Ladies and gentlemen, thank you for standing by. Welcome to the Hormel Foods Third Quarter Earnings Conference Call. [Operator Instructions] I would like to remind everyone that this conference call is being recorded today, August 22, 2013. I will now turn the conference over to Kevin Jones, Director, Investor Relations. Please go ahead, sir.

Thank you. Good morning, everyone. Welcome to the Hormel Foods conference call for the third quarter of fiscal 2013. We released our results this morning before the market opened, around 6:30 a.m. Eastern Time. If you did not receive a copy of the release, you can find it on our website at www.hormelfoods.com under the Investors section. On our call today is Jeff Ettinger, Chairman of the Board, President and Chief Executive Officer; and Jody Feragen, Executive Vice President and Chief Financial Officer. Jeff will provide a review of the operating results for the quarter, then Jody will provide detailed financial results for the quarter. The line will be open for questions following Jody's remarks. [Operator Instructions] An audio replay of this call will be available beginning at 10:30 a.m. Central Time today, August 22, 2013. The dial-in number is (800) 406-7325 and the access code is 4632577. It will also be posted to our website and archived for 1 year. Before we get started with the results of the quarter, I need to reference the Safe Harbor statement. Some of the comments made today will be forward-looking and are made under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those expressed in or implied by the statements we will be making. Among the factors that may affect the operating results of the company are fluctuations in the costs and availability of raw materials and market conditions for finished products. Please refer to the cautionary statement and risk factors on Pages 31 through 38 in the company’s Form 10-Q for the quarter ended April 28, 2013, which was filed with the SEC on June 7, 2013, for more details. It can be accessed on our website. Now, I'll turn the call over to Jeff.

Thank you, Kevin, and good morning, everyone. We announced third quarter earnings this morning of $0.42 per share, up 2% from last year. Segment operating profit increased by 5% with 4 of our 5 segments registering gains this quarter. Q3 sales were $2.2 billion, an increase of 8% over a year ago on volume growth of 3%. All 5 segments generated sales increases over last year. I will now take you through each segment. Our Grocery Products segment reported an operating profit increase of 32% and a dollar sales increase of 25% for the third quarter. Excluding sales of Skippy peanut butter, sales for Grocery Products were flat for the quarter. We were very pleased with the smooth integration of the domestic Skippy franchise into our Grocery Products organization. Skippy peanut butter sales were strong this quarter, driven by improved distribution. Sales of Dinty Moore Stew, Hormel Mary Kitchen hash and Hormel bacon toppings also grew nicely during the quarter. Sales of our SPAM family of products and Compleats microwave meals were down in the quarter. Segment operating profit for our Refrigerated Foods segment decreased by 26% as spiking core input costs squeezed operating margins. Refrigerated Foods sales were up 2%. On the retail side, we enjoyed strong sales of Hormel party trays, Hormel Natural Choice deli meats and Hormel Cure 81 hams. We're excited about our new Hormel REV Snack Wraps. The Rev products were rolled out nationally during the quarter and a new advertising campaign began in late July. This product meets the needs for a quick, high-protein snack that can be eaten on-the-go. Our Foodservice team continues to outpace the industry with higher sales in the quarter, led by sales of branded products such as HORMEL PECANWOOD bacon, HORMEL FIRE BRAISED Meats and Hormel Natural Choice deli…

