smithfield food our family of companies 2007
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O U R C O M P A N Y 2 0 0 7
TABLE OF CONTENTS
EXECUTIVE MESSAGE 2
PERFORMANCE CHARTS 4
SMITHFIELD UP CLOSE 7
OUR FAMILY OF COMPANIES 23
FINANCIALS 46
MANAGEMENT BOARD, CORPORATE OFFICERS, DIRECTORS 49
CORPORATE INFORMATION 50
FINANCIAL HIGHLIGHTS
Fiscal Years Ended (in millions, except per share data) April 29, 2007 April 30, 2006 May 1, 2005
Sales $ 11,911.1 $ 11,403.6 $ 11,248.4
Income from continuing operations 188.4 185.2 300.7
Net income 166.8 172.7 296.2
Income from continuing operations per diluted share 1.68 1.65 2.68
Net income per diluted share 1.49 1.54 2.64
Weighted average diluted shares outstanding 111.9 112.0 112.3
Additional Information
Capital expenditures $ 477.7 $ 381.6 $ 193.2
Depreciation expense 219.3 200.1 187.0
Working capital 1,372.5 1,161.3 1,421.2
Total debt1 3,092.9 2,558.3 2,274.7
Shareholders’ equity 2,240.8 2,028.2 1,901.4
Total debt to total capitalization2 58.0% 55.8% 54.5%
1 Total debt is equal to notes payable and long-term debt and capital lease obligations including current portion.2 Computed using total debt divided by total debt and shareholders’ equity.
# 1 turkey processor
# 1 cattle feeder
# 1 bacon producer
# 1 smoked ham producer
# 1 spiral hams producer
# 1 smoked pork chops producer
# 1 poultry hot dogs producer
# 1 deli salami producer
With sales approaching $12 billion in fiscal 2007, Smithfield Foods is
the world’s #1 hog producer and #1 pork processor.
In the United States, our market shares also make us the…
A LEADER IN BRANDED PACKAGED MEATS
Smithfield Foods packaged meats are among the most trusted and sought-after. From national brands and regional
powerhouses in the United States to some of the best-known European brands, here are just a few that are prized by retail,
foodservice, and deli customers alike.
Æ
MAP OF OPERATIONS
MEXICO
Smithfield Foods now has operations in 13 countries
through wholly owned subsidiaries and joint ventures.
UNITED STATES
BELGIUM
FRANCE
GERMANY
ITALY
POLAND
PORTUGAL
ROMANIA
SPAIN
THE NETHERLANDS
UNITED KINGDOM
CHINAOur presence in these countriesis through a 50% ownershipstake in Groupe Smithfield.
Smithfield owns a 23% stake inCampofrio.
Our presence in China andMexico is through a 50%ownership stake in joint ventures.
Wholly owned SmithfieldFoods operations as well as theButterball, LLC, and Five RiversRanch Cattle Feeding LLC jointventures in the United States.
EXECUTIVE MESSAGE
2
To Our Stakeholders:
Smithfield Foods reported income from continuing operations for fiscal 2007 of $188.4 million, or $1.68 per diluted
share, versus $185.2 million, or $1.65 per diluted share, last year. Sales were $11.9 billion, compared to $11.4 billion
in the prior year. Considering the negative impact of increased grain prices on all of our live production operations,
I am very pleased with the results, particularly in the international and pork segments.
In fiscal 2007, Smithfield broadened and strengthened its base through acquisitions that were immediately accretive
to earnings. We are reshaping the company through integrating these acquisitions and executing a strategy to
realign and rationalize our manufacturing capacities.
o Through a 50/50 joint venture with Oaktree Capital Management, we acquired Sara Lee’s European Meats
business. This is a strong, branded $1.5 billion business with large positions in France, Portugal, the
Netherlands, and Germany. We have merged our Groupe Jean Caby assets with the acquired French
operations, and the new company, Groupe Smithfield, is the largest packaged meats producer in Europe.
o In acquiring the branded meats business of ConAgra Foods, Inc., we increased the volume of our core
packaged meats operations in the United States by 20 percent. This is a $1 billion business with
well-known brands such as Armour and Eckrich, with large shares in key product categories such as
precooked bacon, smoked sausage, and dry sausage.
o We acquired ConAgra’s Butterball turkey business through a 49-percent-owned joint venture with
Maxwell Farms. The combination of Butterball and Carolina Turkeys, owned by the joint venture, was
renamed Butterball, LLC, and is now the largest U.S. turkey producer, with sales of more than $1 billion.
o A week after the closing of fiscal year 2007, we completed the acquisition of Premium Standard Farms,
a vertically integrated provider of pork products. This enabled Smithfield to capitalize on our vertically
integrated model and expand our share in hog production to 17 percent from 14 percent. The merger
increased our share in pork processing to 31 percent from 26 percent.
Europe represents significant potential for Smithfield, and we continue our focus on building a solid pan-European
business. The Sara Lee European Meats acquisition has provided the vehicle to pursue broad, branded distribution
in Western Europe. Simultaneously, our long-term strategy is to build vertically integrated and low-cost production
in Eastern Europe.
In Poland, we have become the largest hog producer and pork processor and will use vertical integration to expand
the business. After years of investment, we have achieved solid profitability.
In total, we plan to invest up to $1 billion in Romania by 2010 through company-owned and contract grower
agreements to revitalize the pork industry and develop a fully-integrated business model and infrastructure.
This year, we successfully reopened a mothballed pork
processing plant that we acquired, and we will continue to
ramp up production there.
Domestically, Smithfield continues to evaluate manufacturing
operations to drive out significant costs and become a low-cost,
highly efficient producer. We plan additional changes to realign
capacity while we maintain our focus on utilizing our raw
materials internally and eliminating low-margin business. Our
strategy is to invest in new technology and processes to enable
our packaged meats business to become a much stronger
component of our profits.
This year our commitment to corporate social responsibility remained an integral component of our business
strategy. Consequently, Fortune prominently ranked Smithfield on its annual list of America’s Most Admired
Companies for the fifth consecutive year and ranked our company first among beef and pork producers.
USA Today recently listed the top-performing stocks over the past 25 years, and it was gratifying to see Smithfield
listed as number 21, just behind Berkshire Hathaway, with a stock appreciation of 19,414 percent. As always, we
thank our employees, customers, and suppliers for making this possible.
Paul J. Fribourg, chairman, president, and chief executive officer of ContiGroup Companies, Inc., which owned
39 percent of Premium Standard Farms’ shares, has been elected a member of Smithfield’s board of directors.
In addition, Michael J. Zimmerman, executive vice president and chief financial officer of ContiGroup, has been
appointed an advisory director. They will be valuable additions to the board.
Looking forward, in spite of the anticipated increase in grain costs, I am very optimistic about the future. Grain
prices, as well as increases in freight and energy costs, are impacting our operations. However, we are focusing on
realigning our product mix and directing our efforts in packaged meats toward our strong regional brands, as well
as driving out inefficiencies. All of this bodes well for Smithfield Foods.
C. Larry Pope
President and Chief Executive Officer
June 15, 2007
3
4
REAPING THE BENEFITS OF VERTICAL INTEGRATION
Smithfield Foods embarked on a vertical integration strategy in 1987 but ramped up the effort
significantly in 1999. Our participation in both hog production and pork processing has provided a steady
supply of high-quality raw materials. It has also resulted in more consistent earnings and cash flow.
$-200
$-100
$0
$100
FY2002 FY2003 FY2004 FY2005 FY2006
$200
$300
$400
$500
$600
$700
$0.00
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
operating profit in millions price per cwt
$148.0
$266.6
Pork Processing Operating Profit
Hog Production Operating Profit Average Live Hog Market Price
$41.67 $41.68
$125.7
$213.1
$480.9
$166.8
$54.04
FY2007
$-108.4
$178.1
$32.94
$153.0
$330.0
$46.15
$228.0
$211.4
$47.74
Although traditional products still account for most of our
pork segment’s packaged meats volume, sales of higher-
margin convenience items have grown significantly.
Volume of traditional products increased by 455 million
pounds over the past three years, while volume of convenience
items grew by 383 million pounds over the same period.
This means that the volume of convenience products
has grown at a consistently higher rate than that of
traditional products.
