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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    **FORM 10-K**

[ X ]     ANNUAL  REPORT  PURSUANT  TO  SECTION  13 OR 15(d)  OF THE  SECURITIES
          EXCHANGE ACT OF 1934

          For the fiscal year ended: March 29, 2003

                                       OR

[   ]     TRANSITION  REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES
          EXCHANGE ACT OF 1934

                        For the transition period from    to

                        Commission file number: 333-64180

                            **PSF Group Holdings, Inc.**
             (Exact name of Registrant as specified in its charter)

             **Delaware                                    43-1818535**
  (State or other jurisdiction of           (I.R.S. Employer Identification No.)
  incorporation or organization)

**423 West 8th Street, Suite 200, Kansas City, Missouri      64105**
        (Address of principal executive office)          (Zip Code)

       Registrant's telephone number, including area code: (816) 472-7675

        Securities registered pursuant to Section 12(b) of the Act: None

            Securities registered pursuant to 12(g) of the Act: None

     Indicate  by check mark  whether the  Registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
Registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

     Indicate by check mark whether the Registrant is an  accelerated  filer (as
defined in Exchange Act Rule 12b-2). Yes [ ] No [X]

     There is  currently no  established  public  trading  market for the common
equity of the Registrant  held by  non-affiliates.  As of April 30, 2003,  there
were 100,000 shares of the  Registrant's  Class A Common Stock  outstanding  and
113,301 shares of the Registrant's Class B Common Stock outstanding.

**EXPLANATORY NOTES**

     In this  report  on Form  10-K,  the  terms  "we,"  "us"  and  "our"  refer
collectively to PSF Group Holdings, Inc., Premium Standard Farms, Inc. and their
subsidiaries.  Premium Standard Farms, Inc. is a wholly-owned  subsidiary of PSF
Group Holdings, Inc.

**Market and Industry Data and Forecasts**

     Market data and certain  industry  forecasts used throughout this report on
Form 10-K were obtained  from  internal  surveys,  market  research,  consultant
surveys,  publicly available  information and industry publications and surveys.
Reports  prepared or  published by Sparks  Companies,  Inc.,  the National  Pork
Producers Council,  Agrimetrics Associates Inc. and the United States Department
of Agriculture (USDA) were the primary sources for third-party industry data and
forecasts.  Industry  surveys,  publications,  consultant  surveys and forecasts
generally  state that the information  contained  therein has been obtained from
sources believed to be reliable,  but that the accuracy and completeness of such
information is not  guaranteed.  We have not  independently  verified any of the
data from  third-party  sources nor have we ascertained the underlying  economic
assumptions relied upon therein. Similarly, internal surveys, industry forecasts
and market research, which we believe to be reliable based upon our management's
knowledge of the industry, have not been independently  verified.  Forecasts are
particularly  likely to be inaccurate,  especially over long periods of time. In
addition, we do not know what assumptions regarding general economic growth were
used in preparing the forecasts we cite. We do not make any representation as to
the accuracy of information described in this paragraph.

                                **TABLE OF CONTENTS**

PART I.........................................................................3
     Item 1.    Business.......................................................3
     Item 2.    Properties....................................................13
     Item 3.    Legal Proceedings.............................................14
     Item 4.    Submission of Matters to a Vote of Security Holders...........15
PART II.......................................................................15
     Item 5.    Market for Registrant's Common Equity and Related
                Stockholder Matters...........................................15
     Item 6.    Selected Financial Data.......................................15
     Item 7.    Management's Discussion and Analysis of Financial
                Condition and Results of Operations...........................17
     Item 7A.   Quantitative and Qualitative Disclosures About Market Risk....25
     Item 8.    Financial Statements and Supplementary Data...................26
     Item 9.    Changes in and Disagreements with Accountants on Accounting
                and Financial Disclosure......................................26
PART III......................................................................26
     Item 10.   Directors and Executive Officers of Registrant................26
     Item 11.   Executive Compensation........................................29
     Item 12.   Security Ownership of Certain Beneficial Owners
                and Management................................................32
     Item 13.   Certain Relationships and Related Transactions................34
     Item 14.   Controls and Procedures.......................................35
PART IV.......................................................................36
     Item 15.   Exhibits, Financial Statements Schedules, and Reports
                on Form 8-K...................................................36
SIGNATURES....................................................................39
CERTIFICATIONS................................................................41

                                       2

**PART I

Item 1.  Business

Overview**

     We are a leading  vertically  integrated  provider of pork  products to the
wholesale  and  retail,  food  service and  institutional  markets in the United
States. By combining  modern,  efficient  production and processing  facilities,
sophisticated  genetics,  and strict control over the variables of health,  diet
and environment, we produce value-added premium pork products. We are the second
largest owner of sows in North America,  controlling over 255,000 sows, of which
approximately  212,000 are owned,  producing  approximately 4.5 million hogs per
year in production  operations located on over 100,000 acres in Missouri,  Texas
and North Carolina. We are also the seventh largest pork processor in the United
States, with two plants capable of processing approximately 4.5 million hogs per
year.

**Competitive Strengths**

     We believe the following  competitive  strengths position us to enhance our
growth and profitability:

     •    *Vertically  Integrated  Production and Processing*.  We have achieved a
          substantial  degree of vertical  integration of our hog production and
          processing operations. We measure our level of vertical integration in
          terms of the percentage of hogs processed at our plants that are owned
          by us and raised according to our controlled programs. In fiscal 2003,
          99% of the hogs used by our  Milan,  Missouri  processing  plant  were
          sourced from our Missouri and Texas hog production operations.  During
          the same period,  approximately 71% of hogs used by our Clinton, North
          Carolina  processing  plant were  supplied by our North  Carolina  hog
          production  operations,   with  the  remaining  29%  supplied  through
          contracts with independent  producers.  Vertical  integration gives us
          strict control over our process,  from a hog's initial  genetic makeup
          to the  pork  product  ultimately  produced  and  shipped.  This is in
          contrast to non-integrated  or less integrated  processors who acquire
          hogs  from  a  large  number  of  suppliers  with  varying  production
          standards and therefore  find it difficult to ensure a consistent  and
          high  quality  product.  This is a powerful  advantage  for  competing
          effectively  in the rapidly  consolidating  pork  industry  because it
          allows us to:

          •    *Produce  Premium  and  Specialty  Products*.   By  regulating  the
               variables  of  genetics,  environment,  health  and diet,  we can
               produce a  controlled  supply of high  quality,  consistent  pork
               products along with specialty  products,  such as antibiotic free
               pork and Premium 97 pork (certified as 97 percent fat-free by the
               American Heart Association),  as well as KenKo-Ton "healthy" pork
               and Mugi Buta  "barley-fed"  pork for the  Japanese  market.  Our
               products  typically  command  higher prices than  commodity  pork
               products.

          •    *Target  Premium  Customers*.  We are able to tailor our production
               process to meet the  exacting  specifications  of  discriminating
               customers in our target  markets.  These customers are willing to
               pay  premium  prices  for  higher  quality  products  and for the
               assurance  that their  standards  are met  throughout a traceable
               production  process.  Vertical  integration  provides the product
               consistency necessary to satisfy these customers.

          •    *Reduce  Our  Production   Costs  and  Maximize  Value*.   Vertical
               integration allows us to significantly reduce our hog procurement
               costs  and  to  streamline  our  logistics,   transportation  and
               production  schedules,  thus  optimizing  asset  utilization  and
               reducing our cost structure.  We are also able to capture more of
               the value of our hogs  through  our own  processing  rather  than
               passing this value on to other processors.

     •    *Strong Market  Position with Large Scale  Operations*.  Our large-scale
          integrated operations, geographic dispersal and strong market position
          allow us to serve a broad  range of  customers  in our target  market,
          while maintaining economies of scale and marketing leverage.

                                       3

     •    *Efficient,  Modern  Facilities and Operations*.  Our Missouri and North
          Carolina  processing plants are two of the most modern and technically
          advanced facilities of their kind. Our hog production operations, most
          of which were built in the past fifteen  years,  incorporate  advanced
          breeding,    farrowing    and   finishing    methods    resulting   in
          industry-leading productivity statistics.

     •    *Experienced  Management  Team*.  Most  of our  senior  and  operational
          management  personnel have been involved in farm production and/or the
          fresh meat  industry for most of their  business  careers.  Senior and
          operational  management members, on average,  have over fourteen years
          of experience in those areas.

**Business Strategy**

     We are  pursuing a strategy  designed  to  increase  our sales  margins and
returns on invested capital. Key elements of our strategy include:

     •    *Further Develop Vertical Integration*.  We believe our integrated model
          will be the proven  approach to competing  effectively  in the rapidly
          consolidating pork industry.  We have achieved nearly 100% integration
          of our Missouri hog  production  and  processing  operations  and have
          achieved substantial integration in our North Carolina operations.  In
          North  Carolina,  we have renovated our recently  acquired  processing
          plant,  upgraded the genetics of our breed  stock,  rationalized  feed
          manufacturing,  increased supervision of contract growers and achieved
          a USDA  Process  Verified  program  similar to the program  that is in
          place for our Missouri operations.

     •    *Focus on High Quality and  Value-Added  Products*.  In fiscal 2003,  we
          implemented a strategy to increase the volume of value-added products.
          Staffing, in the areas of customer development,  food service, product
          development and export  coordination,  was put in place in fiscal 2003
          to support this strategy.  Our value-added objectives are to move more
          of our products up the value chain to improve sales margins, develop a
          stronger brand, form stronger  relationships  with key customers,  and
          drive new  product  development.  We intend  to  continue  to focus on
          producing  high quality and  value-added  products for  discriminating
          customers in the retail,  food service,  export and further processing
          markets,    and    to    further    differentiate    ourselves    from
          commodity-oriented  competitors.  As part  of  these  efforts,  and in
          conjunction  with  the  modernization  and  renovation  of  our  North
          Carolina  processing  plant, we intend to market premium products from
          this plant similar to those produced by our Missouri plant, as well as
          smoked and processed pork products.