Thank you, Jeff. Good morning. For the third quarter of fiscal 2013, net earnings totaled $113.6 million or $0.42 per share compared to $111.2 million or $0.41 per share a year ago. Net earnings for the first 9 months of fiscal 2013 totaled $368.9 million or $1.37 compared to net earnings of $367.4 million, also $1.37 per share a year ago. Dollar sales for the third quarter totaled $2.2 billion compared to $2.0 billion last year, an 8% increase. For the 9 months of fiscal 2013, dollar sales improved 6% to $6.4 billion. Volume for the third quarter was 1.2 billion pounds, a 3% increase over fiscal 2012. Year-to-date volume was 3.7 billion pounds, also up 3% compared to last year. Selling, general and administrative expenses in the third quarter were 7% of sales compared to 7.2% last year. Year-to-date selling, general and administrative expenses were 7.5% compared to 7.4% last year. We expect selling, general and administrative expenses to be approximately 7.5% of sales for the full year. Equity and earnings of affiliates for the third quarter was $1.3 million versus $9.8 million last year. The decrease is due to lower earnings at our MegaMex Foods joint venture, which experienced a higher earn-out expense on the Fresherized Food acquisition, unfavorable exchange rates and higher input costs. Interest expense for the quarter was $3.1 million compared to $3.2 million last year. Year-to-date interest expense is $9.4 million compared to $9.7 million last year. We expect interest expense to be approximately $12 million to $14 million for fiscal 2013. Our effective tax rate in the third quarter was 35.7% versus 33.7% for the same period in fiscal 2012. Year-to-date, our effective tax rate was 33.5%, unchanged from last year. We expect the effective tax rate to be about 34% for the full year of fiscal 2013. The basic weighted average number of shares outstanding for the third quarter was 265 million. The diluted weighted average number of shares outstanding for the third quarter was 271 million. We repurchased 953,000 shares of common stock during the third quarter, spending about $38 million. We have 10 million shares remaining to be purchased from the current authorization in place. Depreciation and amortization for the quarter was $31.8 million, up from $28.9 million last year. For the 9 months of the year, depreciation and amortization was $93 million compared to $88.6 million last year. We expect depreciation and amortization to be approximately $120 million to $125 million for fiscal 2013. Long-term debt at the end of the quarter was $250 million, unchanged from last year. Capital expenditures for the quarter totaled $23 million compared to $36 million last year. For the first 9 months of the year, capital expenditures totaled $69 million compared to $94 million last year. For fiscal 2013, we expect capital expenditures to be approximately $110 million to $120 million. At this time, I will turn the call over to the operator for the question-and-answer portion of the call. Operator?

[Operator Instructions] And your first question will come from the line of Akshay Jagdale from KeyBanc.

First question on Refrigerated Foods. Can you just give us a little bit more insight into the weakness? I mean, this quarter tends to be historically one where you can have some of your lower margins, but the cutout itself wasn't as weak as your results would imply. I think you mentioned something about bacon. Can you just help us with what part -- components of maybe your cost basket went up so that we can keep track of it going forward and be aware of what happens? So just trying to understand what happened because it definitely surprised us and it seems to be unique relative to some of your peers.

Okay, Akshay. I mean, the weakness for Refrigerated Foods was clearly the most pronounced in the earlier part of the quarter, ending up prompting us to come out with our guidance adjustment that occurred mid-quarter. At that stage, we were seeing some continued weakness in processing margins, but the bigger culprit had been the spike in some of the raw material costs, particularly bellies for bacon and trim costs for a number of our products, pepperoni and other items within the portfolio. As the quarter went on, the team had an opportunity to, particularly on the bacon side, price against with the new reality of what the cost situation is. Belly costs are still at historically very high levels, but they have moderated some from the peak. And we expect now, as we kind of head out of the summer season, they should start to return to more normalized levels. Overall, for Refrigerated, I mean, those are the big challenges. I mean, it wasn't all bad for the quarter in terms of their -- what we look at for their business performance. Our large Foodservice group for Hormel is part of Refrigerated Foods and they really had a very fine quarter, growing sales at a solid rate and really doing a nice job introducing some other newer products, their FIRE BRAISED meats and their PECANWOOD. This half also does represent somewhat of an investment time for us with the REV brand. We're very pleased with where we're at with that brand. We've achieved the distribution goals that we had set for the team. We have the ad campaign kicking in. Our early sales results are very promising. But anytime you roll out something new on that scale, I mean, we're not going to be bringing bottom line contributions for that brand to the team this year and probably even into next year somewhat, but we're heading in a good direction with that.

Just on that point, Jeff, can you help us understand sort of where you are with the REV like ACV, number of SKUs, anything you can give us? And how do we parse out that positive from their results if the volumes are obviously down, so it's hard to tell what impact REV has had even on the revenue side? So maybe you can help us because our channel checks also tell us some -- that the launch, at least initially, has been pretty encouraging. So maybe you can just give us a little bit of a sense of, one, how it's doing and maybe -- and just talk about the impact it's having already.

