2025 were driven by the turkey portfolio, Planters ® snack nuts, and Applegate ® products. These gains were partially offset by the strategic decision to discontinue certain offerings of private label snack nuts. Full year fiscal 2025 volume declined, primarily due to contract manufacturing. Full year fiscal 2025 net sales growth was driven by the turkey portfolio, Applegate ® products, the Mexican foods portfolio, and the SPAM ® family of products.

Retail segment profit declined in the fourth quarter and the full year of fiscal 2025, primarily due to non-cash impairment charges. Adjusted segment profit declined for the fourth quarter and full year of fiscal 2025, as net sales growth was more than offset by input cost pressures, mainly due to elevated commodity markets.

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In fiscal 2026, the Company expects modest net sales growth for its Retail segment. Net sales growth is expected to come from a broad range of categories, higher brand support, and market-based pricing actions. Retail segment profit is expected to grow compared to the prior year. Risks to this outlook include slowing consumer demand, unfavorable sales mix, and higher-than-expected operating costs.

Foodservice

Fourth Quarter Ended

Fiscal Year Ended

In thousands

October 26, 2025

October 27, 2024

% Change

October 26, 2025

October 27, 2024

% Change

Volume (lbs.)

Organic Volume (lbs.)

Net Sales

Organic Net Sales

Segment Profit

Organic net sales growth continued to be broad-based in the Foodservice segment in the fourth quarter of fiscal 2025, with significant contributions from the customized solutions business, branded bacon offerings, branded pepperoni, premium prepared proteins, and the Jennie-O ® turkey portfolio, while organic volume was flat. Full year fiscal 2025 organic volume and organic net sales increased due to growth across many categories, with significant contributions from the customized solutions business, Jennie-O ® turkey portfolio, premium prepared proteins, and branded bacon offerings.

Segment profit declined for the fourth quarter of fiscal 2025, as strong net sales growth was more than offset by impacts from a chicken-product recall and the rise in input costs, mainly due to elevated commodity markets. Segment profit declined for the full year of fiscal 2025 as net sales growth was more than offset by the rise in input costs and margin pressures from non-core businesses. The Foodservice segment continued to benefit from an extensive range of solutions-based products, its direct-selling organization, and a diverse channel presence during fiscal 2025.

In fiscal 2026, the Company anticipates year-over-year growth for volume, net sales, and segment profit in its Foodservice segment. Risks to this outlook include a softening of foodservice industry demand, lower-than-expected raw material markets which through market-based pricing can negatively impact net sales, and higher-than-expected operating costs.

International

Fourth Quarter Ended

Fiscal Year Ended

In thousands

October 26, 2025

October 27, 2024

% Change

October 26, 2025

October 27, 2024

% Change

Volume (lbs.)

Net Sales

Segment Profit (Loss)

Adjusted Segment Profit

For the International segment, volume and net sales growth for SPAM ® luncheon meat and the refrigerated portfolio was more than offset by declines in fresh pork exports and competitive pressures in Brazil in the fourth quarter of fiscal 2025. The China market continued to contribute volume and net sales growth in the fourth quarter. Full year fiscal 2025 volume and net sales growth in the China market, the SPAM ® family of products, and the Planters ® brand was partially offset by volume and net sales declines due to competitive pressures in Brazil.

Segment profit for the fourth quarter and full year was significantly impacted by the non-cash impairment of a minority investment in Indonesia. Adjusted segment profit declined in the fourth quarter and full year of fiscal 2025, primarily due to commodity input cost pressures and softness in Brazil.

In fiscal 2026, the Company anticipates year-over-year growth for volume, net sales, and segment profit from its International segment. Risks to this outlook include macroeconomic conditions in multinational markets, cost inflation, and global trade dynamics.

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Unallocated Income and Expense

Fourth Quarter Ended

Fiscal Year Ended

In thousands

October 26, 2025

October 27, 2024

October 26, 2025

October 27, 2024

Net Unallocated Expense

Noncontrolling Interest

For the fourth quarter of fiscal 2025, net unallocated expense increased due to corporate restructuring plan expenses, higher external expenses, and the lapping of the gain on sale of Hormel Health Labs, LLC (Hormel Health Labs) in the prior year. These factors were partially offset by proceeds from a legal settlement.

In addition to the fourth quarter impacts, for fiscal 2025, net unallocated expense increased due to lower interest income, the loss on the sale of a non-core sow operation, and higher expenses related to the T&M initiative. These factors were partially offset by the lapping of prior year legal expenses.

