HORMEL FOODS CORP /DE/HRL
HORMEL FOODS CORP /DE/ Income Taxes Disclosure
Income Taxes
The components of the Provision for Income Taxes are as follows:
| Fiscal Year Ended | ||||||||||||||||||||
| In thousands | October 26, 2025 | October 27, 2024 | October 29, 2023 | |||||||||||||||||
| Current | ||||||||||||||||||||
| U.S. Federal | $ | 97,519 | $ | 110,928 | $ | 161,016 | ||||||||||||||
| State | 17,618 | 17,002 | 20,166 | |||||||||||||||||
| Foreign | 17,675 | 15,203 | 7,576 | |||||||||||||||||
| Total Current | 132,812 | 143,133 | 188,758 | |||||||||||||||||
| Deferred | ||||||||||||||||||||
| U.S. Federal | 46,851 | 74,461 | 23,221 | |||||||||||||||||
| State | 7,658 | 14,868 | 8,602 | |||||||||||||||||
| Foreign | (1,637) | (1,659) | (29) | |||||||||||||||||
| Total Deferred | 52,872 | 87,670 | 31,794 | |||||||||||||||||
| Total Provision for Income Taxes | $ | 185,684 | $ | 230,803 | $ | 220,552 | ||||||||||||||
Deferred Income Taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the deferred income tax liabilities and assets are as follows:
| In thousands | October 26, 2025 | October 27, 2024 | ||||||||||||
| Deferred Tax Liabilities | ||||||||||||||
| Goodwill and Intangible Assets | $ | (618,099) | $ | (556,263) | ||||||||||
| Tax over Book Depreciation and Basis Differences | (204,612) | (211,554) | ||||||||||||
| Other, Net | (32,828) | (39,618) | ||||||||||||
| Deferred Tax Assets | ||||||||||||||
| Pension and Other Postretirement Benefits | 43,434 | 50,078 | ||||||||||||
| Employee-related Liabilities | 70,803 | 70,339 | ||||||||||||
| Marketing and Promotional Accruals | 6,473 | 9,833 | ||||||||||||
| Inventory | 8,445 | 6,853 | ||||||||||||
| Other, Net | 70,165 | 84,733 | ||||||||||||
| Net Deferred Tax (Liabilities) Assets | $ | (656,219) | $ | (585,599) | ||||||||||
Reconciliation of the statutory federal income tax rate to the Company’s effective tax rate is as follows:
| Fiscal Year Ended | ||||||||||||||||||||
| October 26, 2025 | October 27, 2024 | October 29, 2023 | ||||||||||||||||||
| U.S. Statutory Rate | 21.0 | % | 21.0 | % | 21.0 | % | ||||||||||||||
| State Taxes on Income, Net of Federal Tax Benefit | 3.6 | 2.6 | 2.5 | |||||||||||||||||
Impairment on Equity Method Investment | 5.2 | — | — | |||||||||||||||||
Foreign-derived Intangible Income Deduction | (0.2) | — | (1.3) | |||||||||||||||||
All Other, Net | (1.6) | (1.3) | (0.4) | |||||||||||||||||
| Effective Tax Rate | 28.0 | % | 22.3 | % | 21.8 | % | ||||||||||||||
As of October 26, 2025, the Company had $335.7 million of undistributed earnings from non-U.S. subsidiaries. The Company maintains all earnings as permanently reinvested. Accordingly, no additional income taxes have been provided for withholding tax, state tax, or other taxes.
Total income taxes paid during fiscal 2025, 2024, and 2023 were $183.5 million, $186.4 million, and $205.0 million, respectively. Fiscal 2025 and 2024 included amounts paid for the purchase of federal transferable energy credits.