Okay. In terms of ACV, we're really in a solid shape with that. We're in the 70% to 80% of the U.S. that has accepted the item and most of those stores are actively scanning it. Sometimes you'll get an acceptance from a retailer, but in terms of their shelf reset time frame they just have certain windows. They get those things done. So we're still catching up on a few retailers, but we're in a good position to support our ad campaign. In terms of the number of SKUs, there are 8 offered in the line. Most retailers are taking kind of 6 to all 8 in that range. We'll be coming out with 4 additional items later this fall and heading into the winter. And in terms of just the sense of scale, I mean, we're not -- we probably won't get into reporting item-by-item sales. But just to give you a sense of magnitude for the quarter, it was in the $4 million to $5 million range. So I mean it's still building. Clearly, our long-term expectations for the product would be -- are quite solid, but that's about the size of it right now.

I guess, Akshay, I would like to follow up on the volume comment you made about Refrigerated and their volumes is really being impacted by discontinuing the feed business that we talked about last quarter. So that's not all just retail and foodservice volume that's impacting the decline there.

Okay. And just one on Skippy. Are the lower peanut costs already flowing through your P&L or is that still not flowing through? And how are you managing sort of that lower costs that might be flowing through relative to your investments because it's still pretty early in the stage of owning that asset and I just want to know like where you are in terms of your planning on investing behind that brand and perhaps how that's going initially.

Okay. I mean, a decent amount of the lower costs would be flowing through right now. And now it looks -- seems favorable in terms of what we're seeing for peanut crops going forward. In terms of investing in the brand, I think I talked about that at the last quarterly call and I think we talked about it a little bit in the Investor Day that when we bought the brand, it was with the thought in mind of really kind of rejuvenating it with the Skippy consumer in the marketplace. And so one of our approach is to potentially do that in the marketplace would be to anticipate an advertising campaign. The earliest that would occur is next fiscal year and so we'll kind of let you know, probably on the next call, the November call, what our outlook is in terms of advertising support. But we're -- the team is actively looking at both possibilities right now.

Your next question comes from the line of Farha Aslam from Stephens Inc.

First of all, just a continuation of Akshay's questions regarding Refrigerated Foods. Looking out into the fourth quarter, we've recently seen hog prices rally a bit. So when you look at that, is that a net positive for your Refrigerated Food business because you do raise 15% of your hogs internally. And can you price for the hog price increase better into the fourth quarter versus the third quarter. How should we think about that?

I'll take that, Farha. I would generally say that we would prefer lower hog prices, and we would expect hog prices in the fourth quarter to be lower than they were in the third quarter. Still probably year-over-year, an increase. The live production side doesn't really play that much into it since we take those values into our further process businesses at market.

Okay. And then going into International, I mean, that turnaround in that International business is pretty, pretty material. Do you expect that China will continue to perform? And your thoughts on that other business, which is becoming pretty meaningful in your P&L.

Farha, I'm really quite encouraged by International. And not only, as we mentioned, has it had all 3 solid quarters this year, but this will be the third consecutive year of really solid, both top line and bottom line, growth for International. I think our strategy of focusing on the Asia base market has proven out well and so we have good solid business performance in Korea and Japan, our partnership with San Miguel in the Philippines and then the more majority-owned China ventures. China, in particular, we do feel we've now gotten to the point where we have sufficient scale in that business, that now it can generate a solid profit. And we're look -- the team out there is looking forward to bringing Skippy on board, so that will be our third plant facility we'll be running in China. And we'll kick that business well over $100 million once the Skippy contribution is in there, which we expect to occur in the next fiscal year. So overall, International, I would agree with your assessment that it's become a more and more meaningful component of our overall performance and it's one that I think we've articulated in the past we have solid expectations that it will grow at a faster rate than our overall company average.

Your next question comes from the line of Tim Ramey from Davidson. Timothy S. Ramey - D.A. Davidson & Co., Research Division: I just was wondering about the supply of hogs. As we think about the fall, this PED virus that used to be impacting hog supplies. Is that showing up in any particular way in your geographies more or less than we are seeing from nationwide impact? Some folks are thinking it will impact the supply 2% to 3%.