NON-GAAP MEASURES

This report includes measures of financial performance that are not defined by GAAP. The Company utilizes these non-GAAP measures to understand and evaluate operating performance on a consistent basis. These measures may also be used when making decisions regarding resource allocation and in determining incentive compensation. The Company believes these non-GAAP measures provide useful information to investors because they aid analysis and understanding of the Company’s results and business trends relative to past performance and the Company’s competitors. Non-GAAP measures are not intended to be a substitute for GAAP measures in analyzing financial performance. These non-GAAP measures are not calculated in accordance with GAAP and may be different from non-GAAP measures used by other companies.

Transform and Modernize (T&M) Initiative

In the fourth quarter of fiscal 2023, the Company announced a multi-year T&M initiative. In presenting non-GAAP measures, the Company adjusts for (i.e., excludes) expenses for this initiative that are non-recurring, which are primarily project-based external consulting fees and expenses related to supply chain and portfolio optimization (e.g., asset write-offs, severance, or relocation-related costs). The Company believes that non-recurring costs associated with the T&M initiative are not reflective of the Company’s ongoing operating cost structure; therefore, the Company is excluding these discrete costs. The Company does not adjust for (i.e., does not exclude) certain costs related to the T&M initiative that are expected to continue after the project ends, such as software license fees and internal employee expenses, because those costs are considered ongoing in nature as a component of normal operating costs. The Company also does not adjust for savings realized through the T&M initiative as these are considered ongoing in nature and reflective of expected future operating performance.

Gain (Loss) on Sale of Business

In the first quarter of fiscal 2025, the Company sold Mountain Prairie, LLC, a non-core sow operation, resulting in a loss on the sale. In the fourth quarter of fiscal 2024, the Company sold the Hormel Health Labs business, resulting in a gain on the sale. The Company believes the one-time benefit or detriment from these sales, including transaction costs, are not reflective of the Company’s ongoing operating cost structure, are not indicative of the Company’s core operating performance, and are not meaningful when comparing the Company’s operating performance against that of prior periods. Thus, the Company has adjusted for (i.e. excluded) these impacts.

Legal Matters

From time to time, the Company receives proceeds or incurs expenses related to discrete legal matters that the Company believes are not indicative of the Company’s core operating performance, do not reflect expected future operating income or costs, and are not meaningful when comparing the Company’s operating performance against that of prior periods. The Company adjusts for (i.e., excludes) these impacts.

Litigation Settlements

In fiscal 2025 and 2024, the Company entered into settlement agreements with certain plaintiffs in pending antitrust litigation. In the fourth quarter of fiscal 2025, the Company received proceeds in settlement of a separate legal matter. See Note K - Commitments and Contingencies of the Notes to the Consolidated Financial Statements for additional information.

Corporate Restructuring Plan

In the fourth quarter of fiscal 2025, the Company commenced a corporate restructuring plan, the focus of which is to reduce administrative expenses, improve efficiencies, and align the workforce to the Company’s future needs, while enabling continued investment in the Company’s growth. The costs incurred to execute the corporate restructuring plan and the charges incurred under the program are primarily related to severance and employee benefit costs. Because the Company believes the charges incurred under the corporate restructuring plan do not reflect future operating costs and are not meaningful when comparing the Company's operating performance against that of prior periods, the Company adjusts for

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(i.e., excludes) these impacts. See Note R - Restructuring of the Notes to the Consolidated Financial Statements for additional information.

Impairments

In the fourth quarter of fiscal 2025, the Company recorded non-cash impairment charges related to certain intangible assets and an equity method investment. See Note C - Goodwill and Intangible Assets and Note D - Investments in Affiliates of the Notes to the Consolidated Financial Statements for additional information. The Company believes these charges are not indicative of the Company’s core operating performance, do not reflect expected future operating income or costs, and are not meaningful when comparing the Company’s operating performance against that of prior periods. The Company adjusts for (i.e., excludes) these impacts.

The tables below show the calculations to reconcile from the GAAP measures to the non-GAAP measures presented in this Annual Report on Form 10-K. The tax provision expense or benefit of each of the pre-tax items excluded from the Company's GAAP results was computed based on the facts and tax implications associated with each item.

