smithfield food Our Family of Companies 2007

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%


SOUTHLb. Share – 23%


WESTLb. Share – 10%


Bacon

CENTRALLb. Share – 55%


NORTHEASTLb. Share – 54%


SOUTHLb. Share – 55%


WESTLb. Share – 32%


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

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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

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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

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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

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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

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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

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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


i Curly’s Foods Inc.


i Henry’s Hickory House

27


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


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


www.armour-eckrich.com


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


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


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


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


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


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.


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


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.


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


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


www.patrickcudahy.comwww.814americas.com


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


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.


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


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


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.


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


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


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


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


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


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


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


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


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


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




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


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


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 [email protected]

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 [email protected]

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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

smithfield food Our Family of Companies 2007

Economy & Finance

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