Tim, this is Jody. We're really not seeing any impact on the supply here in the Midwest. Actually looking at seasonally high numbers for this last quarter for us, so maybe it's not as impactful here. Timothy S. Ramey - D.A. Davidson & Co., Research Division: That's good news. And then I don't know whether you'll be willing to kind of think about further add in the fall, but historically, at least for the last 2 years, you've run some pretty big margin numbers in Jennie-O Turkey Stores. Is there any reason to think that, that seasonal pattern should change or steady as she goes?

Yes, without giving a percentage target, I mean, our expectations for Jennie-O's performance is that this year's fourth quarter will have better segment profit results than last year's fourth quarter. So I mean, that should support what you're saying. Timothy S. Ramey - D.A. Davidson & Co., Research Division: Terrific. And I know you're not going to give first quarter guidance, but that's been kind of a big quarter. No reason to think that, that would change relative to seasonal patterns for the last couple of years?

We're really not in a position to do anything earlier than 2014 yet. But in terms of just sales momentum, I mean, the value-added items that Jennie-O has created, both the new or innovative items and some other traditional items, are connecting well in the marketplace. And we don't have any reason to believe that, that won't continue heading into next year.

Your next question comes from the line of Ken Zaslow of BMO Capital Markets.

Two questions. One is if you hold your current margins -- current situation or current environment steady, how much would your margins move up in the Refrigerated Foods with the new product innovation?

Well, I mean, that's 1 contributor, certainly. We -- as we innovate, the team's goal is always to have margins that are accretive to the overall division. And certainly, the targets we have in place for the REVs and the other items that they've been introducing do meet those requirements. The Refrigerated Foods has really a significant opportunity, frankly, just to get back towards some of the performance levels that we enjoyed a couple of years ago. I mean, we had 2 consecutive years of around 7% net and these last couple of years have been more like 5% with this most recent quarter even dipping below that with the struggle we had in periods '07 and '08. So we think there are some things on top of the innovation as we head into a different environment that will be favorable for Refrigerated Foods.

What about just innovation? Would it add 100 basis points? If you just kept everything stable, how do you think about that because you have a lot of new products coming out, so I just was trying to figure out if it's the REVs and all the new products. Is it 100, 200 basis points of just contribution just from the new products? Or how do you think about that? Separating the environment out from what you guys can actually do yourselves.

I'd be really speculating. Clearly, I haven't looked at it from that standpoint. I mean, I look at it from the standpoint that clearly the -- whether it's the Foodservice group, the meat products group, et cetera, within Refrigerated Foods or even some of their subsidiary organizations like Farmer John or Burke, I mean, our expectation is that they grow their top line commensurate with our 5% target. And to the extent that they -- the innovative items are contributors to that, that those should be better for margins than the traditional items. But I guess, I don't have it reduced back to the algorithm you're looking for.

And my follow-up question is, on turkey, is how bound are you to your turkey margins at the high end of 15% because it seems like the commodity meat business is probably at the bottom. You're seeing 10% cuts. And then obviously, the corn curve should be -- and soybean meal for that matter should all be encouraging. So is 15% a real boundary? Or does it just kind of -- that was just a comfortable number to start with and we'll see where they actually go from here.

Yes, that number really -- I mean, I think what we did historically in the old days, if you will, we were looking at Jennie-O and sort of the 8% to 10%, 7% to 11% range. We reassessed it based on both the improvements they've made to the branded portfolio and a lot of the efficiency gains that they've made in the total system and came out with the new kind of longer-term guidance range of 11% to 15%. But no, that's not necessarily viewed as a ceiling. We'll certainly give a little more specificity related to what our expectations are for Jennie-O when we get to the November call, but it's not -- I wouldn't take that as the absolute max.

And your next question comes from the line of Diane Geissler from CLSA. Diane Geissler - Credit Agricole Securities (USA) Inc., Research Division: I wanted to ask you, just first off, have you quantified what your expectations are for increased grain prices in fiscal '13 and JOTS just on a year-over-year basis in absolute terms?