Fourth Quarter Ended

Fiscal Year Ended

in thousands, except per share amounts

October 26, 2025

October 27, 2024

October 26, 2025

October 27, 2024

Cost of Products Sold (GAAP)

Transform and Modernize Initiative (1)

Adjusted Cost of Products Sold (Non-GAAP)

Gross Profit (GAAP)

Transform and Modernize Initiative (1)

Adjusted Gross Profit (Non-GAAP)

SG&A (GAAP)

Transform and Modernize Initiative (2)

Gain (Loss) on Sale of Business

Corporate Restructuring Plan

Litigation Settlements

Adjusted SG&A (Non-GAAP)

Equity in Earnings of Affiliates (GAAP)

Impairment Charges

Adjusted Equity in Earnings of Affiliates (Non-GAAP)

Goodwill and Intangible Impairment (GAAP)

Impairment Charges

Adjusted Goodwill and Intangible Impairment (Non-GAAP)

Operating Income (GAAP)

Impairment Charges

Transform and Modernize Initiative (1)(2)

(Gain) Loss on Sale of Business

Corporate Restructuring Plan

Litigation Settlements

Adjusted Operating Income (Non-GAAP)

Other Income (Expense), Net (GAAP)

Corporate Restructuring Plan

Adjusted Other Income (Expense), Net (Non-GAAP)

Earnings (Loss) Before Income Taxes (GAAP)

Impairment Charges

Transform and Modernize Initiative (1)(2)

Corporate Restructuring Plan

(Gain) Loss on Sale of Business

Litigation Settlements

Adjusted Earnings (Loss) Before Income Taxes (Non-GAAP)

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Fourth Quarter Ended

Fiscal Year Ended

in thousands, except per share amounts

October 26, 2025

October 27, 2024

October 26, 2025

October 27, 2024

Provision for Income Taxes (GAAP)

Impairment Charges

Transform and Modernize Initiative (1)(2)

Corporate Restructuring Plan

(Gain) Loss on Sale of Business

Litigation Settlements

Adjusted Provision for Income Taxes (Non-GAAP)

Net Earnings (Loss) Attributable to Hormel Foods Corporation (GAAP)

Impairment Charges

Transform and Modernize Initiative (1)(2)

Corporate Restructuring Plan

(Gain) Loss on Sale of Business

Litigation Settlements

Adjusted Net Earnings (Loss) Attributable to Hormel Foods Corporation (Non-GAAP)

Diluted Earnings (Loss) Per Share (GAAP)

Impairment Charges

Transform and Modernize Initiative (1)(2)

Corporate Restructuring Plan

(Gain) Loss on Sale of Business

Litigation Settlements

Adjusted Diluted Earnings (Loss) Per Share (Non-GAAP)

Fourth Quarter Ended

Fiscal Year Ended

in thousands, except per share amounts

October 26, 2025

October 27, 2024

October 26, 2025

October 27, 2024

SG&A as a Percent of Net Sales (GAAP)

Transform and Modernize Initiative (2)

Corporate Restructuring Plan

Gain (Loss) on Sale of Business

Litigation Settlements

Adjusted SG&A as a Percent of Net Sales (Non-GAAP)

(1)    Comprised primarily of asset write-offs, equipment relocation expenses, and severance related to supply chain and portfolio optimization.

(2)    Comprised primarily of project-based external consulting fees.

Organic Volume and Organic Net Sales (Non-GAAP)

The non-GAAP measures of organic volume and organic net sales are presented to provide investors with additional information to facilitate the comparison of past and present operations. Organic volume and organic net sales exclude the impact of the sale of Hormel Health Labs in the Foodservice segment in the fourth quarter of fiscal 2024.

Fourth Quarter Ended

October 26, 2025

October 27, 2024

In thousands

GAAP

GAAP

Divestiture

Non-GAAP Organic

Non-GAAP

% Change

Volume (lbs.)

Retail

Foodservice

International

Total Volume (lbs.)

Net Sales

Retail

Foodservice

International

Total Net Sales

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Fiscal Year Ended

October 26, 2025

October 27, 2024

In thousands

GAAP

GAAP

Divestiture

Non-GAAP Organic

Non-GAAP

% Change

Volume (lbs.)

Retail

Foodservice

International

Total Volume (lbs.)

