Hormel Foods 2014 Annual Report Download - page 31

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local environmental laws and regulations pertaining to the
discharge of materials into the environment and the handling
and disposition of wastes (including solid and hazardous
wastes) or otherwise relating to protection of the environment.
Compliance with these laws and regulations, and the ability to
comply with any modifications to these laws and regulations,
is material to the Company’s business. New matters or sites
may be identified in the future that will require additional
investigation, assessment, or expenditures. In addition, some
of the Company’s facilities have been in operation for many
years and, over time, the Company and other prior operators
of these facilities may have generated and disposed of wastes
that now may be considered hazardous. Future discovery of
contamination of property underlying or in the vicinity of the
Company’s present or former properties or manufacturing
facilities and/or waste disposal sites could require the
Company to incur additional expenses. The occurrence of any
of these events, the implementation of new laws and regula-
tions, or stricter interpretation of existing laws or regulations
could adversely affect the Company’s financial results.
The Company’s foreign operations pose additional risks to
the Company’s business. The Company operates its business
and markets its products internationally. The Company’s
foreign operations are subject to the risks described above,
as well as risks related to fluctuations in currency values,
foreign currency exchange controls, compliance with foreign
laws, compliance with applicable U.S. laws, including the
Foreign Corrupt Practices Act, and other economic or political
uncertainties. International sales are subject to risks related
to general economic conditions, imposition of tariffs, quotas,
trade barriers and other restrictions, enforcement of reme-
dies in foreign jurisdictions and compliance with applicable
foreign laws, and other economic and political uncertainties.
All of these risks could result in increased costs or decreased
revenues, which could adversely affect the Company’s finan-
cial results.
Deterioration of labor relations or increases in labor costs
could harm the Company’s business. As of October 26, 2014,
the Company had approximately 20,400 employees worldwide,
of which approximately 5,500 were represented by labor
unions, principally the United Food and Commercial Workers’
Union. A significant increase in labor costs or a deterioration of
labor relations at any of the Company’s facilities or contracted
hog processing facilities that results in work slowdowns or
stoppages could harm the Company’s financial results. Union
contracts at the Company’s facilities in Algona, Iowa; Atlanta,
Georgia; Austin, Minnesota; Beloit, Wisconsin; Fremont,
Nebraska; and Vernon, California will expire during fiscal 2015,
covering a combined total of approximately 3,400 employees.
Negotiations at these facilities have not yet been initiated.
key employees and customers of the acquired companies, the
possible assumption of unknown liabilities, potential disputes
with the sellers, potential impairment charges if purchase
assumptions are not achieved or market conditions decline,
and the inherent risks in entering markets or lines of business
in which the Company has limited or no prior experience. Any
or all of these risks could impact the Company’s financial
results and business reputation. In addition, acquisitions
outside the United States may present unique challenges and
increase the Company’s exposure to the risks associated with
foreign operations.
The Company’s operations are subject to the general risks
of litigation. The Company is involved on an ongoing basis in
litigation arising in the ordinary course of business. Trends
in litigation may include class actions involving employees,
consumers, competitors, suppliers, shareholders, or injured
persons, and claims relating to product liability, contract
disputes, intellectual property, advertising, labeling, wage and
hour laws, employment practices, or environmental matters.
Litigation trends and the outcome of litigation cannot be
predicted with certainty and adverse litigation trends and out-
comes could adversely affect the Company’s financial results.
The Company is subject to the loss of a material contract.
The Company is a party to several supply, distribution,
contract packaging, and other material contracts. The loss
of a material contract could adversely affect the Company’s
financial results.
Government regulation, present and future, exposes the
Company to potential sanctions and compliance costs
that could adversely affect the Company’s business. The
Company’s operations are subject to extensive regula-
tion by the U.S. Department of Homeland Security, the
U.S. Department of Agriculture, the U.S. Food and Drug
Administration, federal and state taxing authorities, and other
state and local authorities that oversee workforce immigration
laws, tax regulations, animal welfare, food safety standards,
and the processing, packaging, storage, distribution, advertis-
ing, and labeling of the Company’s products. The Company’s
manufacturing facilities and products are subject to continu-
ous inspection by federal, state, and local authorities. Claims
or enforcement proceedings could be brought against the
Company in the future. The availability of government inspec-
tors due to a government furlough could also cause disruption
to the Company’s manufacturing facilities. Additionally, the
Company is subject to new or modified laws, regulations, and
accounting standards. The Company’s failure or inability to
comply with such requirements could subject the Company
to civil remedies, including fines, injunctions, recalls, or sei-
zures, as well as potential criminal sanctions.
The Company is subject to stringent environmental regu-
lation and potentially subject to environmental litigation,
proceedings, and investigations. The Company’s past and
present business operations and ownership and operation
of real property are subject to stringent federal, state, and