No, we really haven't given a specific number related to that. I mean, obviously, you've got timing, you've got hedge positions that will effect that. We've kind of indicated each quarter, thus far, this year clearly that total feed costs of the system for Jennie-O has been up every quarter year-over-year. We're starting to get into the mode. We're all still waiting to see where this crop ends up. I mean, if you look at -- based on futures market, if that turns out to be the reality, then clearly we should start heading downward in terms of what the feed cost impact would be to Jennie-O. But even then, there'll be some delay to that effect. Diane Geissler - Credit Agricole Securities (USA) Inc., Research Division: Well, I guess my point is that you guys have had a pretty good year in operating profits in Jennie-O despite the fact that grain has just been really out of control. And I'm just -- know you're not in a position to talk about '14 yet, but obviously I have to think about it. And so I'm just trying to understand the magnitude of that. Maybe you can help me with this because I know that -- it seems to me that the holiday turkey business has pretty consistently been a big business in the fourth quarter and I think there's a little carryover into the first quarter. And so anything that's marketed now would have old grain prices in it in terms of the cost basket, is that not correct?

That is correct. Diane Geissler - Credit Agricole Securities (USA) Inc., Research Division: And then could you just tell me, as a percentage of sales, roughly how big that business is today? Because you've done so much work on the value-added side, I'm assuming that's a smaller and smaller percentage of your total sales. Is that...?

Right. It's not a huge percentage of the sales and it's certainly not a huge percentage of the earnings. I mean, the whole bird business has never been a big moneymaker for either the manufacturer or the retailer. There is an impact to the first quarter of any year for Jennie-O related to whole birds. Frankly, there's probably a bigger impact of the fact that franchises such as our Fresh Lean Ground Turkey franchise often will have -- kind of leap out of the gate in January kind of people with New Year's resolutions and so forth. And that's a peak time of the year for that very solid product line for us. In terms of trying to get back to -- you mentioned about kind of grain impact, I mean we're pleased with where Jennie-O is for the year. But I mean, it is true that for both the first 2 quarters, I think their year-over-year adjustment was around $18 million down each quarter. And that was part trying to catch up to the grains and that was part that the commodity turkey markets were not as favorable. To one of the earlier questions, I mean, at the moment, those both look -- the outlooks for both of those things look more favorable right now heading into next year. But that's something we'll be in a better position to quantify when we provide earnings guidance in November. Diane Geissler - Credit Agricole Securities (USA) Inc., Research Division: Okay. And then I wanted to ask on your commentary on the lower contribution from the affiliates for MegaMex. You cited 3 things. I think it was higher payout for the Fresherized Foods, currency and then higher input costs. I'm assuming you detailed those in the order of impact. And if so, is that payout for Fresherized Foods I'm assuming it's kind of one and done in the quarter and you're completely free of the terms of that agreement, is that correct?

Diane, this is Jody. The Fresherized earn-out goes for 3 years, so it ends in fiscal 2014. And the way we handle it from an accounting perspective is we evaluate their performance against their earn-out criteria and make adjustments on a quarterly basis. The great news is that the Wholly Guacamole brands have really outperformed. So we have this short term impact to that business because of recording the expected payout that will be made in 2014. So... Diane Geissler - Credit Agricole Securities (USA) Inc., Research Division: So we'll look forward in the third -- sorry. I'm sorry, talking over here.

We'll see an impact in the fourth quarter, too. Hopefully, they'll have other parts of their business that are able to overcome it, but this quarter was a little bit of a catch-up. Diane Geissler - Credit Agricole Securities (USA) Inc., Research Division: So are you accruing today for a payment in '14? And then once '14 rolls around, you're done or do you have to accrue again in '14?

There'll be some accrual in '14, but it won't be -- well, depending on how the business performs, we'll see where it goes. But I would expect it to be somewhat less than 2013. This quarter ended up being a bit of a catch-up. Diane Geissler - Credit Agricole Securities (USA) Inc., Research Division: It was a catch-up? Okay.

Totally done by the end of '14.

Totally done in 2014. And then they also. . .