Net Sales

Retail

Foodservice

International

Total Net Sales

Adjusted Segment Profit (Non-GAAP)

Fourth Quarter Ended

October 26, 2025

October 27, 2024

In thousands

GAAP

Non-GAAP Adjustments (1)

Non-GAAP

GAAP

Non-GAAP Adjustments (2)

Non-GAAP

Segment Profit (Loss)

Retail

Foodservice

International

Total Segment Profit (Loss)

Net Unallocated Expense

Noncontrolling Interest

Earnings (Loss) Before Income Taxes

(1)    Retail and International segment profit (loss) adjustments in the fourth quarter of fiscal 2025 were due to non-cash impairment charges. Net Unallocated Expense adjustments were comprised of non-recurring T&M initiative costs, corporate restructuring plan charges, and a favorable litigation settlement.

(2)    Net Unallocated Expense adjustments in the fourth quarter of fiscal 2024 were comprised of non-recurring T&M initiative costs and the gain on the sale of Hormel Health Labs.

Fiscal Year Ended

October 26, 2025

October 27, 2024

In thousands

GAAP

Non-GAAP Adjustments (1)

Non-GAAP

GAAP

Non-GAAP Adjustments (2)

Non-GAAP

Segment Profit (Loss)

Retail

Foodservice

International

Total Segment Profit (Loss)

Net Unallocated Expense

Noncontrolling Interest

Earnings Before Income Taxes

(1)    Retail and International segment profit (loss) adjustments in fiscal 2025 were due to non-cash impairment charges. Net Unallocated Expense adjustments in fiscal 2025 were comprised of non-recurring T&M initiative costs, corporate restructuring plan charges, the loss on sale of Mountain Prairie, LLC, and litigation settlements.

(2)    Net Unallocated Expense adjustments in fiscal 2024 were comprised of non-recurring T&M initiative costs, litigation settlements, and the gain on the sale of Hormel Health Labs.

Forward-looking GAAP to Non-GAAP Measures

Below shows the calculations to reconcile from the estimated fiscal 2026 GAAP measures to the corresponding estimated adjusted non-GAAP measures.

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Fiscal 2026 Outlook - Adjusted Diluted Earnings per Share (Non-GAAP)

The non-GAAP measure of adjusted diluted earnings per share excludes estimated charges associated with the T&M initiative, corporate restructuring plan, and other estimated non-recurring items. The Company’s strategic investments in the T&M initiative are expected to cease at the end of the investment period. T&M charges, corporate restructuring plan expenses, and other estimated non-recurring items are not expected to recur in the foreseeable future and are not considered representative of the Company’s underlying operating performance.

In fiscal 2026, the Company expects:

• Diluted earnings per share (GAAP) in the range of $1.29 to $1.39

• Adjustments for the T&M initiative of $0.06 to $0.07

• Adjustments for corporate restructuring plan-related charges of $0.01

• Adjustments related to other (1) non-recurring items of $0.05 to $0.06

Resulting in an adjusted diluted earnings per share range (non-GAAP) of $1.43 to $1.51.

(1)    Includes estimated one-time consulting expenses related to a former executive officer and estimated non-recurring impacts related to the anticipated sale of the Justin’s ® branded business.

Supplemental Financial Measures (Non-GAAP)

EBIT and EBITDA (Non-GAAP)

The Company provides earnings before interest and taxes (EBIT) and earnings before interest, taxes, depreciation, and amortization (EBITDA) because it believes these measures are useful to management and investors as indicators of operating performance net of non-operating income and expenses, and because they are commonly used to benchmark the Company’s performance.

Fiscal Year Ended

In thousands

October 26, 2025

October 27, 2024

EBIT (Non-GAAP):

Net Earnings Attributable to Hormel Foods Corporation

Plus: Income Tax Expense

Plus: Interest Expense

Less: Interest Income

Less: Other Income (Expense), Net

EBIT (Non-GAAP)

EBITDA (Non-GAAP):

EBIT per above

Plus: Depreciation and Amortization

EBITDA (Non-GAAP)

LIQUIDITY AND CAPITAL RESOURCES

When assessing its 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

Fiscal Year Ended

In millions

October 26, 2025

October 27, 2024

Cash and Cash Equivalents at End of Period

Cash Provided by (Used in) Operating Activities

Cash Provided by (Used in) Investing Activities

Cash Provided by (Used in) Financing Activities

Increase (Decrease) in Cash and Cash Equivalents

Cash and cash equivalents decreased $71 million during fiscal 2025 due to higher costs and elevated inventory levels. Cash provided by operating activities along with existing cash on hand was sufficient to cover dividend payments and capital expenditures during fiscal 2025. The Company repaid a portion of long-term debt by using existing cash on hand and the proceeds from new long-term debt issued in fiscal 2024. Additional details related to significant drivers of cash flows are provided below.