INCREASING OUR FOCUS ON CONVENIENCE PRODUCTS
5
0
6%
12%
18%
FY2005vs FY2004
FY2006vs FY2005
FY2007vs FY2006
Traditional
Pork Segment - Annual Volume Growth Rate [% Change]
24%
10.9
18.7
2.3
10.0
16.1
26.9
30%
Convenience
0
250
500
750
FY2005vs FY2004
FY2006vs FY2004
FY2007vs FY2004
1000
LBS MM
193.3 156.6
109.1
382.7
455.0
Traditional
177.9
Pork Segment - Packaged Meats Volume Growth
Convenience
0
750
1,500
2,250
FY2004 FY2005 FY2006 FY2007
3,000
LBS MM
1,433.4
582.2
Traditional Convenience
1,590.0
691.3 760.1
1,626.7
964.9
1,888.4
Pork Segment - Packaged Meats Volume
PENETRATING U.S. REGIONAL PACKAGED MEATS MARKETS
CENTRAL Lb. Share – 24%
Rank #1Distribution – 100%
NORTHEASTLb. Share – 13%
Rank #2Distribution – 96%
SOUTHLb. Share – 23%
Rank #1Distribution – 99%
WESTLb. Share – 10%
Rank #4Distribution – 83%
Bacon
CENTRALLb. Share – 55%
Rank #1Distribution – 92%
NORTHEASTLb. Share – 54%
Rank #1Distribution – 88%
SOUTHLb. Share – 55%
Rank #1Distribution – 96%
WESTLb. Share – 32%
Rank #1Distribution – 96%
Smoked Meats
6
Bacon Source: Nielsen Co. Avg acv 52 W/E 4/21/07 Smoked Meats Source: Fresh Look Marketing Avg distribution 52 W/E 4/29/07
SMITHFIELD UP CLOSEFrom the acquisition of several leading U.S. brands to our
European expansion, we have continued to build upon the
leadership position Smithfield Foods enjoys in many areas
of our industry. In this section, we highlight our purchase of
the Butterball turkey brand, our growing opportunities in
packaged meats, our marketing partnership with celebrity cook
Paula Deen, and other key developments of the past year.
ABOUT TH
9
IS PHOTO Walk into the Boucherie Duret Dupont in Paris, and it’s a good bet that Monsieur Dupont will have a largeassortment of Aoste hams and other Aoste products on hand for customers who appreciate high-qualitymeats. The Aoste brand originated in France, but it is also Groupe Smithfield’s leading brand in Belgium and Germany.
No stranger to the European market, Smithfield Foods upped the
ante considerably this past year. Building on existing positions
in France, Poland, and Romania, Smithfield teamed with Oaktree
Capital Management to acquire Sara Lee’s European Meats
business in August 2006. The 50/50 joint venture—Groupe
Smithfield, S.L.—also includes Smithfield’s established Group Jean
Caby subsidiary. With annual sales of $1.9 billion and 6,650
employees, Groupe Smithfield has emerged as Europe’s largest
packaged meats company.
Like other recent acquisitions made in the United States, the
Groupe Smithfield deal has allowed Smithfield Foods to add more
higher-margin, branded offerings to the company’s product mix.
The acquired brands are among the best known in Western Europe,
including France’s Aoste and Justin Bridou, The Netherlands’
Stegeman, and Portugal’s Nobre. A total of 25 plants produce dry
sausage, dry ham, cooked ham, cooked sausage, and a long list of
other products.
From its new headquarters in Paris, the Groupe Smithfield team
has been busy this past year integrating the company’s Jean Caby
and Groupe Aoste French operations and optimizing their
combined manufacturing platform. New products on the way
include a broader variety of low-salt and low-fat meats under the
Weight Watchers label. Finishing the year significantly ahead of its
original sales plan, the company has increased its targets for 2008.
GROUPE SMITHFIELD JOINT VENTURE
EUROPE’S LARGEST IN PACKAGED MEATS
ABOUT
11
THIS PHOTO Mothers want the best for their children, so it’s no surprise that they have made the Eckrich and Armourbrands a popular supermarket selection for breakfast, a backyard barbecue, or the family dinner table.Armour-Eckrich Meats distributes these and other brands that stand for flavor, high quality, and valuethrough the foodservice channel as well.
For supermarket shoppers in the Midwest, the Eckrich brand is
nearly synonymous with smoked sausages and breakfast links. The
market leader in nine states, its heritage dates back to 1894. It’s
also one of the latest additions to Smithfield Foods’ rapidly growing
packaged meats offerings. In October 2006, Smithfield acquired
Eckrich as well as the Armour, Margherita, and LunchMakers
brands from ConAgra Foods. Now operating under the banner of
Armour-Eckrich Meats LLC, the Naperville, Illinois-based company
boasts annual sales exceeding $1 billion. Precooked and other
convenience items account for approximately 90 percent of sales.
The acquisition supports Smithfield’s strategy of utilizing raw
materials internally and migrating to higher-margin, further-
processed products. For example, Smithfield acquired the Cook’s
ham business from ConAgra earlier in 2006. With annual sales of
approximately $330 million, Cook’s produces traditional and spiral-
sliced smoked bone-in hams, corned beef, and other smoked meat
items sold through supermarket chains and independent grocers.
Armour-Eckrich Meats has added approximately 600 million
pounds of packaged meats to Smithfield’s overall volume, with
large market shares in hot dogs, dinner sausages, and luncheon
meats. In fact, it contributed to a 20-percent increase in Smithfield’s
packaged meats volume during fiscal 2007. Since the acquisition,
Armour-Eckrich has focused on increasing distribution in existing
markets and introducing a number of premium items. Among
them, three new flavors of Eckrich Smoked Sausage—Chipotle,
Chorizo, and Baja Blend—hit store shelves in July 2007.
RECENT ACQUISITIONS ADD STRENGTH
TO U.S. PACKAGED MEATS OFFERINGS
ABOUT
12
Mention Smithfield Foods, and it’s a good bet that the next words
out of the average person’s mouth will be “ham” or “pork.”
Smithfield is, indeed, the world’s largest pork processor. However,
the company also owns 49 percent of Butterball, LLC, the No. 1
U.S. turkey producer and processor with annual sales exceeding
$1 billion. Smithfield’s long-standing Carolina Turkeys joint venture
with Maxwell Farms, Inc., acquired the celebrated Butterball brand
in October 2006 from ConAgra Foods, and it adopted the Butterball
name in the process.
The acquisition has catapulted Smithfield to the top ranks of the
poultry industry and added a national brand with more than a half
century of brand equity to Smithfield’s packaged meats portfolio.
It also complements the company’s strengths in pork and beef.
Smithfield is the nation’s fifth-largest beef processor and, through
another joint venture, the world’s largest cattle feeder.
Beyond the whole birds that grace Thanksgiving dinners across the
country, Butterball’s seven U.S. plants produce a broad range of
retail, foodservice, and deli products for customers in 20 countries.
The company sells cooked turkey breasts, turkey sausages, ground
turkey, turkey bacon, and lunchmeat, to name just a few.
The Butterball brand continued to widen its lead in the market-
place during the past year, helped in part by the 5-percent increase
in sales of pre-packaged whole turkeys. The company also launched
an All Natural line of cooked deli breasts and introduced several
chicken varieties of Butterball lunchmeats.
THIS PHOTO For more than 50 years, Butterball turkeys have been a staple of Thanksgiving dinners such as the one beingenjoyed by this Florida family. Moreover, Butterball is the only national poultry brand to offer a complete lineof premium turkey and chicken products for a variety of year-round meal occasions. A bit of trivia: TheButterball name was originally chosen to characterize a new breed of broad-breasted white-feather turkeys.
BUTTERBALL ACQUISITION CATAPULTS
SMITHFIELD TO TOP POULTRY RANKS
14
Among Smithfield Foods’ current strategic goals, utilizing more
raw materials internally and migrating to higher-margin, further-
processed products top the list. The company has been busy
acquiring several leading packaged meats brands in the United
States and Europe over the past year for just this purpose. At the
same time, Smithfield has also been addressing capacity issues
among core brands to pave the way for their continued growth.
Nowhere is this more evident than in the new deli ham and sliced
lunchmeat plant that The Smithfield Packing Company opened in
Kinston, North Carolina, in 2006. The $100 million facility, dubbed
“K2” to distinguish it from the company’s other processing
operation across town, already produces 90 million pounds of
packaged meats annually for the retail, foodservice, and deli
channels. Products bearing the Smithfield and Gwaltney brands fill
departing tractor-trailers, as do popular regional brands such as
Lykes, Valleydale, and Esskay. With 238,000 square feet, K2 has the
capacity to produce up to 130 million pounds each year to serve
Smithfield Packing’s markets along the East Coast. Among its other
benefits, K2 has allowed Smithfield Packing to close two other
plants and manufacture their products far more efficiently.
The most automated ham processing plant in the world, K2 has
been built from the ground up to consume less water than
traditional plants. It also employs the latest in food safety
technology. For example, the Armor Inox Thermix™ system that
cooks and chills the hams virtually eliminates the need for workers
who monitor the process to touch products after raw meat is first
stuffed into casings.
ABOUT THIS PHOTO Smithfield Packing Company’s K2 plant took 13 months to construct, and it employs approximately 300 people. Among them, Gritzel Morales is busy inspecting Smithfield Virginia Brand half hams before they undergo the pasteurization process. Built with a focus on enhanced food safety, K2 houses its sevenslicing lines in separate halls with dedicated drainage and air handling systems.