Your next question comes from the line of Robert Moscow from Credit Suisse. Robert Moskow - Crédit Suisse AG, Research Division: I wanted to dial in a little deeper into the expectations for fourth quarter because if you do the math here, it looks like operating profit needs to grow like about 15% to hit your guidance. And then when you look at consensus, Jeff, for fiscal '14, I know you don't want to get into guidance, but it is -- the expectations are for a very strong year. And as you go down the list of all the other food companies that have reported, they are talking about weaker volumes at retail, again a weak consumer environment. So maybe just dial in a little bit more about what the drivers for fourth quarter are going to be even if the consumer environment is rather weak. And then maybe you could just touch a little bit on fiscal '14 because I think it's rare that consensus has such a high bar already set for you. And then in the context of a weak consumer environment, is it achievable?

Well, first of all, in terms of -- our best read on consumers are our own products, I guess. And throughout the more challenging economic times of the past few years, that's been somewhat mixed. I mean, obviously in the aggregate, we have enough products that are connecting with enough groups of consumers that we've been able to drive our business forward both on a top line and bottom line basis. That's our current picture as well. There were elements of the business in terms of retail sales that were a little bit softer this quarter. But I don't put a lot of stock frankly on one quarter. I mean, I just see things go up and down kind of quarter-to-quarter in the past on certain businesses. Overall, I think the portfolio of items that we have, that we offer for sale into the retail channel whether through Jennie-O or Grocery Products or Refrigerated Foods are in a good position to be able to continue to generate growth, both in the fourth quarter and beyond. And then on top of that, obviously, we have Foodservice and other commercial-type sales that also are contributing to our overall results. So overall, I mean, the way we see making the numbers for Q4 is kind of as we've outlined from a segment standpoint that we would expect somewhat of a dip from Specialty, albeit Specialty is one of the smaller units in terms of total contribution to the company. And so our expectation right now is that all 4 of the other units are in a position to have good solid quarters. And that then adds up to our ability to support the grains we've provided here a couple of months ago for the full year. Robert Moskow - Crédit Suisse AG, Research Division: Okay. And then the follow-up on Refrigerated just for fourth quarter. Again, the drivers here are -- you've taken the pricing that you need to take, especially in bacon. And do you -- are you saying that you think the input costs might trend sequentially lower in the quarter, and that might provide a bit of a benefit because there has to be a big sequential benefit in order to hit the guidance.

Yes, that definitely is a part of it. I mean, we're seeing it somewhat already on bellies. We've seen it much -- on a more pronounced basis in pork trim and that's the key input for some of the items. So that definitely should be a part of it.

Your next question comes from the line of Akshay Jagdale from KeyBanc.

Just 2 follow-ups, one on REV. It was very useful to get a sense of how big it is now. But Jeff, can you just give us a sense of sort of the optimism about this product? I mean, could it be like a Compleats type of product where it went from 0 to a couple hundred million in a short period of time? And what kind of expectations do you have for this product? It seems pretty unique because it's in the lunchable aisle and it's really a differentiated product that took probably years to develop. So can you just help us like frame what would be sort of the best case scenario for this and perhaps over what period?

Okay. Well, I think we've talked about it in the past. Our innovation track record and even in achieving our $2 billion challenge has been achieved mostly through kind of a lot of incremental gains. Some of our are better new product franchises have been even in the $50 million to $100 million range, although you cited Compleats correctly as being higher than that. Given the kind of advertising we're putting against this, given the capital investment we made, I think it's certainly fair that we at least expect this item to be in that type of range. But I would not at all put that as the ceiling. We'll just have to see what consumers reactions are to the items. We think, over time, if assuming the initial REV Wraps connect as well with consumers as we think they can, that this can be a platform for other types of products that are more oriented toward a younger audience, toward on-the-go, immediate consumption-type items. And so we could have a very significant franchise in this. But I really don't have a number for you that's beyond kind of that number I just gave you in terms of what historically has been a bigger product for us.

