selected financial data financial condition and results of operations (In Thousands of Dollars, Except Per Share Amounts) management’s discussion and analysis of *53 Weeks **Adjusted for the impact of EITF 01-9, “Accounting for Consideration Given by a Vendor to a Customer (Including a Reseller of the Vendor’s Products).” EITF 01-9 relates to the income statement classification of advertising and promotional costs. The company applied the consensus as of the beginning of fiscal 2002, and reclassified certain marketing expenses as reductions of revenue. The marketing expenses that were reclassified included consumer coupon redemption, off-invoice allowances, and various marketing performance funds. There was no impact to operating income or net earnings. The impact of the reclassification on other years presented was a reduction in  net sales of $238,868 in 2001 and $201,283 in 2000. Hormel Foods’ discussion and analysis of its financial condition and results of operations are based upon the company’s consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires the company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. The company evaluates, on an on-going basis, its estimates for reasonableness as changes occur in its business environment. The company bases its estimates on experi- ence, the use of independent third-party specialists, and various other assumptions that are believed to be reasonable under the  circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Critical accounting policies are defined as those that are reflective of significant judgments, estimates, and uncertainties, and poten- tially result in materially different results under different assumptions and conditions. Hormel Foods believes the following are its critical accounting policies: Inventory valuation:  The company values its pork inventories  at the lower of cost or USDA market prices (primal values). When the carcasses are disassembled and transferred from primal pro- cessing to various manufacturing departments, the primal values, as adjusted by the company for product specifications and further processing, become the basis for calculating inventory values.  In addition, substantially all inventoriable expenses, packaging,  and supplies are valued by the last-in, first-out method. Turkey raw materials are represented by the deboned meat quanti- ties realized at the end of the boning lines. The company values these raw materials using a concept referred to as the “meat cost pool.” The meat cost pool is determined by combining the cost  to grow turkeys with processing costs, less any net sales revenue 16 Hormel Foods Corporation Critical Accounting Policies (In Thousands, Except Per Share Amounts) 2004 * 2003 2002 2001 2000 Operations Net Sales ** $4,779,875 $4,200,328 $3,910,314 $3,885,244 $3,473,849 Net Earnings 231,663 185,779 189,322 182,441 170,217 Percent of Sales 4.85% 4.42% 4.84% 4.70% 4.90% Wage Costs 795,119 730,161 668,420 617,693 528,746 Total Taxes (Excluding Payroll Tax) 147,591 118,157 118,671 114,589 105,537 Depreciation and Amortization 94,745 88,020 83,238 90,193 65,886 Financial Position Working Capital $ 565,037 $ 381,984  $ 552,059  $ 463,078  $ 368,484 Properties (Net) 704,237 701,342 652,678 679,930 541,549 Total Assets 2,533,968 2,393,121 2,220,196 2,162,698 1,641,940 Long-term Debt Less Current Maturities 361,510 395,273 409,648 462,407 145,928 Shareholders’ Investment 1,399,248 1,252,735 1,115,255 995,881 873,877 Per Share of Common Stock Net Earnings – Basic 1.67 1.34 1.36 1.32 1.21 Net Earnings – Diluted 1.65 1.33 1.35 1.30 1.20 Dividends 0.45 0.42 0.39 0.37 0.35 Shareholders’ Investment 10.15 9.04 8.06 7.18 6.31