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Cash Provided by (Used in) Operating Activities

• Cash flows from operating activities were impacted by changes in operating assets and liabilities and lower net earnings.

– In fiscal 2025, inventory increased $172 million primarily due to higher raw material costs, strategic inventory build for certain categories, and recovery of snack nuts inventory levels following the production disruptions at the Suffolk, Virginia manufacturing facility. The $95 million decrease in fiscal 2024 was due to a better alignment of product levels with customer demand as well as less turkey and associated feed supplies.

– In fiscal 2025, accounts receivable decreased $33 million due to the timing of sales and estimated impact from the chicken product recall. In fiscal 2024, accounts receivable was comparable to the prior year, decreasing $2 million.

– Accounts payable and accrued expenses decreased $69 million in fiscal 2025 primarily due to the payment of legal settlements and the timing of payments which was partially offset by feed and livestock payment deferrals. In fiscal 2024, accounts payable and accrued expenses decreased $27 million related to the timing of payments which was partially offset by higher employee-related and promotional expenses.

Cash Provided by (Used in) Investing Activities

• Capital expenditures were $311 million and $256 million in fiscal 2025 and 2024, respectively. Significant projects ongoing during fiscal 2025 and fiscal 2024 were for capacity expansions in Barron, Wisconsin and at the Jiaxing, China facility. Additional projects during fiscal 2025 included manufacturing equipment upgrades in Willmar, Minnesota and investments in data and technology.

• Proceeds from the sale of business were $13 million during fiscal 2025, primarily from the sale of the Company’s equity interest in Mountain Prairie, LLC. In fiscal 2024, the Company received $25 million from the sale of Hormel Health Labs.

Cash Provided by (Used in) Financing Activities

• Cash dividends paid to the Company’s shareholders are an ongoing financing activity for the Company with payments totaling $633 million in fiscal 2025 and $615 million in fiscal 2024. The annualized dividend rate was $1.16 per share in fiscal 2025, compared to $1.13 per share in fiscal 2024.

• The Company paid $950 million of its senior unsecured notes upon maturity on June 3, 2024.

• Proceeds from the issuance of long-term debt were $498 million in fiscal 2024, resulting from the Company's issuance of senior unsecured notes with an aggregate principal amount of $500 million.

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 maintains a disciplined capital allocation strategy and uses a waterfall approach, which focuses first on core uses of cash, such as capital expenditures to maintain facilities, dividend returns to investors, mandatory debt repayments, and fulfillment of pension obligations. Next, the Company looks to strategic items in support of growth initiatives, such as other capital projects, acquisitions, additional dividend increases, and working capital investments. Finally, the Company evaluates opportunistic uses, including incremental debt repayment and share repurchases.

The Company believes its anticipated income from operations, cash on hand, borrowing capacity under the current unsecured revolving credit facility, and access to capital markets will be adequate to meet all short-term and long-term commitments. The Company continues to look for opportunities to make investments and acquisitions that align with its strategic priorities. The Company maintains multiple liquidity sources, including its ability to issue debt, which supports strategic investments and acquisitions.

Dividend Payments

The Company remains committed to providing returns to investors through cash dividends on its common stock. The Company has paid 389 consecutive quarterly dividends since becoming a public company in 1928. On November 24, 2025, the Board of Directors authorized a quarterly dividend for the first quarter of fiscal 2026 of $0.2925 per share, a 1% increase from the prior year.

Capital Expenditures

Capital expenditures are allocated to required maintenance and growth opportunities based on the needs of the business. Capital expenditures supporting growth opportunities in fiscal 2026 are expected to focus on projects related to infrastructure, new data and technology, and equipment upgrades. Capital expenditures for fiscal 2026 are estimated to be $260 million to $290 million.

Debt

As of October 26, 2025, the Company’s outstanding debt included $2.9 billion of fixed rate unsecured senior notes due in fiscal 2027, 2028, 2030, and 2051 with interest payable semi-annually. During fiscal 2025, the Company made $73 million of interest payments, and the Company expects to make $73 million of interest payments in fiscal 2026 on these notes. See Note M - Long-term Debt and Other Borrowing Arrangements of the Notes to the Consolidated Financial Statements for additional information.

