Fitch Affirms Hormel's IDR at 'A'; Outlook Stable

CHICAGO--(Business Wire)--
Fitch Ratings has affirmed the following ratings for Hormel Foods
Corporation (Hormel):

--Long-term Issuer Default Rating (IDR) 'A';

--Bank facility 'A';

--Senior unsecured notes 'A';

--Short-term IDR 'F1';

--Commercial paper 'F1'.

The Rating Outlook is Stable. Approximately $350 million of debt
is affected by these actions.

The ratings and Outlook reflect Hormel's consistently low
leverage, growing operating income, and meaningful cash flow
generation. Hormel's strong credit profile is the result of both its
conservative operating and financial strategy.

For the latest 12-month period ended April 27, 2008, Hormel's
total debt-to-operating earnings before interest, taxes, depreciation,
and amortization (EBITDA) was 0.5 times (x), funds from operations
(FFO) adjusted leverage was 1.1x, operating EBITDA-to-gross interest
expense was 20.0x and free cash flow margin was 2.4%. Hormel's credit
measures are strong for the rating category, leaving the company
significant financial flexibility at current rating levels.

The ratings incorporate Fitch's expectations that Hormel will
continue to manage its balance sheet prudently and that debt will not
increase significantly in the near term. Consolidated EBITDA margins,
which average 10%, are anticipated to remain relatively stable,
despite inflationary headwinds, and free cash flow is likely to be
allocated toward fill-in acquisitions and moderate levels of share
repurchases.

Roughly 75% of Hormel's revenue and 60% of its operating profit is
derived from commodity-oriented meat and poultry products, which are
subject to higher volatility. However, the diversification provided by
its higher margin shelf-stable Grocery Products and faster growing
Specialty Foods businesses provides increased stability to its ongoing
cash flow generation.

As with other food manufacturers, Hormel is absorbing higher than
normal commodity input cost inflation, but its extensive use of supply
contracts, incremental pricing and hedging has enabled it to maintain
margins. Hormel's focus on branded value-added turkey, pork and beef
offerings improves its ability to raise prices and its overall
profitability.

During the first half ended April 27, 2008, consolidated revenue
and operating income grew 7% and 18%, respectively. Excluding
acquisitions, sales increased approximately 5%, with 3% due to tonnage
and 2% being attributed to pricing. Hormel benefited from sales of
higher margin products, such as Hormel Compleats and Natural Choice
lunchmeats, and lower pork input costs.

With over $6 billion in annual revenue, Hormel is a manufacturer
of branded and non-branded meat and food products. Over 95% of sales
are generated in the United States and approximately 70% are
distributed via retail channels. Key brands include Hormel, Jennie-O
Turkey Store, and SPAM. The company's operating segments and their
contribution to 2007 revenue and operating profit were as follows:
Grocery Products (14% and 28%), Refrigerated Foods (53% and 34%),
Jennie-O Turkey Store (19% and 21%), Specialty Foods (11% and 12%) and
All Other (3% and 5%). The Hormel Foundation owns approximately 47% of
the company's common stock.

Fitch's rating definitions and the terms of use of such ratings
are available on the agency's public site, www.fitchratings.com.
Published ratings, criteria and methodologies are available from this
site, at all times. Fitch's code of conduct, confidentiality,
conflicts of interest, affiliate firewall, compliance and other
relevant policies and procedures are also available from the 'Code of
Conduct' section of this site.

Fitch Ratings
Carla Norfleet Taylor, CFA, +1-312-368-3195 (Chicago)
Wesley E. Moultrie II, CPA, +1-312-368-3186 (Chicago)
Dorothy Goczal, +1-312-368-2095 (Chicago)
Media Relations:
Brian Bertsch, +1-212-908-0549 (New York)

Copyright Business Wire 2008