No, that's very helpful. Just -- I get this question a lot, so I'm posting it to you. I mean, I feel like your company every year keeps moving away from commodity products, if I may, and more towards value-added. Can you help us sort of understand from your perspective like what percentage of your sales or earnings what you would call commoditized today? And how much is that really changed over the last few years? The reason I asked that today is because you obviously pre-released a lot bit about and lowered the bar because of the commodity piece of your business, so at least relatively commoditized piece. And kind of surprised me the magnitude of that sensitivity there. So can you just help us? And again, not trying to get into like numbers exactly, but just give us a sense of how you think about that dynamic.

Well, we're clearly over time -- I would agree with your assessment that we're trying to create a portfolio that is less vulnerable to certain commodity movements. And so we still do have a hog supply chain. We still do have a turkey supply chain. Frankly, even if you get to the point where you sell next to nothing of the meat on a commodity basis, you still could have some cost-related inputs that can fluctuate fairly significantly. But in doing that, I mean, between portfolio diversification, buying into a category like peanut butter that has a different raw material, like guacamole, like salsa, we think those things have helped us. And then the more you develop products that are not frankly just a piece of meat, but are a meal that have other components that are a REV Wrap, et cetera, again your vulnerability to any one commodity moving on you becomes less. So I do think we have over time improved the portfolio in terms of its vulnerability to these kinds of things. But as you correctly point out, I mean, it's still out there. Bacon would be a good example. I mean, if you're in -- if you process hogs, you have bellies off the hogs. Bacon is actually a very on-trend, popular item with consumers. By and large, if you're just talking about kind of a pound of raw bacon, that's never a high-margin, big moneymaker for the manufacturer. I mean, there's a lot of competition within that category. That 1 pound of bacon is not particularly differentiated. So quarters like this last quarter, I mean, it hurt us that the belly cost spiked as much as they did and it took us more time to catch up to those. But that's never an area that in the long run we're looking to drive results. Now flavored bacon flavors like PECANWOOD or Applewood or precooked bacons or bacons for a particular foodservice application, than that could be a contributor to the kind of higher margins we're looking for. So in terms of that percentage, I mean, I think we've said before, when you look at both the pork and turkey supply chains, we're probably in the 75% to 80% of the volume goes out in a value-added form. You're always going to have a little bit of a mismatch with some of the -- what comes off the animals in terms of what the American consumers are looking for. But the goal beyond just -- is it in any kind of value-added form is just keep moving up the value-add or keep finding more innovative ways to direct it to consumers.

That's helpful. And just one follow-up for me. So why is Jennie-O Turkey much more stable than, let's say, a pork portfolio if the percentage from value-added is similar in both cases? Can you -- I mean, it just seems like it's more value-added and it's more differentiated in turkey. But is that -- can you put a thing on so why your turkey business just continues to march up in margins and on the pork side every now and then we tend to get these negative surprises.

Well, I mean, Jennie-O Turkey Store, I mean, whole birds would be one example. It's certainly a category that's sort of supply chain-based category. We mentioned earlier they're a little bit lower margin. But otherwise, if you look at turkey products kind of sold in the U.S., it tends to be more of a specialized niche, one that the team up there has done a really nice job of developing the right products and being the only one out there advertising these products to the consumer. And so I think that has provided them with some insulation versus, say, a pork supply chain in terms of their ability to deliver more consistent results.

Your next question comes from the line of Diane Geissler from CLSA. Diane Geissler - Credit Agricole Securities (USA) Inc., Research Division: I forgot to ask on the Foodservice. Your group saw pretty good growth in environment. I think if you listened to the restaurant companies when they reported their second quarters, I mean, the traffic trends have been pretty bad at both casual and QSRs. So congratulations for outperforming that. But I guess question is really what are you hearing from your customers? What are their expectations for the second half of the year? Do you think that there are -- there's some pent-up demand on the customer side because really the restaurant guys have struggled here over the last year and so we should expect to see improvements there and maybe improvements for Hormel? Or what are you hearing from consumers about where they're shopping, retail versus dining out?