NEW KINSTON PLANT PAVES THE WAY
FOR PACKAGED MEATS EXPANSION
ABOUT
THIS PHOTO In her home kitchen in Savannah, Georgia, Paula Deen puts the finishing touches on a Smithfield spiral-sliced half-ham. Her homemade glaze contains premium peanuts from The Peanut Shop of Williamsburg, partof The Smithfield Specialty Foods Group. In January 2007, this Smithfield subsidiary launched a line of sauces and seasonings under the Paula Deen brand.Getting families to sit down to meals together on a regular basis
can be challenging these days, but Smithfield Foods has enlisted a
secret weapon on this front. Since September 2006, the company
has teamed with celebrity cook Paula Deen in a partnership that
includes community outreach efforts, personal appearances,
Web-based recipe and meal-preparation tips, and new products.
With her two shows on the Food Network, six cookbooks, and
Cooking with Paula Deen magazine, food lovers across the country
are familiar with the ubiquitous Deen and the Southern spell she
casts on her dishes. A longtime user of Smithfield products, she
hopes to make people feel more confident in selecting cuts of meat
that take less time to prepare, are easy to make, and are well-
balanced for family members.
Not surprisingly, studies by Iowa State University and other schools
have found that the family meal offers clear benefits. Along with
providing children with better nutrition, this time together allows
parents to teach table manners, social skills, family values, a sense
of community, and basic cooking skills.
In July, Smithfield launched a national Cable TV ad campaign
featuring Deen. The 30-second spots feature Deen telling consumers
about all the wonderful, easy-to-fix recipes using Smithfield
products that she has waiting for them at Smithfield.com. In the
first four TV spots running this summer, Paula entices viewers with
her delicious recipes for Smithfield Smoked Sausage, Marinated
Pork Tenderloin, Deli Thin Sliced Tub Lunchmeat, and Naturally
Hickory Smoked Bacon.
PAULA DEEN AND SMITHFIELD DEVELOP
WAYS OF PROMOTING THE FAMILY MEAL
17
ABOUT THIS P
18
HOTO Chef Michael Formichella puts the entrepreneurial talents of the Smithfield Innovation Group to work on a year-round basis for the Smithfield Foods family of companies. He frequently hits the road to present new dishes to retailers and restaurant chains and often hosts customers at the company’s test kitchen inBuffalo Grove, Illinois.
How does a restaurant shave enough minutes off a dish’s
preparation time to add it to the menu? Ask Certified Master
Chef Michael Formichella. He was in his office at the Smithfield
Innovation Group (SIG) when a call came in from a representative
of Smithfield Foods’ national account team. One of its customers, a
large chain of casual dining restaurants, had a problem: It wanted
to serve a double-cut boneless pork loin chop wrapped in Apple-
Wood Smoke bacon, but the kitchen staff couldn’t find a way to
cook the dish quickly enough. Formichella dispatched a member
of his team, who analyzed the restaurant’s preparation techniques
and demonstrated a different way to sear the meat and hold it in
the oven. That shaved six minutes off its prep time—a lifetime in
the restaurant business—and the dish was added to the menu.
For SIG, challenges like this add up to business as usual. Since
its founding in 2003, this five-member culinary think tank has
provided virtually all of Smithfield’s independent operating
companies with solutions to specific customer needs as well as
offering new product ideas. Formichella, whose lengthy resumé
includes a stint as executive chef at a five-star restaurant, has
been with SIG since its inception. He took over the reins in 2006.
Among the past year’s successes, SIG helped the Smithfield
Specialty Foods Group leverage its relationship with celebrity
cook Paula Deen by developing a line of sauces and seasonings.
Introduced in January 2007, Paula Deen Collection Sauces &
Seasonings have been a big hit on the QVC home shopping
network and among catalog shoppers. A line of Simply Southern
heat-and-eat side dishes are on the way as well.
SMITHFIELD’S CULINARY THINK TANK
PUTS INNOVATION ON THE MENU
20
Thanks to Smithfield Foods’ John Morrell & Co. subsidiary, 25 needy
high school seniors from Sioux Falls, South Dakota, have dually
enrolled at a two-year school where they are pursuing their dreams
of a post-secondary education. These students are the first to
benefit from Learners to Leaders, a national educational alliance
funded by the Smithfield-Luter Foundation. Made up of Smithfield’s
independent operating companies and local education partners,
Learners to Leaders wants to close the economic gap that keeps
many high school students from obtaining further education.
Participating students are typically the first generation in their
families to continue beyond high school.
Subsidiaries in Green Bay, Wisconsin, and Denison, Iowa, have
since launched their own Learners to Leaders programs, with
several more in the works. The Smithfield-Luter Foundation
supports a number of other education programs as well, including
the work of An Achievable Dream. This organization provides
underprivileged children in the Newport News, Virginia, area (the
student in the far right photo among them) with a solid education
that prepares them for college. As sponsor of its 2006 high school
graduating class, Smithfield has given more than 30 students each
a merit scholarship worth $2,000 annually for four years of college.
Smithfield has also made protecting the environment, ensuring
worker safety, improving animal welfare, and other areas of
corporate social responsibility a priority. For example, the company
is helping fund the Ducks Unlimited Sound CARE initiative in
North Carolina as part of the $2 million contributed annually for
the state’s environmental enhancement grants. Begun in 2003,
Sound CARE has conserved or restored some 10,000 acres of
wetlands to date such as the Mattamuskeet National Wildlife
Refuge (right). By joining the Chicago Climate Exchange (CCX) in
February 2007, Smithfield has committed to cutting the company’s
greenhouse gas emissions in the United States by a minimum of
6 percent by 2010.
CORPORATE SOCIAL RESPONSIBILITY
TAKES MANY FORMS AT SMITHFIELD
OUR ORGANIZATIONAL STRUCTURE
SMITHFIELD FOODS, INC.
Pork
Beef
International
Hog Production
Other
Smithfield Packing Company, Inc.
John Morrell & Co.
The Smithfield Specialty Foods Group
Cook’s Hams, Inc.
Armour-Eckrich Meats LLCCurly’s Foods, Inc.Cumberland Gap Provision
Patrick Cudahy, Inc.North Side FoodsStefano Foods, Inc.Smithfield RMH Foods, LLCSmithfield Innovation Group
Five Rivers Ranch Cattle Feeding LLC1
Smithfield PROD (Romania)Smithfield Foods, Ltd. (U.K.)Campofrio (Spain)2
OtherMaverick Food Co. Ltd. (China)1
Norson (Mexico)1
Europe
Farmland Foods, Inc.
Smithfield Beef Group
Animex (Poland)
Groupe Smithfield, S.L. (Europe)1
Butterball, LLC1
Murphy-Brown, LLC
1 Joint venture2 Smithfield Foods owns a 23% stake.
OUR FAMILYOF COMPANIES
A series of successful acquisitions completed largely over the
past decade have transformed Smithfield Foods into a global
food company with annual revenue approaching $12 billion.
Here is a breakdown of our fiscal 2007 sales by operating
segment: Pork (59%), Beef (19%), Hog Production (14%),
International (7%), and Other (1%).
Our operating companies and joint ventures maintain their
individual identities, but together they make Smithfield Foods
a leader in several key categories. The following pages provide
snapshots of these companies, including selected brands and
markets as well as highlights from the latest fiscal year.
24
Founded in 1936 by Joseph W. Luter and his son, Joseph W. Luter, Jr., The Smithfield Packing
Company today enjoys annual sales of more than $2.5 billion. Smithfield Packing’s primary
lines of business include fresh pork, smoked meats, bacon, cooked hams, and hot dogs for
retail, foodservice, and deli channels. The company exports products to more than 30
countries. In addition to the Smithfield brand, its Gwaltney, Esskay, and Valleydale products
are among the leaders in their respective markets. The Smithfield Specialty Foods Group
is home of the Genuine Smithfield Ham, The Peanut Shop of Williamsburg, and other
gourmet offerings.
