Hormel Foods 2014 Annual Report Download - page 29

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Risk Factors
The Company’s operations are subject to the general risks of
the food industry. The food products manufacturing industry
is subject to the risks posed by:
• food spoilage;
• food contamination caused by disease-producing organ-
isms or pathogens, such as Listeria monocytogenes,
Salmonella, and pathogenic E coli.;
• food allergens;
• nutritional and health-related concerns;
• federal, state, and local food processing controls;
• consumer product liability claims;
• product tampering; and
• the possible unavailability and/or expense of
liability insurance.
The pathogens which may cause food contamination are found
generally in livestock and in the environment and thus may be
present in our products as a result of food processing. These
pathogens also can be introduced to our products as a result
of improper handling by customers or consumers. We do not
have control over handling procedures once our products
have been shipped for distribution. If one or more of these
risks were to materialize, the Company’s brand and business
reputation could be negatively impacted. In addition, revenues
could decrease, costs of doing business could increase, and
the Company’s operating results could be adversely affected.
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, availability of
capital markets, energy availability and costs (including fuel
surcharges), and the effects of governmental initiatives to
manage economic conditions. Decreases in consumer spend-
ing rates and shifts in consumer product preferences could
also negatively impact the Company.
Volatility in financial markets and the deterioration of national
and global economic conditions could impact the Company’s
operations as follows:
• The financial stability of our customers and suppliers may
be compromised, which could result in additional bad debts
for the Company or non-performance by suppliers; and
• The value of our investments in debt and equity securities
may decline, including most significantly the Company’s
trading securities held as part of a rabbi trust to fund sup-
plemental executive retirement plans and deferred income
plans, and the Company’s assets held in pension plans.
The Company also utilizes hedging programs to manage its
exposure to various commodity market risks, which qualify
for hedge accounting for financial reporting purposes. Volatile
fluctuations in market conditions could cause these instru-
ments 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
The Private Securities Litigation Reform Act of 1995 (the
Reform Act) provides a “safe harbor” for forward-looking
statements to encourage companies to provide prospective
information. The Company is filing this cautionary state-
ment in connection with the Reform Act. When used in the
Company’s Annual Report to Stockholders, other filings by the
Company with the U.S. Securities and Exchange Commission,
the Company’s press releases, and oral statements made by
the Company’s representatives, the words or phrases “should
result,” “believe,” “intend,” “plan,” “are expected to,” “tar-
geted,” “will continue,” “will approximate,” “is anticipated,”
“estimate,” “project,” or similar expressions are intended to
identify forward-looking statements within the meaning of
the Reform Act. Such statements are subject to certain risks
and uncertainties that could cause actual results to differ
materially from historical earnings and those anticipated
or projected.
In connection with the “safe harbor” provisions of the Reform
Act, the Company is identifying risk factors that could affect
financial performance and cause the Company’s actual results
to differ materially from opinions or statements expressed
with respect to future periods. The following discussion of risk
factors contains certain cautionary statements regarding the
Company’s business, which should be considered by investors
and others. Such risk factors should be considered in con-
junction with any discussions of operations or results by the
Company or its representatives, including any forward-looking
discussion, as well as comments contained in press releases,
presentations to securities analysts or investors, or other
communications by the Company.
In making these statements, the Company is not undertaking,
and specifically declines to undertake, any obligation to
address or update each or any factor in future filings or com-
munications regarding the Company’s business or results,
and is not undertaking to address how any of these factors
may have caused changes to discussions or information
contained in previous filings or communications. Though the
Company has attempted to list comprehensively these import-
ant cautionary risk factors, the Company wishes to caution
investors and others that other factors may in the future prove
to be important in affecting the Company’s business or results
of operations.
The Company cautions readers not to place undue reliance on
forward-looking statements, which represent current views
as of the date made. Forward-looking statements are inher-
ently at risk to any changes in the national and worldwide
economic environment, which could include, among other
things, economic conditions, political developments, currency
exchange rates, interest and inflation rates, accounting stan-
dards, taxes, and laws and regulations affecting the Company
and its markets.