Full Description

Smithfield Foods, Inc. is a pork processor and hog producer. The Company produces and markets a variety of fresh meat and packaged meats products both domestically and internationally. The Company conducts its business through five segments: Pork, International, Hog Production, Other and Corporate, each of which comprises a number of subsidiaries. The Pork segment consists of its three wholly owned United States fresh pork and packaged meats subsidiaries. The International segment is consists mainly of its meat processing and distribution operations in Poland, Romania and the United Kingdom, as well as its interests in meat processing operations, in Western Europe, Mexico and China. The Hog Production segment consists of its hog production operations located in the United States, Poland and Romania, as well as its interests in hog production operations in Mexico. The Other segment is consists of its turkey production operations, its 49% interest in Butterball, LLC (Butterball), its live cattle operations and its interest in live cattle joint venture operations. The Corporate segment provides management and administrative services to support its other segments. In October 2008, the Company acquired Continental Grain Company’s 50% interest in Five Rivers Ranch Cattle Feeding LLC. In October 2008, the Company completed the sale of Smithfield Beef, Inc. (Smithfield Beef), its beef processing and cattle feeding operation that encompassed its entire Beef segment, to a wholly owned subsidiary of JBS S.A.

Pork Segment

The Pork segment produces a variety of fresh pork and packaged meats products in the United States and markets them nationwide and to numerous foreign markets, including China, Japan, Mexico, Russia and Canada. The Pork segment operates over 40 processing plants. The Company process hogs at nine plants (six in the Midwest and three in the Southeast), with an aggregate slaughter capacity of approximately 118,000 hogs per day. The Pork segment sold approximately 4.5 billion pounds of fresh pork during the fiscal year ended May 3, 2009 (fiscal 2009). A substantial portion of its fresh pork is sold to retail customers as unprocessed, trimmed cuts, such as butts, loins (including roasts and chops), picnics and ribs.

The Pork segment sold approximately 3.1 billion pounds of packaged meats products in fiscal 2009. the Company produces a variety of packaged meats, including smoked and boiled hams, bacon, sausage, hot dogs (pork, beef and chicken), deli and luncheon meats, specialty products, such as pepperoni, dry meat products, and ready-to-eat, prepared foods, such as pre-cooked entrees and pre-cooked bacon and sausage. The Company markets its domestic packaged meats products under labels that include Smithfield, Farmland, John Morrell, Gwaltney, Great, Cumberland Gap, Armour, Eckrich, Margherita, LunchMakers, Dinner Bell, Carando, Kretschmar, Lean Generation, Lykes, Cook’s, Esskay, Valleydale, Ember Farms, Rath, Roegelein, Ohse, Stefano’s, Williamsburg, Tom & Ted’s and Jamestown. It also sells a substantial quantity of packaged meats as private-label products.

The Company’s product lines include leaner fresh pork products, as well as lower-fat and lower-salt packaged meats. It also markets a line of lower-fat value-priced luncheon meats, smoked sausage and hot dogs, as well as fat-free deli hams and 40% lower-fat bacon. In fiscal 2009, export sales consisted approximately 16% of the Pork segment’s volumes and approximately 13% of the segment’s revenues.

International Segment

The International segment includes the Company’s international meat processing operations that produce a variety of fresh pork, beef, poultry and packaged meats products, including cooked hams, sausages, hot dogs, bacon and canned meats. The Company has controlling interests in international meat processing and distribution operations located mainly in Poland, Romania and the United Kingdom. In addition, the Company has noncontrolling interests in international meat processing operations, mainly in Western Europe, Mexico and China, including a 37% interest in the Campofrio Food Group, S.A. (CFG). The International segment purchased 76% of its live hog requirements from the Hog Production segment in fiscal 2009.

Hog Production Segment

The Hog Production segment operates numerous hog production facilities with approximately 1.1 million sows producing about 20 million market hogs annually. In addition, through its Mexican joint ventures, the Company has approximately 90,000 sows producing about 1.7 million market hogs annually. The Company owns certain genetic lines of specialized breeding stock, which are marketed using the name Smithfield Premium Genetics (SPG). The Hog Production segment makes use of these genetic lines, with approximately 770,000 SPG breeding sows. In addition, it has sublicensed some of these rights to some of its hog production partners. In addition, through its joint ventures, the Company has approximately 60,000 SPG breeding sows. All hogs produced under these sublicenses are processed internally. In fiscal 2009, the Company produced approximately 14 million SPG hogs domestically. It also produced approximately 1.1 million SPG hogs through its joint ventures.

Other Segment

The Company’s turkey production operations produce and sell to Butterball. Butterball’s products include whole turkeys and parts, cooked turkey breasts, turkey sausages, ground turkey, lunchmeat and fresh tray pack, bone-in and boneless turkey. These products are sold in 20 countries, including the United States, Mexico, China and Russia, and are available through retail, deli and foodservice channels. Its remaining live cattle operations consist of the live cattle inventories that were excluded from the sale of Smithfield Beef.in addition, in conjunction with the sale of Smithfield Beef, the Company formed joint venture to sell the remaining live cattle.