HEADQUARTERS:Smithfield, VA
PRESIDENT:Joseph W. Luter, IV
EMPLOYEES: 12,000
MAJOR MARKETS
i United States
i Japan
i China
i South Korea
i Mexico
i Canada
i Russia
i European Union
MAJOR BRANDS
i Smithfield
i Gwaltney
i Smithfield Tender N Easy
i Great
i Smithfield Self Basting
i Esskay
SUBSIDIARIES
i Smithfield Specialty Foods Group (see profile on pg. 35)
25
www.smithfield.com
FISCAL 2007 HIGHLIGHTS
i Forged a marketing partnership with Paula Deen that has
generated increased consumer awareness of the Smithfield
brand and substantial interest among trade partners
i Expanded retail distribution level of Smithfield bacon in
core Eastern U.S. markets from 69 percent to 80 percent,
according to ACNielsen
i Experienced double-digit increases in deli and foodservice
sales; precooked bacon volume jumped by more than
200 percent with launch of new capacity
i Developed solid export business in European Union with
other Smithfield subsidiaries as well as external customers
i Installed CO2 stunning at its plants in Smithfield, Virginia,
and Tar Heel, North Carolina
F
i Opened the most modern, efficient cooked-ham plant in
the United States in Kinston, North Carolina, positioning
Smithfield as a leading provider of sliced and whole deli
ham and turkey products for retail and foodservice
channels
i Increased sales of Gwaltney-branded hot dogs by 3 percent
over the previous year, securing Gwaltney’s position as the
No. 1 brand of retail hot dogs in its core marketing area
and the No. 4 brand of hot dogs in the United States
i Introduced the One Step Closer™ line of marinated stuffed
pork in response to consumer demand for great-tasting,
easy-to-prepare meals
PROCESSING FACILITIES
i Smithfield, VA
Fresh pork, bacon, sausage
i Kinston, NC
Smoked hams, water-cooked hams
i Landover, MD
Smoked hams
i Wilson, NC
Bacon
i Tar Heel, NC
Fresh pork
i Plant City, FL
Smoked hams, franks
i Elon, NC
Dry-cured hams
i Portsmouth, VA
Franks, lunchmeat
26
OUR FAMILY OF COMPANIES
John Morrell & Co. was founded in England in 1827 and is the oldest continuously operating
meat manufacturer in the United States. It enjoys annual sales of approximately $2 billion.
Serving the retail, foodservice, and deli channels, John Morrell & Co.’s primary product lines
include smoked sausages, hot dogs, natural smoked hams, bacon, deli meats, corned beef, and
fresh pork products. The company sells products under the flagship John Morrell brand and
more than a half-dozen others. Its celebrated Kretschmar brand offers a full line of German-
style favorites for the service deli, including hams, turkey, cooked beef, sticks, and loaves.
John Morrell & Co. is also one of the nation’s largest producers of private-label packaged meats.
HEADQUARTERS:Cincinnati, OH
PRESIDENT:Joseph B. Sebring
EMPLOYEES: 6,700
MAJOR MARKETS
i Midwest U.S.
i Northeast U.S.
i Northwest U.S.
i Southwest U.S.
i Eastern Asia
MAJOR BRANDS
i John Morrell
i Kretschmar Deli
i Mosey’s Corned Beef
i Rath Blackhawk
i EZ Cut Hams
i Hunter
SUBSIDIARIES
i Armour-Eckrich Meats LLC
(see profile on pg. 28)
i Mohawk Packing
i Cumberland Gap Provision
(see profile on pg. 29)
i Curly’s Foods Inc.
(see profile on pg. 29)
i Henry’s Hickory House
27
FISCAL 2007 HIGHLIGHTS
i Restaged John Morrell brand with new logo and package
graphics, a new advertising and promotional campaign, and
NFL quarterback Carson Palmer as brand spokesperson
i Introduced several new retail products, including ham
and poultry cuts in resealable packages, cocktail smokies,
resealable tub bacon, Bavarian branded boneless hams,
quarter spiral bone-in hams, deli party trays, and cocktail
party trays
S
i Gained more than 800 distribution points as a result of
new retail offerings
i Rolled out 13 cheeses for the service deli channel under
the Kretschmar brand
i Launched Applewood naturally smoked bacon for
foodservice customers
i Grew to the No. 1 brand of ham cuts in the United States
and the No. 2 brand of cocktail links
www.johnmorrell.com
PROCESSING FACILITIES
i Sioux Falls, SD
Fresh pork, sausages, smoked meats
i Sioux City, IA
Fresh pork
i Great Bend, KS
Fresh pork, smoked meats
i San Jose, CA
Corned beef, smoked meats
i Cincinnati, OH
Hot dogs, sausages, lunchmeats
28
OUR FAMILY OF COMPANIES
www.armour-eckrich.com
FISCAL 2007 HIGHLIGHTS
i Developed Armour Sizzle & Serve frozen breakfast
links and patties
i Prepared three new Eckrich smoked sausage flavors for
summer 2007 launch: Chipotle, Chorizo, and Baja Blend
i Restaged Eckrich Ready Crisp precooked bacon with
upgraded product quality and improved packaging
i Launched Eckrich Fried Favorites, among the industry’s
first line of fried meat items for the deli case
i Upgraded the package graphics for Armour meatballs and
began work on a similar initiative for Armour hot dogs
i Created dedicated sales, marketing, operations, logistics,
and finance teams following 2006 acquisition by Smithfield
Armour-Eckrich Meats LLC enjoys annual sales exceeding $1 billion, 90 percent from
precooked and other convenience items for the retail, deli, and foodservice channels. Anchored
by the venerable Eckrich and Armour brands, the company’s primary product lines include
dry and smoked sausage, lunchmeat, precooked bacon, hot dogs, portable lunches, and deli
products. Eckrich brand sausage is ranked No. 1 in sales in nine U.S. markets, with Armour a
leading value brand in hot dogs. LunchMakers is the No. 2 portable lunch brand nationally.
HEADQUARTERS:Naperville, IL
PRESIDENT:Michael E. Brown
EMPLOYEES: 3,600
MAJOR MARKETS
i Central U.S. i Texas i Northeast U.S.
MAJOR BRANDS
i Eckrich i Armour i Margherita
PROCESSING FACILITIES
i St. Charles, IL
i Omaha, NE
i Peru, IN
i Junction City, KS
i Mason City, IA
i St. James, MN
i Hastings, NE
i Lufkin, TX
29
HEADQUARTERS:Middlesboro, KY
PRESIDENT:R.D. McGregor
EMPLOYEES: 325
www.curlys.com www.cumberlandgapprovision.comHEADQUARTERS:Edina, MN
PRESIDENT:John Pauley
EMPLOYEES: 700
Established in 1988, Curly’s Foods, Inc. supplies leading
restaurant chains with raw and fully cooked ribs as well
as smoked pork, beef, and chicken entrees. The company’s
retail offerings can be found at many club stores and
supermarkets. At its plant in Sioux City, Iowa, an authentic
pit smoker gives Curly’s meats genuine, wood-smoked
barbecue flavor.
Cumberland Gap, the first great gateway to the West, is also
home to great-tasting hams, sausages, and other specialty
packaged meats smoked using 100-percent genuine hickory
wood. Founded in 1979, the company makes the best-selling
semi-boneless ham in the United States. It serves some of the
nation’s largest supermarket chains with branded products
and a substantial private-label business.
MAJOR MARKETS
i United States
i Mexico
i Taiwan
i Colombia
MAJOR BRANDS
i Curly’s Foods
FISCAL 2007 HIGHLIGHTS
i Sales rose by 6 percent due to success of semi-boneless
ham and increased private-label business
i Successfully completed transition to new order-entry
and billing system
MAJOR MARKETS
i United States
MAJOR BRANDS
i Cumberland Gap i Olde Kentucky
FISCAL 2007 HIGHLIGHTS
i Revenue increased 17 percent due mainly to growth in
retail sales and in the cooked beef foodservice category
i Introduced cooked carnitas and prime rib for foodser-
vice customers and cold-smoked ribs for retailers
30
Farmland Foods, Inc., derives the majority of its more than $2.2 billion in annual sales from
a broad selection of pork products for retail and foodservice customers. Its primary lines of
business include fresh pork, case-ready pork, hams, bacon, fresh sausage, cooked sausage,
lunchmeat, dry sausage, and specialty sausage. Since its founding in 1959, Farmland Foods has
maintained a proud heritage of working side by side with American farm families. Smithfield
Foods acquired the company in 2003. Farmland Foods has a large and growing international
business, exporting products to more than 60 countries across six continents. Its Carando Foods
subsidiary is one of the largest suppliers of Italian deli and specialty meats in the United States.