     •    *Expand  Production  and  Processing  Capacity*.   In  fiscal  2002,  we
          completed   construction  of  a  new  10,000  sow  and  wean-to-finish
          operation in Texas.  Our Texas  production  facilities  are located on
          approximately  54,000 acres with adequate space and all  environmental
          and land use permits  required for further  expansion in a manner that
          could  replicate our Missouri hog  production  facilities.  Due to the
          difficulty  in  obtaining  such  permits  in  the  current  regulatory
          environment, we believe our existing permits in Texas could provide us
          a competitive advantage if we expand these operations. In fiscal 2003,
          through  modernization and efficiency  efforts, we completed expansion
          of processing capacity at our North Carolina plant from 6,500 hogs per
          day to up to 10,000  hogs per day on a  ten-hour  shift on a  seasonal
          basis.

     •     *Acquisition  Strategies*.  As an important part of our growth strategy,
          we   evaluate   on  an  ongoing   basis   potential   industry-related
          acquisitions  and joint  ventures.  We will continue to evaluate those
          opportunities  that fit strategically  with our objective of producing
          high quality, value added products.

     •    *Maintain  Position  as a Low  Cost  Producer*.  We  strive  to  produce
          high-quality  pork products at low cost by combining  state-of-the-art
          hog production with modern and efficient pork  processing.  We measure
          our production and processing  activities  continually in an effort to
          increase our hog production efficiencies,  lower our break-even costs,
          improve our processing yields and develop new value-added products.

                                       4

     •    *Continue  Expansion  into  International   Markets*.  We  believe  that
          international  markets  offer  significant  growth  opportunities  and
          intend to  continue  our efforts to develop  sales  outside the United
          States.  Over the past seven years, we have established  relationships
          with trading partners in Japan,  China, South Korea,  Canada,  Mexico,
          Russia and Taiwan,  and have exported product over that time period to
          more than twenty countries. We also believe that our presence in these
          markets  allows us to achieve  higher prices for certain pork products
          than  could be  obtained  domestically.  In  particular,  we intend to
          increase  our  export  volumes  to  Japan,  as  this  market  ascribes
          significant value to premium, process-controlled,  traceable products.
          We also  intend to  actively  expand  sales in other Asian and Mexican
          markets.

     •    *Manage Market Risks*. We will continue to draw upon the strength of our
          risk  management  team,  which  collectively  has  over  twenty  years
          experience   in  the  area.   We  will   continue  to  monitor   daily
          opportunities  to lock in  favorable  margins by hedging both feed and
          energy costs as well as fresh meat sales.

     •    *Environmental Stewardship*. We will continue to be a leader in the pork
          industry  in  researching,   developing  and  implementing  new  waste
          handling  and   environmental   technologies   and  solutions.   Those
          technologies and solutions include source  reduction,  risk reduction,
          improved  manure   treatment,   beneficial  reuse  of  waste  products
          (creating value-added products), energy generation, and water reuse.

**Our History**

     The hog  production  business  of  Premium  Standard  Farms was  originally
founded in 1988. In 1994, we completed  construction of our Missouri  processing
plant.  Due primarily to start-up costs and the low level of initial  production
at  that  plant,  as well as the  rapid  expansion  of our  Missouri  and  Texas
operations,   the  corporation  that  previously  ran  our  Missouri  and  Texas
operations  filed Chapter 11 bankruptcy on July 2, 1996. In September  1996, the
reorganization  became  effective  and our  business  emerged  from  Chapter 11.
Premium  Standard  Farms  in its  current  corporate  form  resulted  from  this
restructuring.

     Since  emerging  from  bankruptcy,  we have  expanded  our  business in two
significant  ways.  On May 13, 1998,  we expanded our Missouri  operations  in a
series of transactions with ContiGroup Companies,  Inc.  ("ContiGroup," formerly
known as Continental Grain Company). In these transactions, ContiGroup purchased
a 51.0 percent ownership  interest in PSF Group Holdings for $182.3 million.  In
exchange,  we purchased the North Missouri Farms hog production  operations then
owned by ContiGroup for $75.0 million. The financial data in this report relates
to operations since the ContiGroup transaction in May, 1998.

     In fiscal 2001,  we expanded our  operations  through two  acquisitions  in
North  Carolina.  We acquired  The Lundy  Packing  Company and its  subsidiaries
("Lundy"),  which consisted of hog production and pork processing operations, on
August 25, 2000. On September 22, 2000, we then acquired  Premium Standard Farms
of  North  Carolina  ("PSFNC")  from  ContiGroup.  In  the  latter  transaction,
ContiGroup  received cash and  additional  shares of PSF Group  Holdings  stock,
bringing its overall ownership of PSF Group Holdings'  outstanding  common stock
to 53.1 percent.

     PSF Group Holdings is a Delaware  company formed in 1998.  Premium Standard
Farms is a Delaware company formed in 1996. Our principal  executive offices are
located  at 423 West 8th  Street,  Suite  200,  Kansas  City,  Missouri  and our
telephone number is (816) 472-7675.

**Industry Overview**

     Historically,  the United  States pork  industry  has been divided into two
segments:  pork  processing  and  hog  production.  As a  vertically  integrated
supplier of pork products, we operate in both industry segments.

***Pork Processing***

     The U.S. pork processing industry is highly concentrated,  with the top ten
processors representing  approximately 87% of total federally inspected industry
capacity,  and the  industry is highly  competitive.  Although

                                       5

customers in the retail,  institutional,  further  processing and export markets
have  different  product  specifications  and service  requirements,  processors
generally compete on the basis of the price and quality of their product.

     The processing industry is geographically concentrated in the hog producing
regions of the U.S., particularly the Midwest and portions of the Southeast. Due
to the high degree of fragmentation of the hog production  industry,  processing
operations are extremely  large relative to the producers that supply them. As a
result,  non-integrated processors must acquire each day's supply of hogs from a
large number of suppliers,  many of whom use varying genetics,  feeding programs
and  growing  environments.  We  believe  that this  dichotomy  between  the hog
requirements of processors and the fragmentation and variation of hog production
makes it relatively  difficult  for  non-integrated  pork  processors to produce
consistent, high quality products.

***Hog Production***

     The  hog  production  industry,  although  consolidating,   remains  highly
fragmented and can be  characterized  by large variations in costs of production
and quality of hogs produced. In many smaller hog operations,  the hogs are kept
outdoors  in  open  lots  or  in  less  sophisticated  buildings,   bred  in  an
unscientific  manner,  increasing  disease and death risk. As a result,  a large
portion of the  industry is  generally  characterized  by fewer hogs per sow per
year, higher feed-to-gain  conversion ratios, higher costs of production,  lower
quality and less consistent hogs brought to market. In addition,  the effects of
temperature  and  climate  on  breeding  and  farrowing  encourage  outdoor  hog
producers  to breed  hogs in the  spring  and fall.  This  results  in  seasonal
production,  which may result in lower prices when these  producers  bring their
hogs to market.

     According  to the USDA,  the number of U.S. hog  producers  has declined by
more than 85% over the last twenty years.  We believe that as the hog production
industry moves to more  sophisticated  production  techniques,  the pressures on
marginal  producers  will  intensify.  In the last  several  years,  a number of
operations  have  emerged  which  are  based  on  large-scale,   scientific  and
management-intensive production of hogs. These operations have grown rapidly. We
expect that the hog  production  industry will see continued  consolidation  and
integration in the future.

**Products, Marketing and Customers**

     We market our pork products to a variety of customers in wholesale, retail,
food  service  and  further  processing  in the  U.S.  and  abroad.  We focus on
discriminating  customers in these markets.  We primarily market our products as
chilled and frozen pork, sold:

     •    *To  retailers,  retail  distributors  and  wholesalers*  in the form of
          chilled boxed bone-in and boneless loins, tenderloins,  hams, picnics,
          butts, ribs, marinated, case-ready, bacon, smoked hams and sausage;

     •    *To further processors* in the form of chilled bulk bone-in and boneless
          hams, picnics and butts, bellies,  trimmings,  variety meats and other
          products  which are used by these  customers  to make  processed  pork
          products;

     •    *To food  service  customers*  in the form of chilled  and frozen  boxed
          bone-in and boneless loins, ribs, picnics, butts and further processed
          smoked meats; and

     •    *To  export   customers*  in  the  form  of  chilled   boneless   loins,
          tenderloins,  frozen hams, shoulders, bellies, as well as frozen offal
          items.

     Our vertical  integration  and control also allows us to produce  specialty
products.  These include our antibiotic free pork and Premium 97 pork (certified
as 97 percent fat-free by the American Heart Association),  as well as KenKo-Ton
"healthy" pork and Mugi Buta "barley-fed" pork for the Japanese market.

     Our  marketing  strategy  seeks to  capitalize  on the  quality of the pork
produced by our controlled  supply of  high-quality  consistent  hogs and modern
processing  operations  allowing us to sell fresh and  processed  pork at prices
that reflect a premium to those  received by  competitors  selling lower quality
products.  Our pork  processing  facilities  have been  designed  to enhance the
realization  of this quality by  converting  standard  pork cuts to  value-added

                                       6

products through boning, trimming and other further processing.  Furthermore, we
target specialty,  export and ethnic markets,  in which there is a higher demand
for  certain  pork  products.  In order to take  advantage  of a  differentiated
product,  we have  been  certified  to use the  USDA  Process  Verified  seal in
connection with our Missouri and North Carolina operations.

     Our  international  marketing  efforts  are  directed  toward a  number  of
countries,  but are predominantly  focused on Japan, which ascribes  significant
value to our premium,  process-controlled products. In fiscal 2003, our sales to
Japanese  customers  represented  about 7 percent  of our total  sales.  We have
recently  begun  shipping  fresh pork products to Japan from our North  Carolina
plant. We are using our success in Japan to explore other  opportunities  in the
export  markets in Asia,  Europe,  Mexico  and  Canada.  Sales to  international
markets  other than Japan  accounted  for  approximately  3 percent of our total
sales in fiscal 2003.