Okay. I mean, on the QSR side, at least on a domestic basis, we tend to be less of a player with QSRs. Part of that is maybe by design in terms of we just kind of found our model of creating unique items that are designed for giving operators less what a really large chain is looking for. But it's in part, I think, also -- I mean, there's been a little change in this. But by and large, the fast-food channel is sort of chicken and beef focused and we're a turkey and pork supply chain business. I think our leader of the group articulated in Investor Day their strategy to also really work on the noncommercial side of the Foodservice business and so they've had some very nice success in the college and university environment, in the health care world and so forth. So they're seeing better growth through that segment than what the overall industry is experiencing. That being said, I mean, we are -- I think the sort of secular comments we're hearing is a little bit of optimism coming out of them for the upcoming quarter for this segment as a whole, and our group feels it's well positioned to continue to have really solid quarter in Q4.

Your next question comes from the line of Robert Moskow from Credit Suisse. Robert Moskow - Crédit Suisse AG, Research Division: Really, just more of a comment. Wanted to thank... [Technical Difficulty]

He disconnected, I guess. We'll have to go on to Jonathan Feeney.

Unworthy substitute, I must admit. I wanted to dig in a little bit more on Turkey Store business. As Akshay said, it just seems to hang in there and seems to be so much -- I mean, is it just dramatically less of a commodity business right now because of the branding and value-added you've done? And specifically, how much has the mix of business changed from 5 years ago versus from what you consider near to that the whole bird business commodity mix back then? So just 5 years ago versus where that is today. If you could give me sort of a ballpark estimate for thinking about that? Then I have one follow-up.

True. Yes, I mean, clearly, the predominant results driver for Jennie-O Turkey Store are their value-added branded products that they sell at the retail deli and foodservice. The mix has -- I don't have the stats for you. Maybe Kevin can follow up with you on that. But clearly, it has changed over the 5-year time frame. Not only have we changed by virtue of those items, but I think if I'm remembering correctly, I think there's been 2 occasions over those 5 years that we've actually tightened our basic processing within the turkey business to make sure that we're staying fully in balance and that we're just supporting the value-added items and not throwing off a lot of additional commodity meat. So that's improved the percentage as well. And then on top of just sheer -- not having as many numbers, I mean, the team's done a nice job at driving other efficiency gains that have led to those results.

It doesn't sound like it's dramatically different. It just sounds like of the value-added business then, you've just gotten -- been more effective at it. Is that a fair characterization?

Yes, and the advertising has helped. This year is a little bit less significant campaign, but the last 2 years prior to this, we've -- $20 million-plus each year in terms of trying to drive business with really nice results. The past campaigns have featured burgers and turkey bacon and both of those, over the long time frame, are way up. I mean, well into the double-digit increases.

And my follow-up question, Jeff, is a while back you used to have this great -- like 10 years ago, in your presentation, you used to have this great pyramid where the top of the ladder you had high value-added items and you sort of -- the idea was to push people off that pyramid in terms of margin structure. Across the Refrigerated Foods and turkey business, I mean, could you differentiate -- have those margins at the top of the ladder just gotten bigger in the value-added space and that's why? Or you've done better across-the-board? Or is the mix of business in both Refrigerated and turkey just so much less in that commodity piece than it, say, was 5 or even 10 years ago that you're sustaining these higher margins?

I think the biggest impact would be the moving -- if you do that pyramid as having different floors, if you will, we've moved more items up more floor levels. I mean, the percentage of portfolio that's a higher level of value-add that has the higher differentiation and therefore more defensible margin position is greater in both the Refrigerated Foods group and in the Jennie-O group.

Your next question comes from the line of Robert Moskow from Credit Suisse. Robert Moskow - Crédit Suisse AG, Research Division: This is actually a question for Kevin Jones. Kevin, is this your last conference call?

It is. Robert Moskow - Crédit Suisse AG, Research Division: Kevin, I want to thank you for many years of assistance. You've been a great investor relations contact for us, and thank you so much. Best of luck in retirement.

Thank you very much.

[Operator Instructions] And there are no further questions at this time.

Okay. Thank you very much, everyone, for your participation. We appreciate it. Feel free to get back in touch with me and Jenna [ph] after the call for any follow-up questions. Thank you.

Ladies and gentlemen, this concludes the conference call for today. Thank you for participating. Please disconnect your lines.