HEADQUARTERS:Kansas City, MO
PRESIDENT:George Richter
EMPLOYEES: 6,500
MAJOR BRANDS
i Farmland i Carando i Cook’s
MAJOR MARKETS
i United States
i Japan
i Mexico
i Russia
S
i China
i Europe
i South Korea
S
i Canada
i Taiwan
i Australia
SUBSIDIARIES
i Carando Foods i Cook’s Hams, Inc. (see profile on pg. 32)
31
FISCAL 2007 HIGHLIGHTS
i Worked with Murphy-Brown to develop a new herd of
vegetarian-fed, antibiotic-free animals for Farmland
Simply Natural brand
i Launched 15 Farmland Simply Natural and 13 Farmland
All Natural products in January 2007
i Secured a contract as the exclusive supplier of pork to
Sodexho, with annual volume estimated at 36 million
pounds
i Opened new distribution center in Crete, Nebraska, in
July 2007
i Moved corporate office to a new location with state-of-the-
art R&D and test kitchen facilitiesGIi Brought new CO2 stunning facility online in Denison, Iowa,
improving animal welfare and enhancing pork quality
i Received European Union certification to begin exporting
products from Crete, Nebraska, plant
i Exceeded third-year objectives as part of a six-year plan to
utilize all hams and bellies internally
i Continued work on modernizing manufacturing facilities
across the company
www.farmlandfoods.comwww.carando.com
PROCESSING FACILITIES
i Crete, NE
Fresh pork, hams, bacon, sausage
i Denison, IA
Fresh pork, hams, bacon
i Monmouth, IL
Fresh pork, hams, bacon
i Wichita, KS
Smoked sausage, hot dogs, lunchmeat
i Carroll, IA
Cook-in-bag products
i Springfield, MA
Dry sausage and specialty sausage
i New Riegel, OH
Bone-in hams, spiral hams
i Salt Lake City, UT
Case-ready fresh pork
32
OUR FAMILY OF COMPANIESOUR FAMILY OF COMPANIES
HEADQUARTERS:Lincoln, NE
GENERAL MANAGER:Mark Meiners
EMPLOYEES: 1,300
HEADQUARTERS:Arnold, PA
PRESIDENT:Robert G. Hofmann, II
EMPLOYEES: 325
The acquisition of Cook’s Hams, Inc., in 2006 brought
another producer of high-quality packaged meats under the
Smithfield umbrella. Cook’s offers traditional and spiral
sliced bone-in hams, other smoked meats, and corned beef
primarily for supermarket chains and independent grocers.
The company operates plants in Lincoln, Nebraska; Martin
City, Missouri; and Grayson, Kentucky.
North Side Foods has been making great-tasting meats for
nearly a century. Today, the company’s plants in Arnold,
Pennsylvania, and Cumming, Georgia, specialize in
precooked pork and turkey sausage patties, links, and
crumbles for the foodservice industry. The first provider of
fully cooked sausage to McDonald’s Corporation, North Side
Foods remains one of its major suppliers.
FISCAL 2007 HIGHLIGHTS
i Launched exact-weight boneless ham items and
quartered spiral-sliced ham
i Increased market share of value-added ham products
by broadening retail customer base
www.CooksHam.com www.emberfarms.com
MAJOR MAR
i United States i Canada i Mexico
MAJOR BRANDS
i Cook’s
FISCAL 2007 HIGHLIGHTS
i Completed plant expansion in Georgia, increasing the
company’s production capacity by 33 percent
i Broadened market reach into Canada with the addition
of a major quick-serve account
MAJOR MARKETS
i Eastern U.S. i Midwest/Western U.S. i Canada
MAJOR BRANDS
i Ember Farms
MAJOR MARKETS
33
HEADQUARTERS:Charlotte, NC
PRESIDENT:Enrico Piraino
EMPLOYEES: 95
HEADQUARTERS:Morton, IL
PRESIDENT:Jonathan Rocke
EMPLOYEES: 120
From its roots as an Italian delicatessen and pizzeria,
Stefano Foods today produces ready-to-eat and ready-to-cook
entrees, appetizers, and snacks at its two plants in
Charlotte, North Carolina. The company’s pizzas, calzones,
panini, and other convenience items are a popular choice
in the deli section of grocery stores. Its products are also
sold through foodservice and fundraising channels.
Smithfield/RMH Foods Group produces more than 150
varieties of fully cooked beef, pork, and chicken entrees at
its two plants in Morton, Illinois. The company provides
branded and private-label offerings for retail customers and
also serves the deli and foodservice channels. With roots
dating back to 1937, RMH has long specialized in high-
quality, value-added meat products.
FISCAL 2007 HIGHLIGHTS
i Increased sales by more than 45 percent, with
retail and fundraising providing the greatest gains
i Tripled grilled panini sales, mostly through the
retail channel
www.stefanofoods.com www.rmhfoods.com
MAJOR MAR
i United States i Canada i Mexico
MAJOR MARKETS
i United States
MAJOR BRANDS
i Stefano’s i Rip-n-Dip i Party Dipper
FISCAL 2007 HIGHLIGHTS
i Enjoyed 17-percent sales growth driven in part by the
Quick-N-Easy brand’s expansion into club stores
i Launched a three-item heat-and-serve appetizer tray
under the Smithfield and Quick-N-Easy brands
MAJOR MARKETS
MAJOR BRANDS
i Smithfield i Quick-N-Easy i Flavoré
P
i Cudahy, WI i Sioux Center, IA i Elizabeth, NJ
34
OUR FAMILY OF COMPANIES
www.patrickcudahy.comwww.814americas.com
FISCAL 2007 HIGHLIGHTS
i Enjoyed 10-percent volume growth for premium dry
sausage and specialty Italian deli products
i Increased volume and revenue by 15 percent in the
Hispanic foods segment; expanded distribution and product
introductions drove strong performance across all brands at
814 Americas
S
i Expanded capacity for precooked bacon in Sioux Center,
Iowa, to support rapid category growth
i Focused on improving productivity across all operations to
keep core Patrick Cudahy business competitive; improved
line efficiencies by 20 percent
Founded in 1888 in Milwaukee, Wisconsin, Patrick Cudahy specializes in high-quality, branded
packaged meats for the foodservice, deli, and retail channels. Primary lines of business include
precooked and traditional bacon, dry sausage, ham, and sliced meats. Patrick Cudahy is among
the top three U.S. producers of precooked bacon. The company has long been identified with
Sweet Apple-Wood Smoke Flavor®, one of its most popular bacon varieties. In 2005, Patrick
Cudahy purchased 814 Americas as part of its expansion into the fast-growing Hispanic market.
HEADQUARTERS:Cudahy, WI
PRESIDENT:William G. Otis
EMPLOYEES: 2,300
MAJOR MARKETS
i United States i Mexico i Canada i Caribbean i Japan
MAJOR BRANDS
i Patrick Cudahy
i Higüeral
i Realean
i El Miño
i La Abuelita i Riojano i Pavone
PROCESSING FACILITIES
35
www.thepeanutshop.comwww.smithfieldhams.comwww.smithfieldcollection.com
HEADQUARTERS:Toano, VA
VP & GENERAL MANAGER:Wm. W. “Pete” Booker, III
EMPLOYEES: 30
Founded in 2003, the Smithfield Innovation Group is a
culinary think tank that develops new food product ideas
for the Smithfield Foods family of companies. Chef Michael
Formichella and his team capitalize on emerging trends
in foodservice, retail, and deli. As a result, they create
solutions that set Smithfield companies apart from the
competition and address unique customer needs.
The Smithfield Specialty Foods Group is the gourmet products
division of Smithfield Foods. Home of The Peanut Shop of
Williamsburg and Genuine Smithfield Ham, it sells dozens
of high-quality nuts, meats, desserts, and dressings. These
products are popular choices for gifts and incentives, and they
are available through the company’s catalogs, Web sites, and
four retail locations in Virginia, Georgia, and South Carolina.
FISCAL 2007 HIGHLIGHTS
i Created marinated meats and 40-ounce dinner kits for
club stores as well as rubbed loins for grocery stores
i Developed 10 Paula Deen sauces for QVC and specialty
stores and stuffed beef filets for a large retailer
KEY CAPABILITIES
i Developing original, cost-effective menu solutions
i Providing culinary expertise specific to each customer’s needs
i Assessing the operational needs of foodservice operators as they
relate to time, space, and labor
FISCAL 2007 HIGHLIGHTS
i Posted double-digit sales growth, in part through
broader catalog distribution and strategic partnerships
i Introduced Paula Deen Collection Sauces & Seasonings
through The Peanut Shop of Williamsburg
MAJOR MARKETS
i United States
MAJOR BRANDS
i The Peanut Shop of Williamsburg
i Genuine Smithfield Ham
i Paula Deen Collection
i Basse’s Choice
www.smithfieldinnovationgroup.comHEADQUARTERS:Buffalo Grove, IL
SENIOR VP & COO:Michael Formichella CMC
EMPLOYEES: 5
36
OUR FAMILY OF COMPANIES
The fifth-largest beef processor in the United States, the Smithfield Beef Group specializes in high-
quality USDA Prime and Choice beef. It processes more than 2 million head of cattle each year for
annual sales exceeding $2.5 billion. Smithfield Beef Group provides fresh beef in sub-primal and
case-ready packaging for both the retail and foodservice industries. Specialty brands include
Cedar River Farms Natural, which comes from cattle raised without the use of growth-promoting
hormones. In addition to a strong domestic base of customers, Smithfield Beef Group exports to
more than 20 countries. The Smithfield Beef Group was created following Smithfield Foods’ 2001
acquisitions of Packerland Holdings and Moyer Packing Company.
HEADQUARTERS:Green Bay, WI
PRESIDENT:Richard V. Vesta
EMPLOYEES: 5,600
MAJOR MARKETS
i United States
i Japan
i Mexico i Canada
MAJOR BRANDS
i Smithfield
i Cedar River Farms Natural
i Aberdeen Farms Black Angus
i Showcase Foods
i Packerland
SUBSIDIARIES
i Packerland Packing Company, Inc.
i Packerland–Plainwell, Inc.
i Sun Land Beef Company
i Moyer Packing Company
i Packerland Transport, Inc.
i Cattle Production Systems, Inc.