     Though our sales and marketing  efforts are  primarily  focused on sales of
pork  products,  we are to a lesser extent  involved in the related  markets for
live hogs, processed meat products and pork by-products. The excess live hogs of
our production facilities are sold to other pork processors. In this respect, we
have  long-term   contracts  with  two  major  pork  processors,   who  purchase
substantially all of the hogs produced at our Texas facilities. The remainder of
our excess hog  production is sold in privately  negotiated  transactions.  With
respect to processed meats, our North Carolina plant includes further-processing
facilities that produce products such as cured hams, bacon and sausage. Finally,
all of our facilities sell the  by-products of our processing  activities to the
variety meat, feed processing and pet food industries.

**Production and Processing Operations*****Overview***

     Our production  and  processing  operations are organized as three separate
pods  located in  Missouri,  Texas and North  Carolina.  Our  Missouri and North
Carolina pods each combine hog production farms and processing plants. Our Texas
pod has only hog production  operations.  The geographic  separation of our pods
enhances  biosecurity  and  puts us  closer  to our  customers  and  feed  grain
suppliers,  allowing us to minimize  shipping  costs.  Shipping,  via truck,  is
important in a number of aspects of hog production, particularly the delivery of
feed to hog production  units,  the shipment of feeder pigs to finishing  units,
and the shipment of finished hogs to processing  plants.  To further  reduce the
risk of disease and maximize the  scheduling and process  coordination  that our
integrated  approach provides,  our pods incorporate  transportation  facilities
served by our own truck fleet for hauling feed and hogs.  Please read note 12 to
our financial  statements  for financial  information  relating to our operating
segments.

***Hog Production***

     Our sow production  facilities house herds ranging from 1,100 to 3,300 sows
per unit.  On  average,  a staff of five people is  required  for 1,100 sows.  A
typical sow production  unit consists of four connected  buildings,  each with a
specialized function -- breeding, gestation, farrowing and nursery.

     The  production  process  begins  in the  breeding  barn,  where  sows  are
artificially inseminated.  Artificial insemination maximizes breeding efficiency
and  productivity  and allows us to utilize  genetic  stock that  maximizes  our
overall productivity and quality. After four weeks, conception is verified using
ultrasound  technology.  From the breeding barn, sows are moved to the gestation
barn  where they are  vaccinated  and placed on a special  diet.  The  gestation
period is 114-days. During this period, the sows must receive adequate nutrition
and careful  attention  to health and disease  control in order to maximize  the
size and health of their litters. In our gestation buildings, sows are carefully
monitored and  individually  fed  according to body weight.  A few days prior to
delivery,  sows are moved to the  farrowing  barn  where  they give  birth to an
average litter of  approximately  10 offspring.  Sows nurse their  offspring for
three weeks before they are returned to the breeding barn. At  approximately  12
to 15 pounds,  the  offspring are moved to the nursery for a  six-to-seven  week
period. This step requires high levels of nutrition,  environmental  control and
minimization  of  disease  and  health  risks.  An  increasing  portion  of  our
operations  use the

                                       7

wean-to-finish  production method where nursery pigs are transported directly to
a modified grow/finish site, skipping the traditional time spent in a nursery.

     In the next phase of production, offspring are transferred in our sanitized
trailers  to our  grow/finish  complexes  or  contract  growers  for growth from
approximately 50 pounds to a target market weight of 260 pounds. Our grow/finish
complexes are  comprised of  temperature-controlled  barns,  each housing 950 to
1,200 hogs. A manager in charge of the complex is responsible for monitoring hog
welfare and health, as well as equipment.  Efficiency in finishing operations is
affected by the health and  environment  of the hogs and the  formulation of the
feed. These factors,  as well as the genetics of the hog, can have a substantial
impact on the feed-to-gain  conversion ratio (the pounds of feed required to add
a pound of weight) and the average  daily gain.  Specialized  crews  support the
complex managers by assisting with loading and unloading hogs,  health care, and
sanitation.  Hogs  generally  remain at the  grow/finish  complexes for 18 to 19
weeks,  gaining an average of approximately 1.7 pounds per day, until they reach
market weight and are transported to a processing facility.

     Because diet is a critical  factor in the efficient  production of hogs and
affects the quality of the final  products,  where possible we have  established
our own feed mills. Our Missouri and Texas pods are located in areas with access
to substantial  corn and other feed grain  production in excess of local demand.
As a result,  we can typically access feed grains on a cost-effective  basis and
manufacture  and deliver feed to our  facilities at a lower cost than we can buy
it from commercial  feed mills. In North Carolina,  where we rely to some extent
on  commercial  feed mills,  we have  established  cost-effective  toll  milling
arrangements  with  select  mills.  Due to  excess  milling  capacity  in  North
Carolina,  we are  generally  able to purchase  feed from these vendors on terms
that  help us  remain  a low cost  producer.  Our feed  mills  and toll  milling
arrangements  allow  us to  optimize  production  of our  customized  diets to a
greater  degree than would typical  arrangements  with  third-party  feed mills,
which operate on a cost plus basis and provide feeds for many types of customers
and  animals.  We  achieve  this  through  "least  cost"  formulations  based on
available feed ingredients. For example, while corn is the primary ingredient in
hog feed, a large number of other grains,  proteins, fats and supplements may be
added,  and the  content and mix of feed  ingredients  can be managed to improve
nutrition, feed-to-gain ratios and meat quality. We have five company-owned feed
mills  in  operation  aggregating  approximately  1.4  million  tons  of  annual
capacity.

***Biosecurity***

     We seek to  reduce  the risk of  disease  transmission  through a number of
methods,   including  geographic   separation  of,  and  restricted  access  to,
production facilities,  strict sanitation procedures,  high health genetic stock
and constant monitoring and response.  All units are restricted access,  "shower
in/ shower out" facilities.  If it is necessary for a manager or worker to enter
a unit other than their  designated  unit,  a  mandatory  24 to 96-hour  layover
period  is  required.  Feed  purity  and truck  cleanliness  are  inspected  and
monitored.  Operating  procedures within the facilities are designed to stop the
spread and lessen the  viability  of infection  agents  during all phases of the
production process.

     The impact of disease is also controlled  through the selection of healthy,
disease-resistant  sows and  through  breeding  procedures  that help pass along
antibodies  to  the  sow's  offspring.  When  disease  is  found,  treatment  is
implemented  to lessen its impact on the  health-challenged  hogs and to prevent
its spread to other facilities.

***Pork Processing***

     We maintain  pork  processing  facilities  in Missouri and North  Carolina.
Ninety-nine  percent of the hogs used in fiscal 2003 by our Missouri  processing
plant came from our Missouri and Texas hog production operations.  During fiscal
2003, approximately 71% of hogs used by our North Carolina processing plant were
supplied by our North Carolina hog production operations, with the remaining 29%
supplied through contracts with independent producers.  To ensure the safety and
quality of our products,  we use the USDA's Hazard Analysis of Critical  Control
Points  methodology  to identify  food safety  hazards in our  operations.  This
approach uses a team of technically  trained  individuals  who are familiar with
the processes to be evaluated.  Each separate point in the process is identified
and any hazards  associated  with them are assessed.  Methods for monitoring the
quality  and  safety of  products  as they move  through  these  points are then
developed and implemented.

                                       8

     The  quality  management  points  listed  below  provide  the basis for our
Process  Verified  Program.  In November of 1998, we became the first company in
the  pork   industry   to   receive   approval   for  this   program   from  the
USDA-Agricultural  Marketing  Service.  This approval gave  accreditation to the
only program which extends from live animal production through processing. While
other pork companies have since received  approval of their own Process Verified
programs,  we believe ours is the most  comprehensive,  encompassing live animal
production through processing.

     Process Verified is based on ISO-9000 requirements that are adapted for the
livestock  industry,  and is  administered  by the USDA  Agricultural  Marketing
Service,  Livestock and Seed  Division.  We have  designated  six  comprehensive
process points  throughout  our process to represent our program.  These quality
management points are summarized as follows:

     •    Every order is traceable to source farms

     •    Every phase of production is managed using a food safety based control
          system

     •    Production and processing systems are designed to continuously  assess
          the  effect  of farm  and  plant  processes  on meat  quality  traits,
          including extensive genetic research

     •    Personnel  are  trained to handle all  livestock  according  to proper
          animal handling guidelines

     •    We are committed to environmental stewardship with the goal to protect
          the quality of the  environment  by evaluating and improving the waste
          management systems

     •     All  antibiotic  free  products  derive from market  animals that have
          never received antibiotics through feed, water, or via injection

     Our  automated  processing  operations  have been  designed  to achieve the
benefits of vertical  integration that are not available to  non-integrated  hog
producing or pork processing competitors. Some of these benefits are as follows:

     •    We capture more value from our hogs through further  processing rather
          than passing this value on to other processors

     •    We streamline  logistics,  transportation and production  schedules to
          enhance asset utilization and reduce our cost structure because of the
          proximity  and  integrated  management of  production  and  processing
          operations

     •    We improve the  realizable  value of our hogs through our control over
          the key factors (genetics,  nutrition and environment) that affect the
          leanness and meat quality of each hog

     •    We believe we provide a higher  level of quality and safety  assurance
          to our  customers  because  of our  control  of  both  production  and
          processing

     We believe that by controlling our own high quality, consistent hog supply,
we can be among the more  efficient  processors  in the  industry  and produce a
consistent high-quality product whose value will be recognized in the market.