The changes in unrecognized tax benefits, excluding interest and penalties, for fiscal 2025 and 2024 are as follows:
| In thousands | ||||||||
Balance as of October 29, 2023 | $ | 19,127 | ||||||
| Tax Positions Related to the Current Period | ||||||||
| Increases | 3,151 | |||||||
| Tax Positions Related to Prior Periods | ||||||||
| Increases | 1,449 | |||||||
| Decreases | (443) | |||||||
| Settlements | (2,341) | |||||||
| Decreases Related to a Lapse of Applicable Statute of Limitations | (3,183) | |||||||
Balance as of October 27, 2024 | $ | 17,760 | ||||||
| Tax Positions Related to the Current Period | ||||||||
| Increases | 3,720 | |||||||
| Tax Positions Related to Prior Periods | ||||||||
| Increases | 2,035 | |||||||
| Decreases | (1,225) | |||||||
| Settlements | (1,446) | |||||||
| Decreases Related to a Lapse of Applicable Statute of Limitations | (3,220) | |||||||
Balance as of October 26, 2025 | $ | 17,624 | ||||||
Unrecognized tax benefits, if recognized as of October 26, 2025, would impact the Company’s effective tax rate by $16.0 million compared to $15.9 million as of October 27, 2024. The Company includes accrued interest and penalties related to uncertain tax positions in Provision for Income Taxes, with immaterial expenses included during fiscal 2025, 2024, and 2023. The amount of accrued interest and penalties, associated with unrecognized tax benefits was $2.6 million and $2.3 million at October 26, 2025, and October 27, 2024, respectively.
Tax Examinations: The Company is regularly audited by federal, state, and foreign taxing authorities.
The IRS concluded its examination of fiscal 2022 in the second quarter of fiscal 2024. The IRS placed the Company in the Bridge phase of the Compliance Assurance Process (CAP) for fiscal 2023 and 2024. In this phase, the IRS will not accept any disclosures, conduct any reviews, or provide any assurances. The Company has elected to participate in CAP through fiscal 2026. The objective of CAP is to contemporaneously work with the IRS to achieve federal tax compliance and resolve all or most of the issues prior to filing of the tax return. The Company may elect to continue participating in CAP for future tax years; the Company may withdraw from the program at any time.
The Company is in various stages of audit by several state taxing authorities on a variety of fiscal years, as far back as 2019. While it is reasonably possible that one or more of these audits may be completed within the next 12 months and the related unrecognized tax benefits may change based on the status of the examinations, as of October 26, 2025, it was not possible to reasonably estimate the effect of any amount of such change to previously recorded uncertain tax positions.
The Company is subject to various examinations by foreign tax authorities. With limited exceptions, the Company is no longer subject to foreign tax examinations for fiscal years prior to 2018. See Note K - Commitments and Contingencies for additional information.
Tax Legislation: On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law. OBBBA includes income tax provisions such as a permanent extension of certain provisions of the Tax Cuts and Jobs Act, elective deductions for domestic research and development, reinstatement of 100% first-year bonus depreciation, and modifications to the international tax framework. The Company assessed the provisions of OBBBA and determined the changes were not material to the Company's tax provision for the year ended October 26, 2025, and does not expect a material impact on the Company's consolidated financial statements in future reporting periods.
The Organization for Economic Cooperation and Development published a framework for Pillar Two of the Global Anti-Base Erosion Rules, which is designed to coordinate participating jurisdictions in updating the international tax system to ensure that large multinational companies pay a minimum tax of 15%. Many countries have enacted, or begun the process of enacting, laws based on the Pillar Two framework. The Company considered the applicable tax laws in relevant jurisdictions and concluded the impact of Pillar Two was not material to the Company's tax provision for the year ended October 26, 2025. The Company will continue to evaluate the impact of such legislative changes but does not expect the new tax laws to have a material impact on the Company’s consolidated financial statements in future reporting periods.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Dec 5, 2025 | Showing above |
| 2024 | Dec 5, 2024 | |
| 2023 | Dec 6, 2023 | |
| 2022 | Dec 6, 2022 | |
| 2021 | Dec 10, 2021 | |
| 2020 | Dec 4, 2020 | |
| 2019 | Dec 6, 2019 | |
| 2018 | Dec 7, 2018 | |
| 2017 | Dec 20, 2017 | |
| 2016 | Dec 21, 2016 | |
| 2015 | Dec 16, 2015 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.