Joel W. Johnson, Chairman of the Board and Chief Executive Officer “We continue to make good progress in building a faster- growing, more profitable,  better-balanced, and more  diversified business.” fellow shareholders: I am pleased to report that Hormel Foods had an outstanding fiscal 2004.  strategies continue to build shareholder value • Earnings per share reached $1.65, up 24 percent compared to $1.33 in fiscal 2003. Our 2004 results include a $.09 per share gain from non-operating items and 2003 includes a $.02 per share gain from non-operating items.  • Net sales totaled $4.8 billion, 14 percent higher than a year earlier, and were driven by exceptional demand for  value-added pork and turkey products and the addition of Century Foods International.  • Earnings before interest and tax (EBIT) margins increased to 7.8 percent from 7.3 percent because of improved product mix and better market conditions. • Shareholders participated in a 7.1 percent increase in the annual dividend per share payout, with a total dividend payment of $62.4 million. • Shareholders benefited from the company’s repurchase of $37.5 million of common stock during the year. We continue to make good progress in building a faster-growing, more profitable, better-balanced, and more diversified business. I think several achievements and initiatives deserve specific mention here. We have worked to better balance the proportional contributions of our packaged foods and protein business segments for one key reason: to build a business model that supports faster growth than packaged food companies yet is less volatile than protein companies. The right balance allows us to take advan- tage of changing raw material markets and still prosper regard- less of the environment. Strong protein markets, such as we experienced in fiscal 2004, benefit our Refrigerated Foods and Jennie-O Turkey Store protein segments. Conversely, lower  protein markets benefit our Grocery Products packaged food segment. In high protein markets, our Refrigerated Foods and Jennie-O Turkey Store segments are able to get better margins benefits of a balanced business model 2 Hormel Foods Corporation