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Borrowing Capacity

As a source of short-term financing, the Company maintains a $750 million unsecured revolving credit facility. The maximum commitment under this credit facility may be further increased by $375 million upon the satisfaction of certain conditions. Extensions of credit under the facility may be applied by the Company to refinance existing indebtedness and for working capital and other general corporate purposes, including acquisition funding, and may be made in the form of revolving loans, swing line loans, and letters of credit. The lending commitments under the facility are scheduled to expire on March 25, 2030, at which time the Company will be required to pay in full all obligations then outstanding. As of October 26, 2025, the Company had no outstanding borrowings under this facility.

Debt Covenants

The Company’s debt agreements contain customary terms and conditions including representations, warranties, and covenants. These debt covenants limit the ability of the Company to, among other things, incur debt for borrowed money secured by certain liens, or engage in certain sale and leaseback transactions, and the covenants require the Company to maintain certain consolidated financial ratios. As of October 26, 2025, the Company was in compliance with all covenants in its debt agreements and expects to maintain compliance in the future.

Cash Held by International Subsidiaries

As of October 26, 2025, the Company’s international subsidiaries held $218 million of cash and cash equivalents. During the third quarter of fiscal 2025, the Company repatriated $44 million in cash from an international subsidiary and recognized foreign withholding taxes on the one-time distribution. The Company maintains all undistributed earnings as permanently reinvested. The Company evaluates the balance and uses of cash held internationally based on the needs of the business.

Share Repurchases

The Company is authorized to repurchase 3,677,494 shares of common stock as part of an existing plan approved by the Company’s Board of Directors. Under the share repurchase authorization, the Company may repurchase shares periodically, depending on market conditions and other factors, and may do so in open market purchases or privately negotiated transactions. The share repurchase authorization has no expiration date. The Company did not repurchase any shares of stock during fiscal 2025. The Company continues to evaluate share repurchases as part of its capital allocation strategy.

Contractual Obligations

The Company’s material cash commitments as of October 26, 2025, are as follows:

In millions

Payments Due by Periods

Total

Less than 1 year

1-3 years

3-5 years

More than 5 years

Purchase Commitments (1)

Debt Repayments (2)

Interest Payments on Long-term Debt (2)

Pension & Other Postretirement Benefit Payments (3)

Lease Obligations (4)

Other Commitments (5)

(1)      The Company commits to purchase quantities of livestock, grain, and other raw materials to ensure a steady supply of production inputs. The Company uses hedging programs to manage price risk associated with a portion of the future grain and hog commitments. The purchase commitments listed above do not reflect the impact of the hedging instruments that manage the risk of fluctuating commodity markets. See Note G - Derivatives and Hedging and Note K - Commitments and Contingencies of the Notes to the Consolidated Financial Statements for additional information.

(2)    As of October 26, 2025, the Company’s outstanding debt included unsecured senior notes due in fiscal 2027, 2028, 2030, and 2051. The Company is required by certain covenants in its debt agreements to maintain specified levels of financial ratios and financial position. See Note M - Long-term Debt and Other Borrowing Arrangements of the Notes to the Consolidated Financial Statements for additional information.

(3)    Represents pension and other postretirement benefit payments related to the Company’s unfunded defined benefit plans. Benefit payments reflect expectations for the next ten years as estimates are not readily available beyond that point. See Note H - Pension and Other Postretirement Benefits of the Notes to the Consolidated Financial Statements for additional information.

(4)    See Note L - Leases of the Notes to the Consolidated Financial Statements for additional detail. Lease payments exclude $6 million of legally binding minimum lease payments for leases signed but not yet commenced.

(5)    Includes obligations related to infrastructure improvements supporting various manufacturing facilities, a media advertising agreement, and the construction and lease of an aircraft. Other Commitments excludes $38 million for a 20-year infrastructure improvement agreement entered into subsequent to the end of the fiscal year.

Off Balance Sheet Arrangements

As of October 26, 2025, the Company had $48 million of standby letters of credit issued on its behalf. The standby letters of credit are primarily related to the Company’s self-insured workers' compensation programs. This amount includes revocable standby letters of credit totaling $3 million for obligations of an affiliated party that may arise under workers' compensation claims. Letters of credit are not reflected on the Consolidated Statements of Financial Position.