FISCAL 2007 HIGHLIGHTS
i Increased volumes by 11 percent on a year-over-year basis
due to growth in foodservice and retail customer base
i Re-entered Japanese and Korean markets successfully
following end of ban on U.S. beef
i Launched the Aberdeen Farms Black Angus brand
successfully
i Expanded high energy fed Holstein capabilities through
additional strategic alliances with calf feeders
S
i Returned beef processing to profitability in spite of
challenging industry conditions
i Repositioned all processing facilities under the Smithfield
Beef Group banner
i Increased efficiencies at the Tolleson, Arizona, facility
through major reconfiguration of the harvest area
i Established a strategic alliance to be the exclusive
producer of Premium Gold Angus Beef
www.sfbeef.com
PROCESSING FACILITIES
i Green Bay, WI
Sub-primal cuts, ground beef chubs
i Tolleson, AZ
Sub-primal cuts
i Plainwell, MI
Sub-primal cuts, ground beef chubs,
case-ready ground beef
i Souderton, PA
Sub-primal cuts, ground beef chubs,
case-ready ground beef, patties
37
FISCAL 2007 HIGHLIGHTS
i Instituted an aggressive management recruitment and
development program
i Dedicated substantial capital to ensuring sustainable
environmental compliance at multiple locations
i Completed several significant capital improvements focused
on improving energy and milling efficiencies
i Provided existing and new customers with cattle for value-
added and branded beef programs
38
OUR FAMILY OF COMPANIES
www.fiveriverscattle.com
HEADQUARTERS:Loveland, CO
PRESIDENT & CEO:Mike Thoren
EMPLOYEES: 575
Formed in 2005, Five Rivers Ranch Cattle Feeding LLC is an independently operated joint
venture between the cattle feeding businesses of ContiGroup Companies, Inc., and Smithfield
Foods, Inc. Five Rivers, the world’s largest cattle feeder, has a combined feeding capacity of
more than 800,000 head of cattle. It has 10 locations in Colorado, Idaho, Kansas, Oklahoma,
and Texas. From one-load and hobby cattle feeders to large-scale beef processors, Five Rivers
provides exceptional service to a variety of cattle-feeding customers.
COLORADO
i Colorado Beef i Gilcrest Feedlot i Kuner Feedlot i Yuma Feedlot
OKLAHOMA
i Cimarron Feeders
KANSAS
i Grant County Feeders
IDAHO
i Interstate Feedlot
TEXAS DS
i Coronado Feeders i Hartley Feeders i XIT Feeders
39
www.murphybrownllc.com
HEADQUARTERS:Warsaw, NC
PRESIDENT:Jerry Godwin
EMPLOYEES: 5,700
MURPHY-BROWN WEST
Ci Illinois i Illinois
i Iowa
i Missouri
i Oklahoma
i South Dakota
i Texas
i Utah
FISCAL 2007 HIGHLIGHTS
i Expanded farming operations in Mexico and began
increasing Circle Four Farms sow herd in Utah
i Continued dramatic growth in Europe, expanding farms
in Poland and Romania by 16,000 and 24,000 sows,
respectively
i Completed construction of a feed mill in Romania and
began construction of a second
i Established team to manage transition of sows from
individual gestation crates to group housing
i Partnered with North Carolina energy provider to promote
legislation that would offer incentives to hog farms that
produce electricity from renewable sources
i Completed implementation of Animal Welfare Management
System at Murphy-Brown West
Murphy-Brown, LLC, is the world’s largest hog producer and a key part of Smithfield Foods’
vertical integration strategy. The company was established in 2001 following the acquisitions
of Brown’s of Carolina, Carroll’s Foods, Murphy Family Farms, and Circle Four Farms. Murphy-
Brown owns approximately 1 million sows, with 85 percent based in the United States. Its U.S.
operations bring nearly 13 million hogs to market annually. Murphy-Brown International
produces more than 2 million additional hogs each year. The company’s Smithfield Premium
Genetics subsidiary is charged with improving swine genetics throughout the organization.
MURPHY-BROWN EAST
i North Carolina i Pennsylvania i South Carolina i Virginia
250 company-owned farms and approximately 1,200 contract producer farms
50 company-owned farms and approximately 500 contract producer farms
MAJOR BRANDS
i Mexico: Norson
i Mexico: Granjas Carroll de Mexico (GCM)
i Poland: Agri Plus
i Romania: Smithfield Ferme
MURPHY-BROWN INTERNATIONAL
i Colorado
i Illinois
i Iowa
i Missouri
i Oklahoma
i South Dakota
i Texas
i Utah
40
Butterball, LLC, is the largest U.S. turkey producer, with annual sales exceeding $1.2 billion.
Smithfield Foods owns 49 percent of the company, a joint venture with Maxwell Farms, Inc.,
of Goldsboro, North Carolina. Formerly Carolina Turkeys, the company adopted the Butterball
name in acquiring the brand in October 2006. The celebrated Butterball name is the most widely
recognized brand in the turkey industry and carries more than a half-century of brand equity.
Primary lines of business include whole turkeys and parts, cooked turkey breasts, turkey
sausages, ground turkey, lunchmeat and fresh tray pack, bone-in and boneless turkey. Available
through retail, deli, and foodservice channels, Butterball products are sold in 20 countries.
HEADQUARTERS:Mount Olive, NC
CEO:Keith Shoemaker
EMPLOYEES: 5,700
MAJOR MARKETS
i United States
i Mexico
i China
i Bermuda
i Costa Rica
i Panama
i Guatemala
i Puerto Rico
i The Bahamas
i Dominican Republic
i Russia
MAJOR BRANDS
i Butterball i Carolina Turkey
41
FISCAL 2007 HIGHLIGHTS
i Increased sales of Butterball pre-packaged whole turkeys
by 5 percent
i Widened market-leading Butterball brand share while
category sales declined 3 percent
i Introduced All Natural line of cooked deli breasts
i Expanded distribution of Butterball lunchmeats with
introduction of chicken varieties
S
i Broadened foodservice national account distribution with
addition of several national restaurant chains
i Began selling turkey medallions to a major food
manufacturer for a new line of consumer branded products
i Realized double-digit international value-added sales by
introducing branded items into five new markets
i Enhanced U.S. deli distribution with addition of several
major grocery retailers
www.butterball.com
PROCESSING FACILITIES
i Mount Olive, NC
Cooked deli breasts, pre-packaged fresh tray
pack turkey, ready-to-eat frozen breasts,
turkey medallions, pre-packaged frozen
turkey breasts, raw turkey breasts
i Kinston, NC
Sliced turkey products (bulk and pre-packaged)
i Carthage, MO
Pre-packaged fresh tray pack turkey, raw bulk turkey
i Jonesboro, AR
Cooked deli breasts
i Ozark, AR
Pre-packaged fresh and frozen whole turkeys
i Longmont, CO
Pre-packaged sliced turkey, cooked deli
breasts, raw meats, hot dogs
i Huntsville, AR
Pre-packaged fresh, frozen, and cooked
whole turkeys, pre-packaged bone-in tray
pack turkey products
42
OUR FAMILY OF COMPANIES
Groupe Smithfield is the home of Aoste, Jean Caby, Stegeman, Nobre, and many
of Western Europe’s other most popular branded packaged meats. Its annual sales total
$1.9 billion. Smithfield Foods owns 50 percent of this joint venture with Oaktree Capital
Management, LLC. The company was formed in 2006 through the combination of Smithfield’s
Groupe Jean Caby subsidiary and the former Sara Lee European Meats business. Primary
product lines include dry sausage, dry ham, cooked ham, cooked sausage, poultry, pâté, hot
dogs, and ready-to-eat meals. Groupe Smithfield serves Europe’s modern and traditional retail
trade as well as a large and growing number of foodservice customers.
HEADQUARTERS:Paris, France
PRESIDENT:Robert A. Sharpe II
EMPLOYEES: 6,650
MAJOR MARKETS
i France
i Belgium
i The Netherlands
i Luxembourg
i Portugal
i Germany
i U.K.