     The design of our Missouri and North Carolina processing facilities reflect
four key objectives:

     •    Modern  equipment and proven  technology has been used to build two of
          the highest quality facilities in the industry

     •    The  facilities  are  designed to  emphasize  worker  safety to ensure
          compliance  with all  regulations  and to  reduce  worker  injury  and
          turnover

                                       9

     •    The  facilities are designed to produce a product that is appealing to
          further  processors  and consumers and will be brandable.  They employ
          identification  and tracking  technology to ensure quality control for
          the final pork product

     •    The facilities are designed to reduce waste products and emissions and
          dispose of waste in accordance with applicable environmental standards

***Missouri***

     Our  Missouri  pod has  both  production  and  processing  operations.  The
Missouri production operation,  based at Princeton,  employs approximately 1,300
people.  An 112,000-sow herd produces  approximately 2.1 million market hogs per
year.  Eighty-two sow units,  five nursery units and ninety-one  finishing units
are located on farms in five counties in Northwest Missouri. We also have grower
relationships   with  ContiGroup.   See  "Certain   Relationships   and  Related
Transactions."

     The  Missouri   processing   facility  is  located  at  Milan  and  employs
approximately  950 people with the  capacity to process  7,100 hogs daily (on an
eight hour shift) or about 1.9 million  hogs per year.  To ensure the safety and
quality of our products, the processing facility incorporates several innovative
systems,  including a carbon dioxide  anesthetizing system, which we believe was
the first carbon dioxide  system of its kind in use in the United  States.  This
facility  also has a large hog holding area that provides at least four hours of
rest to hogs upon arrival.  The result is a less stressful  environment  for the
hogs, which results in better meat quality.

***North Carolina***

     Our North Carolina pod has both production and processing  operations.  The
North Carolina production operation, based at Clinton, employs approximately 300
people.  A 66,000-sow  herd produces  approximately  1.3 million market hogs per
year. Contractual  arrangements for purchasing weaned pigs produce an additional
one-half  million market hogs per year. Nine sow units,  three nursery units and
four  finishing  units are located on farms in various  counties  throughout the
state.  Most of the  production  operations  in North  Carolina are conducted on
farms that are not owned by us. Instead, we have contract grower agreements with
local  farmers  who  provide  the land,  space and labor  needed.  These  grower
arrangements  are  managed by our hog  production  field  supervisors.  The hogs
themselves are owned by us, are raised according to our specifications using our
genetics,  feed and supplies, and are delivered to our North Carolina processing
facility. Since these arrangements allow us to control the process, from a hog's
initial genetic makeup to the pork product ultimately  produced and shipped,  we
consider them to be a part of our integrated operations notwithstanding the fact
that we do not own the farms themselves.

     The North  Carolina  processing  facility is located at Clinton and employs
approximately  1,200  people  processing  up to 10,000 hogs daily,  depending on
seasonality and market conditions,  or up to 2.6 million hogs per year. Now that
construction and renovation are complete at this recently acquired facility,  we
believe the plant is one of the most advanced  facilities of its kind. To obtain
the  estimated  700,000 hogs annually used by the facility that are not supplied
by our production  operations,  we have  established  supply  arrangements  with
several  external hog suppliers  who have agreed to follow our Process  Verified
requirements.

***Texas***

     Our  Texas  pod  has  only  production  operations.  These  operations  are
headquartered  at  Dalhart,   Texas  and  employ  approximately  300  people.  A
34,000-sow   herd  produces   approximately   600,000   market  hogs  per  year.
Twenty-three  sow units, six nursery units and eight finishing units are located
on farms in Dallam and Hartley  counties.  No contract  finishing is used in the
Texas  pod's  production.  A minor  portion  of the hogs  produced  in Texas are
transported  to our Missouri  processing  facility.  Substantially  all are sold
under two long-term contracts with major processors.

     In  fiscal  2003,  we  completed  the  addition  of a new  10,000  sow  and
wean-to-finish   operation  at  our  Texas  facilities.   Our  Texas  production
facilities are located on approximately 54,000 acres with adequate space and all
environmental  and land use permits  required for further  expansion in a manner
that could replicate our Missouri hog production facilities.

                                       10

**Research and Development**

     We  use  an  applied  research   strategy  which  allows  rapid  and  early
implementation  of  technologies in production,  nutrition and processing.  This
effort is driven by our technical  team,  many of whom have advanced  degrees in
nutrition, meat science, and health assurance. This group also uses an extensive
network of outside  scientists and other contacts to enable us to use the latest
technology.

     We constantly  seek to improve the genetics of our production  herds and to
produce hogs that are the highest quality commercially available. Our female and
male  breeding  stock are  purchased  from  several of the  world's  largest hog
genetics firms, which employ extensive  research efforts in molecular  genetics,
biosecurity,  food safety and meat quality.  We also have internal  "multiplier"
herds, which are continually  improved through the purchase of enhanced genetics
and  provide an  internal  source of a majority  of our sows at a  substantially
reduced cost, and with greater control.

     We routinely evaluate  alternate  genotypes to validate and compare them to
existing  products.  In addition,  we conduct intense research trials to further
develop existing genotypes to meet economic and customer demands for composition
and  quality.  These  arrangements  enhance  the  quality  of our  genetics  and
diversify  our  genetic  sources.  We also  incorporate  careful  computer-based
monitoring of the breeding performance of all our breedstock to improve breeding
patterns and remove  sub-optimal  parents from the herd.  These  operations  are
conducted  at  our  Missouri,  Texas  and  North  Carolina  genetic  improvement
facilities.

     We also have been a leader in the implementation of new technologies at our
processing  facilities.  For  example,  we  believe  that we were the first U.S.
company to introduce  the use of  European-designed  carbon  dioxide  anesthesia
systems in pork  processing  to reduce  livestock  agitation  and increase  meat
quality.  Specially  designed  trucks and holding areas also enhance the welfare
and handling of our hogs. In addition,  we use extreme chilling  technologies to
improve product quality traits like color, texture and moisture retention.

     We also are ending our fourth year of a five-year,  $25  million,  research
program to develop  improved  waste  processing  methods and  technologies.  See
"Legal Proceedings."

**Competition**

     The pork industry is highly competitive and we compete with many other pork
processors and hog producers of varying sizes.  Our products also compete with a
large number of other  protein  sources,  including  beef,  chicken,  turkey and
seafood.  However,  our  principal  competition  comes  from  other  large  pork
processors.  We believe  that the  principal  areas of  competition  in the pork
industry are price, quality, product distribution and brand loyalty. Some of our
competitors  are  larger,  have  correspondingly  greater  financial  and  other
resources and enjoy wider recognition for their branded products.

**Intellectual Property**

     We hold several  trademark  and other  intellectual  property  rights.  For
example,  we have registered the names "Premium  Farms,"  "Natural  Excellence,"
"Premium  Standard Farms," "Premium  Standard  Certified,"  "Fresh from the Farm
Taste," "Carolinian," "Lundy's," "Tomahawk Farms," "Signature Cuisine" and "Gold
Banner"  with the  United  States  Patent  and  Trademark  Office.  We have also
registered "Premium Standard Farms" in some of the foreign countries to which we
sell our products.  In addition to trademark  protection,  we attempt to protect
our  unregistered  marks and other  proprietary  information  under trade secret
laws,  employee and  third-party  non-disclosure  agreements  and other laws and
methods of  protection.  We have been  issued a patent  with the  United  States
Patent and Trademark Office for an animal waste  management  system designed for
some of our production facilities.

**Employees**

     We have approximately 4,200 employees,  of which approximately 2,100 are in
processing,  approximately  1,900 are in production and approximately 200 are in
administration.  None of our  employees  are  subject to

                                       11

collective  bargaining  arrangements,  although  there can be no assurance  that
employees  will not enter  into such  agreements  in the  future.  We  generally
consider our employee relations to be good.

**Regulation**

     Various  federal,  state  and  local  laws  and  regulations  apply  to our
operations,  particularly in the health and environmental  areas administered by
the Occupational Safety and Health Administration (OSHA), the USDA, the Food and
Drug Administration (FDA), the federal Environmental Protection Agency (EPA) and
corresponding  state  agencies  such  as  the  Missouri  Department  of  Natural
Resources  (MDNR),  the Texas Natural Resource  Conservation  Commission and the
North Carolina  Department of Environment and Natural  Resources.  We anticipate
increased  regulation  by these  agencies,  including the USDA  concerning  food
safety and the FDA regarding the use of medication in feed.

     Current  environmental  regulations  impose  standards and  limitations on,
among other things, our waste treatment lagoons,  water treatment facilities and
new construction  projects.  Animal waste from our hog production  facilities is
anaerobically  digested and the resulting fluids are then applied to surrounding
farm land.  This  process  uses  lagoons in Missouri  and North  Carolina  and a
combination of digesters, lagoons, solid separators and aeration tanks in Texas.

     In North Carolina,  the use of waste treatment lagoons and spray fields for
the disposal of swine waste continues to be controversial. Certain areas of that
state are prone to flooding, as well as exposed to hurricanes from time to time.
Due in part to damage  caused to waste lagoons by recent  hurricanes,  the state
has extended a moratorium  on  construction  of new hog lagoons and spray fields
until 2007. It is anticipated  that this  moratorium will be extended until such
time as more effective technologies are developed to protect the environment.

     On September 29, 2000, we  voluntarily  entered into an agreement  with the
Attorney  General of North  Carolina.  Under this  agreement,  we  committed  to
implement  "Environmentally  Superior  Technologies" for the management of swine
waste at our farms within three years after an independent  panel has determined
that such technologies are both effective and economically feasible to construct
and operate. "Environmentally Superior Technologies" are generally identified as
waste  treatment  technologies  that meet  certain  performance  standards  with
respect to release of materials  into the  environment.  In addition,  under the
agreement,  we  paid  $2.5  million  to a  fund  for  the  development  of  such
technologies,  for environmental  enhancement activities and for the defrayal of
costs incurred by the state related thereto.  We have met all of our commitments
to date under this  agreement  and  continue  to work  closely  with the state's
designated  representative at North Carolina State University in the development
of "Environmentally Superior Technologies." See also "Legal Proceedings."