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During fiscal 2025, the Company entered into a purchase agreement related to the construction and lease of a corporate aircraft. As part of the agreement, a third party will make progress payments to the supplier on the Company's behalf. In exchange, the Company expects to enter into a lease arrangement with the third party once the aircraft is delivered. Progress payments made by the third party are subject to reimbursement through a promissory obligation. As of October 26, 2025, $11.5 million of the approximately $28.7 million commitment has been financed by the third party. The Company expects to take possession of the aircraft in fiscal 2027.

CRITICAL ACCOUNTING ESTIMATES

Management’s discussion and analysis of financial condition and results of operations is based upon the Company’s consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires the Company to make estimates, judgments, and assumptions that can have a meaningful effect on the reporting of consolidated financial statements. See Note A - Summary of Significant Accounting Policies of the Notes to the Consolidated Financial Statements for additional information.

Critical accounting estimates are defined as those reflective of significant judgments, estimates and uncertainties, which may result in materially different results under different assumptions and conditions. The Company believes the following are its critical accounting estimates:

Trade Promotions

Description: The Company promotes products through consumer incentives and trade promotions. These promotional programs include, but are not limited to, discounts, slotting fees, coupons, rebates, and in-store display incentives. Customer trade promotion and consumer incentive activities are recorded as a reduction to revenue and a corresponding accrued liability based on amounts estimated as variable consideration.

Judgments and Uncertainties: The Company estimates variable consideration associated with promotional programs using the expected value method to determine the total expected consideration. Estimating variable consideration requires judgment and is based largely on an assessment of anticipated performance informed by historical experience, expected participation, and current market trends.

Sensitivity of Estimate to Change: The liability relating to these promotional activities is based on a review of the outstanding contracts for which performance has taken place, but which remain unpaid. As of October 26, 2025, the Company had trade promotion liabilities of $85.9 million recorded in Accrued Marketing Expenses.

Income Taxes

Description: The Company records income taxes in accordance with the liability method of accounting. Deferred taxes are recognized for the estimated taxes ultimately payable or recoverable based on enacted tax law. Changes in enacted tax rates are reflected in the tax provision as they occur.

Judgments and Uncertainties: The Company computes its provision for income taxes based on the statutory tax rates and tax planning opportunities available to it in the various jurisdictions in which it operates. Judgment is required in evaluating the Company’s tax positions and determining its annual tax provision.

Sensitivity of Estimate to Change: While the Company considers all of its tax positions fully supportable, the Company is occasionally challenged by various tax authorities regarding the amount of taxes due. The Company recognizes a tax position in its financial statements when it is more likely than not the position will be sustained upon examination, based on its technical merits. The position is then measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. A change in judgment related to the expected ultimate resolution of uncertain tax positions will be recognized in earnings in the quarter of such change. As of October 26, 2025, the Company had $20.2 million of unrecognized tax benefits, including estimated interest and penalties, recorded in Other Long-term Liabilities.

Goodwill and Other Indefinite-Lived Intangibles

Description: Other indefinite-lived intangible assets primarily include trade names obtained through business acquisitions which are originally recorded at their estimated fair values at the date of acquisition. Goodwill is the residual after allocating the purchase price to net assets acquired and is allocated across the Company’s reporting units: Retail, Foodservice, and International. Goodwill and indefinite-lived intangible assets are not amortized but tested annually for impairment, or more frequently if impairment indicators arise. If the carrying value of the reporting unit or indefinite-lived intangible asset exceeds the estimated fair value, it is considered impaired which requires a reduction to earnings. See Note A - Summary of Significant Accounting Policies of the Notes to the Consolidated Financial Statements for additional details regarding the Company’s procedures.

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Judgments and Uncertainties: Determining whether impairment indicators exist and estimating the fair value of the Company’s goodwill reporting units and indefinite-lived intangible assets for impairment testing requires significant judgment. Indefinite-lived trade names are evaluated for impairment using an income approach utilizing the relief from royalty method. Significant assumptions include royalty rate, annual projected revenue, discount rate, and estimated long-term growth rate. Estimating the fair value of goodwill reporting units using the discounted cash flow model requires management to make assumptions and projections of future cash flows, revenues, earnings, discount rates, long-term growth rates, and other factors. While sensitivity analysis may be provided for individual assumptions, such analysis may not reflect the combined effect of changes simultaneously impacting multiple assumptions.

Sensitivity of Estimate to Change: The assumptions used to assess impairment consider historical trends, macroeconomic conditions, and projections consistent with the Company’s operating strategy. Changes in these estimates can have a significant impact on the assessment of fair value which could result in material impairment losses. Goodwill reporting units and indefinite-lived intangible assets with less than a 20 percent excess of estimated fair value over carrying amount are considered at heightened risk of impairment.

