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Grocery Products: Grocery Products net sales increased 23.3 percent for the fiscal 2013 fourth quarter and 29.6 percent for the year compared to fiscal 2012. Tonnage increased 24.4 per- cent for the quarter and 29.1 percent for the year compared to fiscal 2012. The comparative results reflect the addition of the newly acquired SKIPPY ®  peanut butter business beginning in the second quarter of fiscal 2013 and Don Miguel Foods Corp. sales (additional product lines within the MegaMex joint venture) beginning in the third quarter of fiscal 2012 when the Company’s retail sales force assumed responsibility for these sales. The addition of the SKIPPY ®  peanut butter business contributed an incremental $75.6 million of net sales and 48.1 million lbs. to the top-line results for the fourth quarter. On a combined basis, these businesses contributed an incremental $322.0 million of net sales and 182.8 million lbs. to the top- line results for fiscal 2013. 

Improved sales in both the fourth quarter and fiscal year were recorded for Hormel ®  bacon toppings and the Herdez ®  and Don Miguel ®  products within the Company’s MegaMex joint venture which offset declines in categories such as Hormel ®  chili and Hormel ®  chunk meats. Sales of the Hormel ® Compleats ® line of microwave meals were also strong, enhanced by the intro- duction of new breakfast meal items towards the end of the third quarter. 

Segment profit for Grocery Products increased 17.0 percent for the fourth quarter and 17.9 percent for the year compared to fiscal 2012. Along with the positive performance from the SKIPPY ®  peanut butter products, profit results for the fourth quarter and year benefited from improved margin perfor- mance in Hormel ®  Compleats ® microwave meals and Hormel ® bacon toppings. Higher pork and beef input costs squeezed 

margins of Hormel ®  chili and the SPAM ®  family of products. Lower equity in earnings results from the MegaMex joint venture also impacted profits due to higher incentive expense on the Fresherized Foods acquisition, unfavorable exchange rates, and higher input costs. 

Refrigerated Foods: Net sales for the Refrigerated Foods segment increased 4.2 percent for the fiscal 2013 fourth quar- ter and increased 0.7 percent for the year compared to fiscal 2012. Tonnage decreased 4.8 percent for the fourth quarter and decreased 3.7 percent for the fiscal year compared to fis- cal 2012 results, as planned reductions in this segment’s feed sales business beginning late in the first quarter of fiscal 2013 impacted volume comparisons. Lower sales of commodity fresh pork items contributed to top-line declines in the first half of fiscal 2013, as a reduction in harvest levels was taken to limit the Company’s exposure to unfavorable pork operating margins. However, top-line results strengthened during the second half of the year and solid net sales gains across several key value-added product lines were able to offset the decline in fresh pork sales for the fourth quarter. 

Several value-added product lines within Refrigerated Foods experienced notable growth during fiscal 2013. The retail busi- ness unit had a solid performance throughout fiscal 2013 for Hormel ®  pepperoni, Hormel ® Natural Choice ®  deli meats, and Lloyd’s ®  barbeque ribs in the retail channel. The new Hormel ® REV ® wraps enjoyed broad consumer acceptance, driven in part by a national advertising campaign which began in late July. Within the foodservice business, sales gains for fiscal 2013 were generated by several value-added products, led by sales of Hormel ® Natural Choice ®  deli meats and Hormel ® Fire Braised ™ meats. 