     The Country of Origin Labeling (COOL)  requirements  became law pursuant to
the  Farm  Security  and  Rural  Investment  Act of  2002.  Due to our  vertical
integration,  we do not anticipate any material compliance problems. The EPA has
also issued its Concentrated  Animal Feeding Operation (CAFO) effluent guideline
rules in December 2002. Our facilities and related operating  procedures meet or
exceed  most  of the  rules,  and we do not  anticipate  any  material  problems
complying with these rules.

     Based on  information  currently  available,  we  believe  that the cost of
achieving and maintaining  compliance with these health and  environmental  laws
and  regulations  will not have a material  adverse  effect on our  business  or
financial position. However, future events, such as changes in existing laws and
regulations or enforcement  policies,  could give rise to additional  compliance
costs which could have a material adverse effect on our financial condition.

     In February  2002,  the United States Senate  initially  passed a Farm Bill
that included a provision (the "Johnson  Amendment") which would have prohibited
meat  packers,  like us,  from  owning or  controlling  livestock  intended  for
slaughter  for more than  fourteen  days prior to  slaughter.  The United States
House of  Representatives  passed a different  version of the Farm Bill that did
not  contain  any  provision  similar to the  Johnson  Amendment.  A  Conference
Committee was convened for the Farm Bill,  composed of members of both the House
and the Senate.  This Conference  Committee  rejected the Johnson  Amendment and
approved a uniform Farm Bill without that Amendment or any similar provision.

                                       12

     If the Johnson Amendment had become law, it may have had a material adverse
effect on our vertically  integrated business. It may have caused us to consider
a restructuring of our operations.  We, along with industry groups, succeeded in
educating lawmakers as to the adverse effects and unintended consequences of the
Johnson  Amendment,  leading  to its  subsequent  rejection  by  the  Conference
Committee.  We and  others in the  industry  will  continue  efforts  to educate
lawmakers,  but the parties advocating passage of the Johnson Amendment continue
to propose similar legislation. If a provision like the Johnson Amendment became
law, it could have a material adverse effect on us.

     Several  states have enacted  "corporate  farming  laws" that  restrict the
ability of corporations to engage in farming activities. Missouri is among these
states,  but Texas and North Carolina  currently are not.  Missouri's  corporate
farming law in many cases bars  corporations  from owning  agricultural land and
engaging in farming  activities.  Our operations  have been structured to comply
with  the  Missouri  corporate  farming  law and its  existing  exemptions.  The
Missouri laws,  however,  could be subject to challenge or amendment by Missouri
governmental  bodies  in the  future.  Further,  even with the  exemptions,  the
corporate  farming laws  restrict  our ability to expand  beyond the counties in
which we currently operate.

     At the time of  ContiGroup's  acquisition  of its  interest  in us in 1998,
ContiGroup  submitted  the  proposed  ownership  structure  to the Office of the
Attorney  General of the State of  Missouri  for its review.  At that time,  the
Office of the Attorney General indicated that it had no objection to our current
structure under the corporate farming laws. There can be no assurance,  however,
that this position will be maintained in the future as our  operations  continue
and develop.

**Item 2.  Properties**

     (a)  Hog Production.

     We have a combination of owned and leased hog production  facilities  which
support approximately  212,000 sows and their respective offspring.  As detailed
below, there are three geographic areas where our pork production operations are
located.

     The Missouri  production  operation has an 112,000-sow  herd which produces
approximately  2.1 million market hogs per year.  The production  facilities are
located on  approximately  45,000 acres and are  supported by 3 owned  feedmills
with a combined annual capacity of 960,000 tons per year. Of these 45,000 acres,
approximately  7,200 acres are owned by ContiGroup  but the  facilities  located
thereon are owned by us. See "Certain Relationships and Related Transactions."

     The  Texas  production  operation  has a  34,000-sow  herd  which  produces
approximately  600,000  market  hogs per year.  The  production  facilities  are
located on  approximately  54,000 acres and are supported by one owned  feedmill
with an annual capacity of 180,000 tons per year.

     The  North  Carolina  production  operation  has a  66,000-sow  herd  which
produces  approximately 1.3 million market hogs per year. Most of the production
operations  in North  Carolina are  conducted on farms that are not owned by us.
The hogs themselves, however, are owned by us. In addition, one nursing unit and
one finishing  unit involved in our North  Carolina  production  operations  are
capital lease facilities. Our North Carolina production operations are supported
by one owned  feedmill  with an annual  capacity  of  224,000  tons per year and
through an arrangement  with a large feedmill  operator for the rest of our feed
requirements.

     (b)  Pork Processing.

     We own two  pork  processing  facilities  located  in  Missouri  and  North
Carolina.   Combined,   these  two  facilities  have  the  capacity  to  process
approximately 4.5 million market hogs per year.

     The Missouri  facility  has a processing  capacity of 7,100 market hogs per
day and is one of the most modern and  technically  advanced  facilities  of its
kind.  Substantially all of the market hogs processed at this plant are produced
by our Missouri pork production operation.

                                       13

     In fiscal  2003,  we  completed a major  renovation  to our North  Carolina
processing facility which increased its processing capacity. The facility is now
capable of  processing  up to 10,000 hogs daily,  depending on  seasonality  and
market conditions,  and we believe it is now, along with our Missouri processing
plant, one of the most advanced facilities of its kind in the United States. The
majority of the market hogs  processed at the facility are provided by our North
Carolina  pork  production  operations  with the  remainder  being  sourced from
outside suppliers.

**Item 3.  Legal Proceedings**

     We have settled two citizens'  action suits which sought to enforce alleged
violations  of the Clean Air Act,  Clean  Water Act and  CERCLA  against  us and
ContiGroup Companies,  Inc.  ("ContiGroup").  The U.S. Environmental  Protection
Agency (the "E.P.A.") had intervened in this action and filed a separate  notice
of violation against us under the Clean Air Act. This settlement, in the form of
a consent  decree ("EPA Consent  Decree"),  resolved all  outstanding  issues of
ContiGroup  and  us  with  the  E.P.A.  In  1998,  we  engaged  in a  series  of
transactions with ContiGroup  pursuant to which we purchased from ContiGroup its
North Missouri Farms hog production  operations and ContiGroup purchased a 51.0%
ownership interest in us (the "1998 ContiGroup transaction"). To the extent that
ContiGroup incurred any liability in this litigation,  we assumed that liability
pursuant  to the  terms  of our 1998  ContiGroup  transaction.  The EPA  Consent
Decree, built upon the 1999 consent decree with the State of Missouri referenced
below, requires us and ContiGroup to meet certain performance standards, such as
a 50 percent reduction in nitrogen concentration of the effluent applied to area
fields over a  prescribed  time  period.  Other key  elements of the EPA Consent
Decree include: monitoring air emissions from lagoons and barns; compliance with
certain  best  management  practices  to reduce the risk of  spills;  testing of
selective  lagoons to ensure  integrity,  and the  payment  of a $350,000  civil
penalty.  The counsel for the citizen  plaintiffs  has  submitted a petition for
recovery of attorneys' fees in connection with the lawsuits  against both us and
ContiGroup.  We believe the majority of these fees have been previously paid and
resolved.  We believe  the  resolution  of this  matter will not have a material
adverse effect upon our financial position or results of operations.

     In 1999,  we settled a suit filed by the  Attorney  General of the State of
Missouri against us and ContiGroup. As referenced above, we assumed ContiGroup's
liability in this action in connection with the 1998 ContiGroup transaction. The
settlement  required  us  and  ContiGroup  to  enter  into  a  consent  judgment
("Missouri  Consent  Decree")  pursuant to which we are  obligated to invest $25
million on or before May 19, 2004,  for  researching,  installing  and operating
improved  technology  to control  wastewater,  air and odor  emissions  from our
Missouri  farms.  All such  investments are subject to the approval of an expert
panel of independent university experts. To date, we have spent $11.9 million to
satisfy the settlement.  We anticipate an extension of this expenditure deadline
because   both  the  State  of  Missouri  and  the  expert  panel  want  further
confirmation of the efficacy of any chosen technology. In addition,  pursuant to
the Missouri  Consent  Decree we and  ContiGroup  were issued a $1 million civil
penalty.  Of this,  $650,000  has been paid and  $350,000 is  suspended  pending
certain conditions.

     In addition  to the suits  discussed  above,  we have  received  notices of
violations from the Missouri  Department of Natural Resources  alleging releases
of wastewater.  We have responded to these notices in an effort to resolve these
matters.  The State of Missouri  filed a lawsuit in June 2002 seeking  penalties
and injunctive relief for these violations.  We have filed an answer, believe we
have good defenses, and intend to vigorously defend this suit.

     Two nuisance  suits were filed against  ContiGroup  and us during the third
quarter of fiscal year 2003 in the Circuit Court of Jackson County, Kansas City,
Missouri.  There are multiple  plaintiffs  in each suit,  who claim to live near
swine farms owned by  ContiGroup  but under  production  contracts  with us. The
primary  allegation is that offensive odors from these farms interfered with the
plaintiffs'   right  to  use  and  have  quiet  enjoyment  of  their  respective
properties.  We are  obligated  by  contract  to  indemnify  ContiGroup  for any
liabilities  arising from this litigation.  We have filed an answer,  believe we
have good  defenses to these  actions,  and intend to  vigorously  defend  these
suits.

     In  addition,  we are  involved  from  time to time in  routine  litigation
incidental to our business. Although no assurance can be given as to the outcome
or expense  associated  with any of these routine  proceedings,  we believe that
none  of such  proceedings  currently  pending  should,  individually  or in the
aggregate, have a material adverse effect on our financial statements.

                                       14

**Item 4.  Submission of Matters to a Vote of Security Holders**

     No matter  was  submitted  to a vote of  security  holders  during the last
quarter of the fiscal year covered by this report.

                                     **PART II****Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters**

     (a)  Market Information.  There is no established public trading market for
the common stock of PSF Group Holdings.

