served most recently as a Hormel Foods group vice president and chief executive officer of Jennie-O Turkey Store. I am excited to be working closely with Jeff and I have complete con- fidence in his ability to lead Hormel Foods to continued success. Michael D. Tolbert, formerly our director of information technology services, succeeded Jeff as president of  Jennie-O Turkey Store. Hormel Foods has a solid reputation for maintaining a flexible, strong financial position. Cash from operations totaled $294.7 million in fiscal 2004. Debt accounted for 21 percent of our total capitalization. We devoted our available cash – including the gains from recent sales of Vista Packaging and our Campofrio investment – to our ongoing pursuit of acquisitions that meet our demanding standards. We also directed cash to an aggres- sive 16 percent increase in the 2005 dividend payout and to additional common stock repurchases. At year end, 8.4 million shares of common stock are yet to be repurchased as part of the 10 million share repurchase program authorized in 2002.  maintain strong leadership Hormel Foods is fortunate to have had many talented, dedicated leaders over the years. Their con- tributions are evident in every aspect of this company today. Early in 2004, we welcomed John L. Morrison to our Board of Directors. A former senior executive of The Pillsbury Company, Jack is director and founder of Goldner Hawn Johnson & Morrison Inc., a private equity firm in Minneapolis, Minn. He  also has been chairman of Callanish Capital Partners, a private hedge fund, since 2001. His financial background and corpo- rate and international experience will help Hormel Foods continue to move forward in the food industry. We are grateful for many years of wisdom from Mahlon C. Schneider, senior vice president of external affairs and general counsel, who retired in late 2004. James W. Cavanaugh, corporate secretary and senior attorney, was named to succeed Mahlon, and we look forward to his continued contribution to the company. Finally, at mid-year we named Jeffrey M. Ettinger to the post of president and chief operating officer and to the Hormel Foods board. Jeff is a well-seasoned Hormel Foods executive and We begin fiscal 2005 with more favorable conditions than a year ago. The demand for protein continues to be very good. Our value-added line of products continues to gain momentum and there is an improved price outlook for grain, which is a key input for our turkey operation.  Shareholders may be assured that we will continue to reward their trust through focused attention to our long-term growth strategies: • brand the fresh meat case • increase our value-added product mix • contemporize our product portfolio • grow our ethnic foods business • support foodservice growth • grow the international business in select regions • identify and pursue high-potential products and channels • enhance profitability by operating more efficiently • maintain sound financial discipline. Joel W. Johnson Chairman of the Board and Chief Executive Officer Bread Ready pre-sliced meats are  successful because of the convenience they provide the foodservice operator,  along with excellent quality and flavor.  Sales were up 16 percent for the year. 2004 Annual Report 5 sound strategy and outlook