MAJOR BRANDS
i Aoste
i Cochonou
i Justin Bridou
i Stegeman
i Marcassou
i Nobre
i Jean Caby
SUBSIDIARIES
i Nobre
i Imperial
i Groupe Aoste
i Stegeman
i Aoste SB Germany
43
FISCAL 2007 HIGHLIGHTS
i Finished the year significantly ahead of plan, leading to
increased sales targets for fiscal 2008
i Reaped operational efficiencies through the merger of
Jean Caby and Aoste in France
i Struck an agreement with McDonald’s for the production
of a salad
i Agreed with Weight Watchers to increase product range
of new low-fat and low-salt varieties from 12 to 20
S
i Launched initiative to reposition Jean Caby and Aoste
products for the high end of the private-label market
i Developed plan to improve margins by optimizing the
manufacturing platform for the French companies
i Increased budget for marketing and advertising by
35 percent to revamp brands and develop new products
i Began producing sandwiches for a top-quality bakery chain
www.aoste.dewww.imperial.bewww.nobre.pt
PROCESSING FACILITIES
i Portugal
Cooked ham, dry ham, sausage, salami,
ready meals
i The Netherlands
Cooked ham, dry ham
i Belgium
Cooked ham, dry ham
i France
Dry ham, dry sausage, cooked ham,
cocktail sausage
44
OUR FAMILY OF COMPANIES
PROCESSING FACILITIES
FISCAL 2007 HIGHLIGHTS
i Introduced the Yano brand in Poland with cooked hams,
sausages, hot dogs, and other value-priced products
i Increased export volumes by 30 percent, largely due
to increased sales in the European Union and Far East
i Began selling fresh pork to the Japanese market
i Enjoyed 45-percent U.K. volume growth, mainly through
new line of convenience poultry products and introduction
of packaged meats in Tesco stores
Animex is Poland’s largest producer of fresh and packaged meats and home of the prized
Krakus ham. With annual sales of approximately $775 million, its primary lines of business
include fresh pork, beef, and poultry as well as smoked and cooked hams, sausages, hot dogs,
bacon, canned meats, and pâtés. Animex products are available in more than 50 countries at
retail and through foodservice channels. Smithfield Foods acquired a controlling stake in the
company in 1999.
www.animex.pl
HEADQUARTERS:Warsaw, Poland
PRESIDENT:Darek Nowakowski
EMPLOYEES: 8,750
MAJOR MARKETS
i Poland
i United States
i European Union
i South Korea
i Japan
MAJOR BRANDS
i Krakus i Morliny i Mazury i Yano
i Szczecin
i Elk
i Morliny
i Starachowice
i Opole
i Debica
i Ilawa
i Suwalki
i Zamosc
i Grodkow
i Krakow
45
Smithfield Foods entered the Romanian meat products market in 2004 by acquiring Agrotorvis.
Smithfield PROD’s annual sales have since grown to more than $60 million. Romania’s European
Union accession in 2007 positions the company to play a key role in Smithfield’s expansion
strategy on the continent. Its primary product line is fresh pork, principally for retail customers.
Smithfield PROD also owns a 50-percent stake in food distributor Agroalim and cold storage
warehouse company Frigorifer.
www.smithfieldfoods.ro
HEADQUARTERS:Timisoara, Romania
PRESIDENT & CEO:Morten Jensen
EMPLOYEES: 430
FISCAL 2007 HIGHLIGHTS
i Opened refurbished pork processing plant in Timisoara
i Doubled sales of fresh pork due largely to expansion of
Smithfield Ferme hog production operations
i Began distribution of fresh pork cuts to retail trade
F
S
i Built state-of-the-art rendering and wastewater treatment
facilities for Timisoara plant
i Invested in Frigorifer vegetable packing plant, funded in
part by the European Union
i Invested in Frigorifer warehouse expansion
MAJOR MARKETS
i Romania
MAJOR BRANDS
i Comtim
PROCESSING FACILITIES
i Timisoara i Tulcea
FINANCIAL SUMMARY
46
Fiscal Years (dollars and shares in millions, except per share data) 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998
OPERATIONS
Sales $$ 1111,,991111..11 $ 11,403.6 $ 11,248.4 $ 9,178.2 $ 7,075.3 $ 6,554.4 $ 5,123.7 $ 4,511.0 $ 3,550.0 $ 3,867.4
Gross profit 11,,113344..88 1,092.3 1,212.3 933.6 603.9 873.4 762.3 529.3 448.6 347.9
Selling, general, and administrative expenses 774455..66 673.8 643.6 559.4 487.9 491.5 416.2 353.7 280.4 222.4
Interest expense 117755..44 148.6 132.2 118.5 85.5 87.1 81.5 67.5 38.4 31.9
Income from continuing operations (1) 118888..44 185.2 300.7 167.9 14.8 193.0 214.3 68.0 89.6 53.4
Net income (1) 116666..88 172.7 296.2 227.1 26.3 196.9 223.5 75.1 94.9 53.4
PER DILUTED SHARE
Income from continuing operations (1) $$ 11..6688 $ 1.65 $ 2.68 $ 1.50 $ .14 $ 1.75 $ 1.95 $ .69 $ 1.09 $ .67
Net income (1) 11..4499 1.54 2.64 2.03 .24 1.78 2.03 .76 1.16 .67
Book value 2200..0033 18.11 16.93 14.31 11.83 12.41 10.05 8.21 6.47 4.83
Weighted average shares outstanding 111111..99 112.0 112.3 111.7 109.8 110.4 110.1 98.8 81.9 79.5
FINANCIAL POSITION
Working capital $$ 11,,337722..55 $ 1,161.3 $ 1,421.2 $ 1,059.9 $ 939.9 $ 917.1 $ 635.4 $ 609.9 $ 215.9 $ 259.2
Total assets 66,,996688..66 6,177.3 5,773.6 4,828.1 4,244.4 3,907.1 3,250.9 3,129.6 1,771.6 1,083.6
Total debt (2) 33,,009922..99 2,558.3 2,274.7 1,787.0 1,642.3 1,391.7 1,188.7 1,219.8 610.3 415.8
Shareholders’ equity 22,,224400..88 2,028.2 1,901.4 1,598.9 1,299.2 1,362.8 1,053.1 902.9 542.2 361.0
FINANCIAL RATIOS
Current ratio 22..0011 1.88 2.30 2.05 1.90 2.06 2.01 1.98 1.46 2.03
Total debt to total capitalization (3) 5588..00%% 55.8% 54.5% 52.8% 55.8% 50.5% 53.0% 57.5% 53.0% 53.5%
OTHER INFORMATION
Capital expenditures, net of proceeds $$ 447777..77 $ 381.6 $ 193.2 $ 133.5 $ 166.0 $ 136.5 $ 108.0 $ 87.1 $ 91.2 $ 91.7
Depreciation expense 221199..33 200.1 187.0 165.2 148.3 124.9 114.5 101.0 59.3 42.3
Common shareholders of record 11,,112288 1,196 1,269 1,332 1,195 1,390 1,345 1,514 1,230 1,143
Number of employees 5533,,110000 52,500 51,290 46,400 44,100 41,000 34,000 36,500 33,000 19,700
(1) Fiscal 2001 income from continuing operations and net income include a gain of $45.2 million, or $.41 per diluted share,
from the sale of IBP, inc. common stock, net of related expenses.
(2) Total debt is equal to notes payable and long-term debt and capital lease obligations including current portion.
(3) Computed using total debt divided by total debt and shareholders’ equity.