     (b)  Holders.  As of April 30, 2003,  there were  approximately  150 record
holders of the Class A Common Stock of PSF Group  Holdings and one record holder
of the Class B Common Stock of PSF Group Holdings.

     (c)  Dividends.  PSF Group  Holdings has not declared or paid any dividends
on its common  stock since its  issuance.  Our current  credit  facility and the
Indenture  related to our 9 1/4% Notes  effectively limit our ability to declare
and pay dividends to shareholders.  For more detailed information on our current
credit facility,  the 9 1/4% Notes and the related Indenture,  see "Management's
Discussion  and  Analysis of  Financial  Condition  and  Results of  Operation -
Liquidity  and  Capital  Resources"  and  Notes  to our  Consolidated  Financial
Statements.

     (d)  Securities  Authorized for Issuance Under Equity  Compensation  Plans.
The following  table sets forth  information  regarding our equity  compensation
plans as of March 29, 2003:

**A                               B                              C

                                                                                                Number of Securities Remaining
                                      Number of Securities                                           Available for Future
                                        to be Issued Upon               Weighted Average            Issuance Under Equity
                                    Exercise of Outstanding     Exercise Price of Outstanding         Compensation Plans
    Plan Category                 Options, Warrants and Rights    Options,Warrants and Rights    (Excluding Those in Column A)
    -------------                 ----------------------------  -----------------------------   ------------------------------**
Equity compensation plans
 approved by security holders....             --                              --                             --
Equity compensation plans
 not approved by security holders...       7,428                     $  1,666.48                          7,572
                                         -------                     -----------                        -------
Total...............................       7,428                     $  1,666.48                          7,572
                                         =======                     ===========                        =======

     For a  description  of our  1999  Equity  Incentive  Plan,  see  "Executive
Compensation" below.

**Item 6.  Selected Financial Data**

     The following table sets forth selected historical  consolidated  financial
information for PSF Group Holdings from inception (May 13, 1998, the date of the
ContiGroup  acquisition)  through  the period  ended  March 27, 1999 and for the
fiscal years ended March 25, 2000,  March 31, 2001 and March 30, 2002, which was
derived from our consolidated  financial statements,  which have been audited by
Arthur Andersen LLP, independent public accountants.  The financial  information
presented  for the fiscal  year  ended  March 29,  2003,  was  derived  from our
consolidated financial statements,  which have been audited by Deloitte & Touche
LLP, independent public accountants.

     The  financial  information  presented  for the years ended March 31, 2001,
March 30, 2002, and March 29, 2003, reflect our acquisition of The Lundy Packing
Company on August 25,  2000 and our  acquisition  of Premium  Standard  Farms of
North Carolina,  Inc. on September 22, 2000, both of which were accounted for in
accordance with the purchase  method of accounting.  This data should be read in
conjunction with  "Management's  Discussion and Analysis of Financial  Condition
and Results of Operations" and the financial statements and the notes thereto.

                                       15

**For the period                       Fiscal years ended**
                                     ---------------       ---------------------------------------------------
                                     **May 13, 1998 to       March 25,     March 31,     March 30,     March 29,****March 27, 1999          2000          2001          2002          2003**
                                     ---------------       ---------     ---------     ---------     ---------
                                                          **(Dollars in thousands)****STATEMENT OF OPERATIONS DATA:**
Net Sales                               $ 237,090      $ 306,266     $ 540,576     $ 674,946      $ 608,414
Operating income (loss)                   (35,321)        14,514        61,333        64,770        (39,430)
Net income (loss)                         (32,545)        (5,287)       22,014        25,365        (38,600)

**OTHER FINANCIAL DATA:**
EBITDA (1)                              $    2,330     $   62,527    $  112,292    $  120,825     $   22,078
Capital expenditures                        22,126         23,669        43,224        96,232         35,505
Pounds of pork sales (millions)             296.79         345.84        603.88        675.02         737.95
Total hogs processed (million)                1.61           1.92          3.02          3.66           4.07

**BALANCE SHEET DATA (AT PERIOD END):**
Working capital                         $   70,010     $   51,698    $  119,764    $  120,097     $  139,523
Total assets                               617,455        584,498       773,440       807,639        779,062
Total long-term debt and capital leases
   (including current portion)             211,384        175,997       267,216       272,782        305,184
----------

     (1)  EBITDA  represents  earnings  before  interest,  taxes,  depreciation,
          amortization and impairment. EBITDA is presented because we believe it
          is  frequently  used  by  securities  analysts,  investors  and  other
          interested  parties in the  evaluation  of companies in our  industry.
          EBITDA is also a covenant in our bank credit facility.  However, other
          companies in our industry may calculate EBITDA differently than we do.
          Therefore,  EBITDA is not necessarily  comparable to similarly  titled
          measures of these companies.  EBITDA is not a measurement of financial
          performance under generally accepted accounting  principles and should
          not be  considered  as an  alternative  to cash  flow  from  operating
          activities  or as a measure  of  liquidity  or an  alternative  to net
          income  as  indicators  of our  operating  performance  or  any  other
          measures of performance  derived in accordance with generally accepted
          accounting principles. See the Statements of Cash Flow included in our
          consolidated financial statements.

                                                     **For the period                     Fiscal years ended**
                                                     ---------------  ------------------------------------------------------------
                                                     **May 13, 1998 to     March 25,       March 31,      March 30,       March 29,****March 27, 1999       2000             2001           2002            2003**
                                                     ---------------  ------------    ------------    ------------    ------------
                                                                              **(Dollars in thousands)****Reconciliation of EBITDA to net cash (used in) provided by operating activities:**

EBITDA                                                $     2,330     $    62,527     $   112,292     $   120,825     $    22,078
Plus (minus):
   Interest expense, net                                  (17,601)        (21,500)        (23,952)        (20,404)        (23,745)
   Loss on early extinguishment of debt                         -               -              -           (2,192)              -
   Tax benefit (expense)                                   20,377           1,699         (15,367)        (16,809)         24,575
   Amortization of deferred financing costs                     -              -             738            1,209           1,546
   Deferred income taxes                                  (20,377)         (1,874)         16,825           9,946         (19,164)
   Net loss (gain) on sale of fixed assets                  2,787          (1,433)         (3,763)         (4,950)          1,298
   Senior note interest paid-in-kind                        6,814           7,189               -               -               -
   Changes in operating assets and liabilities, net        (1,950)          9,028         (22,393)         (7,110)        (23,968)
                                                      ------------    ------------     -----------    ------------    ------------
                                                           (9,950)         (6,891)        (47,912)        (40,310)        (39,458)
                                                      ------------    ------------     -----------    ------------    ------------
Net cash (used in) provided by operating activities   $    (7,620)    $    55,636     $    64,380     $    80,515     $   (17,380)
                                                      ============    ============    ============    ============    ============

                                       16

**Item 7.  Management's  Discussion and Analysis of Financial Condition and Results
of Operations***The following  discussion  should be read in conjunction with the financial
statements,  including the notes thereto,  and the other  financial  information
appearing elsewhere in this report on Form 10-K.***Overview**

     As a vertically  integrated  provider of pork products,  we operate in both
pork industry segments:  hog production and pork processing.  In fiscal 2001, we
made  two  strategic  acquisitions  to  strengthen  our  position  in  the  food
production  industry.  On August 25, 2000, we acquired The Lundy Packing Company
("Lundy") and its affiliated companies,  which owned a processing plant in North
Carolina capable of processing 1.8 million hogs per year and owned approximately
41,000 sows.  On September  22, 2000,  we  acquired,  from  ContiGroup,  Premium
Standard Farms of North Carolina  ("PSFNC"),  which owned  approximately  24,000
sows.  As a  result  of  these  acquisitions  and  further  enhancements  to our
operations,  we  are  the  second  largest  owner  of  sows  in  North  America,
controlling  over  255,000  sows,  of which  approximately  212,000  are  owned,
producing  approximately  4.5  million  hogs per year.  We are also the  seventh
largest  pork  processor  in the  United  States,  with two  plants  capable  of
processing approximately 4.5 million hogs per year.

     As an  important  part of our growth  strategy,  we  evaluate on an ongoing
basis potential  industry-related  acquisitions and joint ventures. Other than a
recent joint  venture in a small sow  processing  operation,  we have not at the
present  time  entered  into  any  definitive   agreements   contemplating  such
acquisitions or joint ventures. Further, there can be no assurance as to whether
or when any negotiations will ultimately culminate in definitive  agreements or,
if any definitive agreement is reached, whether any acquisition or joint venture
will ultimately be consummated. To complete any acquisition or joint venture, we
may use our revolving credit facility or other financing  alternatives available
at the time.

     Our  fiscal  year is the 52 or  53-week  period,  which  ends  on the  last
Saturday in March.  Our financial  statements  include  activity from the fiscal
years ended March 29, 2003 (52 weeks),  March 30, 2002 (52 weeks), and March 31,
2001 (53 weeks).

**Net Sales**

     Our net sales are  generated  from the sale of pork  products to retailers,
food service  suppliers,  further  processors,  export  buyers,  and to a lesser
extent the sale of market hogs to other pork  processors.  In fiscal 2003, sales
of pork products  accounted  for  approximately  91% of our net sales,  with the
remaining 9% coming from sales of market hogs.

     Pork product sales are of primal cuts, such as hams, loins, bellies, butts,
picnics and ribs, and to a lesser extent of other  by-products.  Primal products
are also  converted  further  into  boneless  items or,  in our  North  Carolina
operations,  further  processed into items such as smoked hams,  cured hams, and
sliced bacon. Our processing revenues are primarily driven by the operating rate
of our  facilities  and the value that we extract from the hogs that we process.
For our fiscal years ended March 29, 2003, March 30, 2002 and March 31, 2001, we
processed  4.1  million,  3.7 million and 3.0 million  hogs,  respectively.  Our
Missouri  processing plant is currently capable of processing 7,100 hogs per day
and our North Carolina processing plant is currently capable of processing up to
10,000 hogs per day, depending on seasonality and market  conditions.  The value
that we  extract  from  hogs  processed  is  primarily  driven  by pork  prices,
processing  yields and to a lesser extent,  by product mix, as premium  products
and boneless and further processed products generate higher prices and operating
margins.