During the fourth quarter of fiscal 2025, the Company elected to perform a quantitative assessment of goodwill . No goodwill impairment charges were recorded as a result of the testing. The estimated fair value for the Retail and Foodservice reporting units exceeded the calculated carrying value by more than 20 percent. The International reporting unit, with a goodwill carrying value of $258.9 million as of October 26, 2025, was identified as being at heightened risk of impairment. A 10 percent decline in projected cash flow or 100 basis-point increase in the discount rate for any reporting unit would not result in a material impairment.

During the fourth quarter of fiscal 2025, the Company also elected to perform quantitative impairment testing for indefinite-lived intangible assets. As a result of this testing, impairments were recorded on the Planters ® and Chi-Chi's ® trade names for $59.1 million and $2.9 million, respectively. Additionally, the Justin's ® trade name was identified as being at heightened risk of impairment. Fair value estimates used in impairment testing for the Justin's ® trade name assumed continued use and did not incorporate potential changes in ownership structure (see Note B - Acquisitions and Divestitures of the Notes to the Consolidated Financial Statements). After the fiscal 2025 quantitative assessments, the carrying value of indefinite-lived intangible assets at heightened risk for impairment, including the assets impaired, totaled $683.3 million. For indefinite-lived intangible assets not at heightened risk of impairment, a 10 percent decline in forecasted revenue or 100 basis-point increase in the discount rate would not result in a material impairment.

Pension and Other Postretirement Benefits

Description: The Company sponsors several defined benefit pension and postretirement health care benefit plans and recognizes the associated expenses, assets, and liabilities.

Judgments and Uncertainties: In accounting for these employment costs and the associated benefit obligations, management must make a variety of assumptions and estimates including mortality rates, discount rates, compensation increases, expected return on plan assets, health care cost trend rates, and interest crediting rates. The Company considers historical data as well as current facts and circumstances when determining these estimates. Expected long-term rate of return on plan assets is based on fair value, composition of the asset portfolio, historical long-term rates of return, and estimates of future performance. Mortality and discount rates used are based on actuarial tables elected at each fiscal year-end. The Company uses third-party specialists to assist in the determination of these estimates and the calculation of certain employee benefit expenses and the outstanding obligation.

Benefit plan assets are reported at fair value. Due to the lack of readily available market prices, fund managers value private equity investments using models that include a combination of available market data and unobservable inputs that consider earnings multiples, discounted cash flows, and other qualitative and quantitative factors. Other benefit plan investments are measured at net asset value (NAV) per share of the fund’s underlying investments as a practical expedient.

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Sensitivity of Estimate to Change: The assumed discount rate, expected long-term rate of return on plan assets, rate of future compensation increase, interest crediting rate, and the health care cost trend rate have a significant impact on the amounts reported for the benefit plans. For the year ended October 26, 2025, the Company had $1.4 billion and $172.6 million in pension benefit obligation and postretirement benefit obligation, respectively. For fiscal 2026, the Company expects pension benefit costs of $32.3 million and postretirement benefit costs of $7.7 million. A one-percentage-point change in these rates would have the following effects:

One-Percentage-Point

Benefit Cost

Benefit Obligation

In millions

Increase

Decrease

Increase

Decrease

Pension Benefits

Discount Rate

Expected Long-term Rate of Return on Plan Assets

Rate of Future Compensation Increase

Interest Crediting Rate

Postretirement Benefits

Discount Rate

Health Care Cost Trend Rate

As of October 26, 2025, the Company had $82.3 million of private equity and real estate funds and $685.8 million of investments carried at NAV. These valuations are subject to judgments and assumptions of the funds which may prove to be incorrect, resulting in risks of incorrect valuation of these investments. The Company seeks to mitigate these risks by performing various procedures, such as comparing the expected returns based on appropriate benchmarks to reported market values and performing price tests on certain underlying investments. Additionally, a look back comparison of values from audited financial statements to unaudited statements and roll forward calculations of known cash activity are completed to obtain further assurance of reporting accuracy. These procedures cover a majority of the value held in the private equity and NAV investments for each investment type. Variances larger than specified thresholds are investigated further to verify the reported values are reasonable.

See Note H - Pension and Other Postretirement Benefits of the Notes to the Consolidated Financial Statements for additional information.