2004 2003 2002 2001 2000 1999 1998
$ 9,178.2 $ 7,075.3 $ 6,554.4 $ 5,123.7 $ 4,511.0 $ 3,550.0 $ 3,867.4
933.6 603.9 873.4 762.3 529.3 448.6 347.9
559.4 487.9 491.5 416.2 353.7 280.4 222.4
118.5 85.5 87.1 81.5 67.5 38.4 31.9
167.9 14.8 193.0 214.3 68.0 89.6 53.4
227.1 26.3 196.9 223.5 75.1 94.9 53.4
$ 1.50 $ .14 $ 1.75 $ 1.95 $ .69 $ 1.09 $ .67
2.03 .24 1.78 2.03 .76 1.16 .67
14.31 11.83 12.41 10.05 8.21 6.47 4.83
111.7 109.8 110.4 110.1 98.8 81.9 79.5
$ 1,059.9 $ 939.9 $ 917.1 $ 635.4 $ 609.9 $ 215.9 $ 259.2
4,828.1 4,244.4 3,907.1 3,250.9 3,129.6 1,771.6 1,083.6
1,787.0 1,642.3 1,391.7 1,188.7 1,219.8 610.3 415.8
1,598.9 1,299.2 1,362.8 1,053.1 902.9 542.2 361.0
2.05 1.90 2.06 2.01 1.98 1.46 2.03
52.8% 55.8% 50.5% 53.0% 57.5% 53.0% 53.5%
$ 133.5 $ 166.0 $ 136.5 $ 108.0 $ 87.1 $ 91.2 $ 91.7
165.2 148.3 124.9 114.5 101.0 59.3 42.3
1,332 1,195 1,390 1,345 1,514 1,230 1,143
46,400 44,100 41,000 34,000 36,500 33,000 19,700
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CONSOLIDATED CONDENSED STATEMENTS OF INCOME
Fiscal Years (in millions, except per share data) 2007 2006 2005
Sales $$ 1111,,991111..11 $ 11,403.6 $ 11,248.4 Cost of sales 1100,,777766..33 10,311.3 10,036.1
Gross profit 11,,113344..88 1,092.3 1,212.3
Selling, general and administrative expenses 774455..66 673.8 643.6 Interest expense 117755..44 148.6 132.2 Equity in income of affiliates ((3388..99)) (9.2) (17.5)
Income from continuing operations before income taxes 225522..77 279.1 454.0
Income taxes 6644..33 93.9 153.3
Income from continuing operations 118888..44 185.2 300.7
Loss from discontinued operations ((2211..66)) (12.5) (4.5)
Net income $$ 116666..88 $ 172.7 $ 296.2
Income from continuing operations per diluted common share $$ 11..6688 $ 1.65 $ 2.68 Net income per diluted common share $$ 11..4499 $ 1.54 $ 2.64
Fiscal Years Ended (in millions) April 29, 2007 April 30, 2006
ASSETS
Cash and cash equivalents $$ 5577..88 $ 89.4 Accounts receivable 668899..11 650.0 Inventories 11,,880055..88 1,584.2 Prepaid expenses and other current assets 118811..00 151.7
Total current assets 22,,773333..77 2,475.3
Property, plant and equipment, net 22,,334455..11 2,040.9 Goodwill and other intangible assets 999977..88 936.9 Investments and other assets 889922..00 724.2
Total assets $$ 66,,996688..66 $ 6,177.3
LIABILITIES AND SHAREHOLDERS’ EQUITY
Notes payable $$ 1155..22 $ 43.1 Current portions of long-term debt and capital lease obligations 223399..11 215.7 Accounts payable 552244..00 516.2 Accrued expenses and other current liabilities 558822..99 539.0
Total current liabilities 11,,336611..22 1,314.0
Long-term debt and capital lease obligations 22,,883388..66 2,299.5 Deferred income taxes and other long-term liabilities 551144..11 517.3
Total liabilities 44,,771133..99 4,130.8
Minority interests 1133..99 18.3
Total shareholders’ equity 22,,224400..88 2,028.2
Total liabilities and shareholders’ equity $$ 66,,996688..66 $ 6,177.3
CONSOLIDATED CONDENSED BALANCE SHEETS
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MANAGEMENT
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MANAGEMENT BOARD
C. LARRY POPEPresident andChief Executive Officer,Smithfield Foods, Inc.
RICHARD J.M. POULSONExecutive Vice President, Smithfield Foods, Inc.
ROBERT W. MANLY, IVExecutive Vice President,Smithfield Foods, Inc.
CAREY J. DUBOISVice President and Chief Financial Officer, Smithfield Foods, Inc.
JERRY H. GODWINPresident,Murphy-Brown, LLC
ROBERT G. HOFMANN, IIPresident,North Side Foods Corp.
MORTEN JENSENChief Executive Officer,Central and Eastern Europe
JOSEPH W. LUTER, IVPresident,The Smithfield Packing Company,Incorporated
DAREK NOWAKOWSKIPresident,Animex Sp. z o.o.
WILLIAM G. OTISPresident,Patrick Cudahy Incorporated
ENRICO PIRAINOPresident,Stefano Foods, Inc.
GEORGE H. RICHTERPresident,Farmland Foods, Inc.
JOSEPH B. SEBRINGPresident,John Morrell & Co.
RICHARD V. VESTAPresident,Smithfield Beef Group
CORPORATE OFFICERS
C. LARRY POPEPresident andChief Executive Officer
RICHARD J.M. POULSONExecutive Vice President
ROBERT W. MANLY, IVExecutive Vice President
DOUGLAS P. ANDERSONVice President,Rendering
MICHAEL H. COLEVice President, Chief Legal Officer, and Secretary
JEFFREY A. DEELVice President and Corporate Controller
CAREY J. DUBOISVice President and Chief Financial Officer
BART ELLISVice President,Operations Analysis
MICHAEL D. FLEMMINGVice President and Senior Counsel
JERRY HOSTETTERVice President,Investor Relations and CorporateCommunications
JEFFREY M. LUCKMANVice President,Livestock Procurement
HENRY L. MORRISVice President,Operations
JAMES D. SCHLOSSVice President,Sales and Marketing
KENNETH M. SULLIVANVice President and Chief Accounting Officer
DHAMU THAMODARANVice President,Price-Risk Management
DENNIS H. TREACYVice President, Environmental and Corporate Affairs
VERNON T. TURNERCorporate Tax Director
MANSOUR ZADEHChief Information Officer
DIRECTORS
JOSEPH W. LUTER, IIIChairman of the Board
C. LARRY POPEPresident andChief Executive Officer,Smithfield Foods, Inc.
ROBERT L. BURRUS, JR.Former Chairman and Partner inthe law firm of McGuireWoods LLP
CAROL T. CRAWFORD, ESQ.Former Commissioner,U.S. International TradeCommission
PAUL J. FRIBOURGChairman, President, and Chief Executive Officer, ContiGroup Companies, Inc.
RAY A. GOLDBERGMoffett Professor ofAgriculture and BusinessEmeritus at Harvard Business School
WENDELL H. MURPHYPrivate Investor,former Chairman of the Board and Chief Executive Officer ofMurphy Farms, Inc.
FRANK S. ROYAL, M.D.Physician
JOHN T. SCHWIETERSVice Chairman, Perseus LLC,a merchant bank and privateequity fund management company
MELVIN O. WRIGHTFormerly a senior executive of Dean Witter Reynolds, now Morgan Stanley
MICHAEL J. ZIMMERMAN*Executive Vice President and Chief Financial Officer, ContiGroup Companies, Inc.
*Advisory Director
CORPORATE INFORMATION
COMMON STOCK DATAThe common stock of the company has traded on the New York Stock Exchange under the symbol SFD since September 28, 1999.Prior to that, the common stock traded on the Nasdaq National Market under the symbol SFDS. The following table shows thehigh and low sales prices of the common stock of the company for each quarter of fiscal 2007 and 2006.
22000077 HIGH LOW 22000066 HIGH LOW
First $ 29.63 $ 25.90 $ 31.12 $ 25.69
Second 30.51 25.67 31.34 25.90
Third 27.26 24.40 31.47 26.95
Fourth 31.50 25.27 29.63 25.00
HOLDERSAs of May 31, 2007, there were 1,114 record holders of the common stock.
DIVIDENDSThe company has never paid a cash dividend on its common stock and has no current plan to pay cash dividends. In addition,the terms of certain of the company’s debt agreements prohibit the payment of any cash dividends on the common stock. Thepayment of cash dividends, if any, would be made only from assets legally available for that purpose and would depend on thecompany’s financial condition, results of operations, current and anticipated capital requirements, restrictions under then-existing debt instruments, and other factors then deemed relevant by the board of directors.
ANNUAL MEETINGThe annual meeting of shareholders will be held onAugust 29, 2007, at 2 p.m., at Williamsburg Lodge, 310 South England Street, Williamsburg, VA 23185.
INVESTOR RELATIONSSmithfield Foods, Inc.499 Park Avenue, Suite 600New York, NY 10022212-758-2100ir@smithfieldfoods.com
CEO AND CFO CERTIFICATIONSThe company’s chief executive officer and chief financial officerhave filed with the SEC the certifications required by Section 302of the Sarbanes-Oxley Act of 2002 regarding the quality of thecompany’s public disclosure. These certifications are included asexhibits to the company’s Form 10-K Annual Report for fiscal 2007.In addition, the company’s chief executive officer annually certifiesto the NYSE that he is not aware of any violation by the companyof the NYSE’s corporate governance listing standards. Thiscertification was submitted, without qualification, as required after the 2006 annual meeting of shareholders.
The company makes available free of charge through its Web site(www.smithfieldfoods.com) its annual report on Form 10-K,quarterly reports on Form 10-Q, current reports on form 8-K, and any amendments to those reports as soon as reasonablypracticable after filing or furnishing the material to the SEC.
CORPORATE HEADQUARTERSSmithfield Foods, Inc.200 Commerce StreetSmithfield, VA 23430757-365-3000www.smithfieldfoods.com
TRANSFER AGENT AND REGISTERComputershare Investor Services LLC2 North LaSalle StreetChicago, IL 60602312-360-5302
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMErnst & Young LLPOne James Center, Suite 1000901 East Cary StreetRichmond, VA 23219
FORM 10-K REPORTCopies of the company’s 10-K Annual Report are available without charge upon written request to:Corporate SecretarySmithfield Foods, Inc.200 Commerce StreetSmithfield, VA 23430757-365-3000ir@smithfieldfoods.com
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Design and Writing: RKC! (Robinson Kurtin Communications! Inc)
Executive & Feature Photography: Burk Uzzle • Printing: The Hennegan Company This report is printed on recycled paper.
SMITHFIELD FOODS, INC.
200 Commerce Street, Smithfield, VA 23430
757.365.3000
www.smithfieldfoods.com
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