     Wholesale pork prices fluctuate seasonally and cyclically due to changes in
supply and demand for pork. We believe that our vertical  integration  allows us
to  obtain  higher  prices  for our  products  than  our  more  commodity-driven
competitors. See "Market Risk."

     Historically, live hog prices have experienced cyclical and seasonal supply
and demand  fluctuations.  Revenue from the sale of market hogs is driven by the
number of hogs sold (in excess of what our processing  facilities require),  the
average weight,  and the current market price (including any quality  premiums).
Our excess market hogs are sold to third party processors.

                                       17

**Cost of Goods Sold**

     Our cost of goods sold is driven primarily by several key factors.  For our
pork processing  operations,  the main costs (excluding  market hogs) are labor,
packaging, utilities, and facility expenses. Given the high fixed costs required
to build,  maintain  and operate a  processing  plant,  unit costs are  impacted
somewhat by processing  volumes.  For fiscal 2003, the costs associated with our
North Carolina pork processing  facility  reflected the fact that  approximately
29% of the hogs  processed at that facility were  purchased at market price from
independent  local  farmers  under  supply  contracts.  For our  hog  production
operations,  the main costs are feed,  labor,  utilities,  and facility expenses
which include  maintenance,  depreciation  and contract  grower fees.  The costs
associated with feed generally represent 50% to 60% of the total cost to raise a
market hog  depending on the price of corn and soybean  meal,  which  constantly
fluctuates.  Increases in the price of these commodities  result in increases in
our feed costs,  while decreases  reduce our feed costs.  The relative impact of
price  changes in these  commodities  varies based on the  percentage  that each
makes up in our  feed  composition.  See  "Market  Risk."  We are  proactive  in
recognizing  opportunities to improve our cost structure and strive to be one of
the lowest cost producers in the industry.

**Selling, General and Administrative Expenses**

     Sales  and   marketing   expenses   consist   primarily   of  salaries  for
company-employed  sales  people  as  well  as  trade  promotions,   advertising,
commissions and other marketing costs.  General and administrative costs consist
primarily of general management, accounting and legal expenses.

**Seasonality**

     Our quarterly operating results are influenced by seasonal  fluctuations in
the price of our primary feed components, corn and soybean meal, and by seasonal
fluctuations in wholesale pork prices. The prices we pay for our feed components
are generally lowest in August,  September and October,  which  corresponds with
the corn and soybean harvests.  Generally, the prices for these commodities will
increase  over the  following  months  leading up to the next harvest due to the
increased  storage costs.  As a result,  our costs in the production side of our
business tend to increase during this period.

     Live hog and  wholesale  pork  prices are  similarly  affected  by seasonal
factors. It generally takes approximately 11 months from conception for a hog to
reach market weight,  and because sows are generally  less  productive in summer
months as a result  of  seasonal  conditions,  there are  generally  fewer  hogs
available in the months of April,  May and June. This decrease in supply of live
hogs generally causes live hog and wholesale pork prices to be higher on average
during these months, and our revenues tend to increase accordingly.  Conversely,
there are generally more hogs  available in the months of October,  November and
December,  which generally causes live hog and wholesale pork prices to be lower
on average during these months and adversely affects our revenues.

**Results of Operations**

     The following table presents selected historical financial  information for
our  production  and  processing  segments  for the fiscal years ended March 29,
2003,  March 30, 2002 and March 31, 2001.  Results of operations  for the fiscal
year ended March 31, 2001  include  information  for The Lundy  Packing  Company
("Lundy")  from August 25, 2000 and  information  for Premium  Standard Farms of
North Carolina,  Inc. ("PSFNC") from September 22, 2000, the respective dates of
acquisition.  Net sales,  gross profit and operating  income by segment are also
presented  as a  percentage  of  their  respective  totals.  The  columns  under
year-to-year  change show the dollar and  percentage  change from the respective
years ended. Intersegment sales are based on market prices.

                                       18

**Fiscal Year Ended                                      Year to Year Change
                               ----------------------------------------------------------------------------------------------------------------
                               March 29,                March 30,               March 31,                2003 to             2002 to
                                 2003           %         2002          %         2001          %         2002        %        2001         %
                               ---------        -       ---------       -       ---------       -        -------      -      -------        -
                                                                       (in millions except percentages)****Net Sales**
   Production                  $   357.2      58.7%     $   440.8      65.3%     $  359.1      66.4%     $ (83.6)   (19.0)%  $  81.7      22.8%
   Processing                      558.3      91.8%         599.6      88.8%        475.7      88.0%       (41.3)    (6.9)%    123.9      26.0%
   Intersegment                  (307.1)    (50.5)%       (365.4)    (54.1)%      (294.2)    (54.4)%         58.3     16.0%   (71.2)    (24.2)%
                               ---------   --------     ---------    -------     --------    -------     --------  --------  -------    -------
     **Total Net Sales**           $   608.4     100.0%     $   675.0     100.0%     $  540.6     100.0%     $ (66.6)    (9.9)%  $ 134.4      24.9%
                               =========   ========     =========    =======     ========    =======     ========  ========  =======    =======

**Gross Profit**
   Production                  $  (63.3)     269.4%     $    59.8      69.7%     $   62.4      73.9%     $(123.1)  (205.9)%  $ (2.6)     (4.2)%
   Processing                       39.8   (169.4)%          26.0      30.3%         22.0      26.1%         13.8     53.1%      4.0      18.2%
                               ---------   --------     ---------    -------     --------    -------     --------  --------  -------    -------
     **Total Gross Profit**        $  (23.5)     100.0%     $    85.8     100.0%     $   84.4     100.0%     $(109.3)  (127.4)%  $   1.4       1.7%
                               =========   ========     =========    =======     ========    =======     ========  ========  =======    =======

**Operating (Loss) Income**
   Production                  $  (63.1)     160.2%     $    59.5      91.8%     $   62.7     102.3%     $(122.6)  (206.1)%  $ (3.2)     (5.1)%
   Processing                       34.4    (87.3)%          23.0      35.5%         16.2      26.4%         11.4     49.6%      6.8      42.0%
   Corporate                      (10.7)      27.1%        (17.7)    (27.3)%       (17.6)    (28.7)%          7.0     39.5%    (0.1)     (0.6)%
                               ---------   --------     ---------    -------     --------    -------     --------  --------  -------    -------
**Total Operating (Loss) Income**  $  (39.4)     100.0%     $    64.8     100.0%     $   61.3     100.0%     $(104.2)  (160.8)%  $   3.5       5.7%
                               =========   ========     =========    =======     ========    =======     ========= ========  =======    =======

*Fiscal year Ended March 29, 2003 Compared to the Fiscal Year Ended March 30, 2002**Consolidated**Net Sales.*  Net sales decreased by $66.6 million,  or 9.9%, to $608.4 million in
fiscal  year 2003 from  $675.0  million in fiscal year 2002.  The  decrease  was
attributed  to a  decrease  of prices of $91.6  million,  which was offset by an
increase  in  volume of $25.0  million.  Wholesale  pork  prices  were  severely
impacted by several  factors,  including,  an increased  supply of pork industry
wide,  compounded  by an  increased  supply  of all meat  proteins.  Much of the
increase in meat proteins was  attributed to the Russian ban on poultry  imports
from the United States,  which was lifted in fiscal year 2003, but is subject to
current negotiations  regarding import  requirements.  Although the ban has been
lifted,  the  effects  of  it  as  well  as  the  increase  in  pork  production
industry-wide for the year continued to have a negative impact on market hog and
wholesale  pork prices during fiscal year 2003.  See Segment  Analysis below for
comments on changes in sales by business segment.

*Gross Profit.*  Gross profit decreased by $109.3 million, or 127.4%, to a loss of
$23.5  million in fiscal year 2003 from a profit of $85.8 million in fiscal year
2002. As a percentage of net sales, gross profit decreased to (3.9)% from 12.7%.
This  decrease was due to the decrease in sales prices  mentioned  above coupled
with a 3.4%  increase in costs to produce  our  products.  See Segment  Analysis
below for comments on changes in gross profit by business segment.

*Selling,   General   and   Administrative   Expenses.*   Selling,   general   and
administrative expenses decreased as a percentage of net sales to 3.0% in fiscal
year 2003 from 3.2% in fiscal year 2002. In dollar terms,  selling,  general and
administrative expenses decreased by $3.2 million, or 14.9%, to $18.3 million in
fiscal  year 2003 from $21.5  million in fiscal year 2002.  The  majority of the
decrease  is  attributable  to  decreased  bonus and  long-term  incentive  plan
accruals for fiscal year 2003.

*Operating  (Loss)  Income.*  Operating  income  decreased by $104.2  million,  or
160.8%,  to an  operating  loss of $39.4  million  in  fiscal  year 2003 from an
operating  income of $64.8  million  in  fiscal  year  2002.  The  decrease  was
attributable to the factors mentioned above.

*Interest  Expense,  net.* Interest expense,  net,  increased by $3.3 million,  or
16.2%,  to $23.7  million in fiscal year 2003 from $20.4  million in fiscal year
2002. The increase was attributed to an increase in total  interest-bearing debt
outstanding  and increased  amortization  of deferred  financing costs which are
charged to interest  expense  related to recent bank credit  amendments,  offset
slightly by lower  interest  rates on our variable rate debt.  See Liquidity and
Capital Resources below for more information.

                                       19

*Income Tax  Expense.*  Our  effective  tax rate was 38.9% in the fiscal year 2003
compared to an effective  rate of 39.9% in fiscal year 2002.  The difference was
primarily attributable to the utilization of state income tax credits.

*Segment Analysis**Hog  Production.*  Net sales  decreased  by $83.6  million,  or 19.0%,  to $357.2
million  in fiscal  year 2003 from  $440.8  million  in fiscal  year  2002.  The
decrease  primarily  resulted  from a 22.0%  decrease  in net  market  hog sales
prices,  partially  offset  by a 3.9%  increase  in volume  attributable  to the
effects of our Texas sow herd  expansion  and  additional  contract  production.
Intersegment sales to our pork processing  segment  transferred at market prices
are eliminated in the Consolidated Statements of Operations.

     Gross profit  decreased by $123.1  million,  or 205.9%,  to a loss of $63.3
million in fiscal year 2003 from a gross profit of $59.8  million in fiscal year
2002.  The  decrease was a  combination  of the decrease in net market hog sales
prices  mentioned  above,  coupled  with an increase in costs of $39.5  million,
$14.7  million of which  related to increased  volume and $24.8 million of which
related to increased costs.  Overall, hog production costs were 6.2% higher on a
per hundred weight basis in fiscal year 2003 compared to fiscal year 2002,  with
the majority of the increase caused by higher feed costs, lower values on culled
animals and a lower weight per animal marketed.

     Operating  income decreased by $122.6 million,  or 206.1%,  to an operating
loss of $63.1 million fiscal year 2003 from an operating income of $59.5 million
in fiscal year 2002. The decrease is attributed to the factors mentioned above.

*Pork Processing.*  Net sales decreased $41.3 million,  or 6.9%, to $558.3 million
in fiscal  year 2003 from  $599.6  million  in fiscal  year 2002.  The  decrease
resulted from a 16.2% decrease in pork product sales prices, partially offset by
an 11.1% increase in volume processed compared to the same period last year. The
increase in volume was  primarily  attributable  to the  expansion  at the North
Carolina plant completed in late fiscal year 2002, which increased capacity from
6,500 hogs per day to 10,000 hogs per day.

     Gross profit  increased by $13.8  million,  or 53.1%,  to $39.8  million in
fiscal year 2003 from $26.0 million in fiscal year 2002. The increase  primarily
resulted  from higher  margins on pork  products  due to lower market hog prices
coupled with higher volume through the plants.  Processing  costs increased 1.2%
during  fiscal year 2003  compared to fiscal year 2002,  primarily the result of
increased  depreciation  expense related to the North Carolina  processing plant
expansion and added emphasis on higher cost value-added products.

     Operating income increased by $11.4 million,  or 49.6%, to $34.4 million in
fiscal  year 2003 from $23.0  million  in fiscal  year 2002.  The  increase  was
attributed to the factors mentioned above.

*Fiscal year Ended March 30, 2002 Compared to the Fiscal Year Ended March 31, 2001**Consolidated**Net Sales.* Net sales increased by $134.4 million, or 24.9%, to $675.0 million in
fiscal  year 2002 from  $540.6  million in fiscal  year  2001.  The full year of
operations  with Lundy and PSFNC accounted for $141.2 million of the increase in
net sales with  increased  volume  accounting  for another  $10.4 million of the
increase offset by decreased prices of $17.2 million. See Segment Analysis below
for comments on changes in sales by business segment.

*Gross Profit.*  Gross profit increased by $1.4 million, or 1.7%, to $85.8 million
in fiscal year 2002 from $84.4  million in fiscal year 2001.  As a percentage of
net sales,  gross profit decreased to 12.7% from 15.6%. This decrease was due to
the decrease in sales prices  mentioned  above  coupled with a 2.7%  increase in
costs to produce our products.  When excluding the additional gross profit added
by Lundy  and  PSFNC  for the  period  in  fiscal  year  2002 that they were not
included  during  fiscal year 2001,  gross profit would have  decreased by $15.8
million in fiscal year 2002  compared to fiscal year 2001.  This  decrease was a
combination  of the  decrease  in net sales  mentioned  above,  coupled  with an
increase in costs of $11.7  million due to $8.7 million of increased  volume and
$3.0 million of increased costs.

                                       20

*Selling,   General   and   Administrative   Expenses.*   Selling,   general   and
administrative expenses decreased as a percentage of net sales to 3.2% in fiscal
year 2002 from 3.6% in fiscal  year  2001.  This  decrease  was the result of an
increase  in net sales  with the full  year of Lundy  and PSFNC and  integration
savings realized with the addition of Lundy and PSFNC. In dollar terms, selling,
general and  administrative  expenses  increased by $2.1 million,  or 11.0%,  to
$21.5 million in fiscal year 2002 from $19.4 million in fiscal year 2001.

*Operating Income.*  Operating income increased by $3.5 million, or 5.7%, to $64.8
million in fiscal year 2002 from $61.3 million in fiscal year 2001. The increase
is  attributable  to the  factors  mentioned  above  coupled  with a decrease in
amortization  expense  associated  with the early  adoption  of SFAS 142,  which
discontinued our amortization of goodwill effective April 1, 2001.

*Interest  Expense,  net.* Interest expense,  net,  decreased by $3.5 million,  or
14.8%,  to $20.4  million in fiscal year 2002 from $23.9  million in fiscal year
2001.  The decrease was caused  primarily by a decrease in interest rates on our
variable rate debt.

*Income Tax  Expense.*  Our  effective  tax rate was 39.9% in the fiscal year 2002
compared to an effective  rate of 41.1% in fiscal year 2001.  The difference was
primarily attributable to the utilization of state income tax credits.

*Segment Analysis**Hog  Production.*  Net sales  increased  by $81.7  million,  or 22.8%,  to $440.8
million in fiscal  year 2002 from $359.1  million in fiscal year 2001.  The full
year  inclusion  of PSFNC  accounted  for $79.7  million of the  increase in net
sales,  with the remaining  increase  accounted for by a 5.2% increase in volume
offset by an average 4.4% decrease in net market hog sales prices.  The increase
in volume was attributable to increased productivity,  better growing conditions
and additional  contract  production.  Intersegment sales to our pork processing
segment  transferred  at  market  prices  are  eliminated  in  the  Consolidated
Statements of Operations.

     Gross profit decreased by $2.6 million, or 4.2%, to $59.8 million in fiscal
year 2002 from $62.4 million in fiscal year 2001. Excluding the additional gross
profit  added by PSFNC for the period in fiscal year 2002 that was not  included
during fiscal year 2001,  gross profit would have  decreased by $19.8 million in
fiscal year 2002 compared to fiscal year 2001. The decrease was a combination of
the decrease in net market hog sales  prices  mentioned  above,  coupled with an
increase in costs of $21.8 million,  $15.0 million of which related to increased
volume  and $6.8  million of which  related to  increased  costs.  Overall,  hog
production  costs were 3.0% higher on a per hundred  weight basis in fiscal year
2002 compared to fiscal year 2001,  with the majority of the increase  caused by
higher feed costs.

     Operating  income  decreased by $3.2  million,  or 5.1%,  to $59.5  million
fiscal  year 2002 from  $62.7  million  in fiscal  year 2001.  The  decrease  is
attributed to the factors mentioned above.

*Pork Processing.* Net sales increased $123.9 million, or 26.0%, to $599.6 million
in fiscal year 2002 from $475.7 million in fiscal year 2001. The  acquisition of
Lundy accounted for $132.1 million of the increase in net sales.  Net sales also
increased as a result of a 2.6% increase in pork product  sales prices  compared
to the same period last year offset by a decrease in  processing  volume and one
less week in fiscal year 2002.

     Gross  profit  increased by $4.0  million,  or 18.2%,  to $26.0  million in
fiscal year 2002 from $22.0  million in fiscal  year 2001.  When  excluding  the
additional  gross  profit added by Lundy for the period in fiscal year 2002 that
was not included  during fiscal year 2001,  gross profit would have increased by
$3.0  million in fiscal year 2002  compared to fiscal  year 2001.  The  increase
resulted  from higher  margins on pork products due to higher pork product sales
prices,  partially  offset  by higher  plant  operating  costs due to  expansion
start-up costs.

     Operating income  increased by $6.8 million,  or 42.0%, to $23.0 million in
fiscal  year 2002 from $16.2  million  in fiscal  year 2001.  The  increase  was
attributed to the factors  mentioned  above, as well as to a $2.0 million dollar
nonrecurring  charge in fiscal year 2001 for certain benefit plan expenses and a
full year of  earnings  from an  unconsolidated  partnership  at Lundy in fiscal
2002.

                                       21

**Liquidity and Capital Resources**

     Our primary source of financing has been cash flow from operations and bank
borrowings.  Our ongoing  operations  will require the  availability of funds to
service  debt,  fund  working  capital  and  make  capital  expenditures  on our
facilities.  We  expect  to  finance  these  activities  through  cash flow from
operations and from amounts available under our revolving credit facility.

     Net cash flow (used in) and  provided by operating  activities  was ($17.4)
million,  $80.5 million and $64.4  million in fiscal years 2003,  2002 and 2001,
respectively.  The decrease in fiscal year 2003 was  attributed to a decrease in
net income over fiscal year 2002,  the change in deferred  taxes and an increase
in working  capital  requirements  partially  offset by an  increase in non-cash
depreciation charges and losses on the sales of fixed assets.

     Net cash flow used in investing activities was $25.9 million, $81.3 million
and $146.0 million in fiscal years 2003, 2002 and 2001, respectively.  In fiscal
year 2003, net cash used in investing activities was spent as follows:

     •    Approximately $5 million was spent for continuing  improvements of our
          pork processing facilities;

     •    Approximately $6 million was spent for continuing  improvements of our
          hog production  facilities,  and  investments to develop and implement
          new technologies for improved waste handling; and

     •    The remainder was spent for purchases of breedstock.

     In  fiscal  year 2003 and 2002,  we  received  proceeds  from  disposal  of
property,  plant,  equipment  and  breeding  stock of $11.7  million  and  $14.9
million,  respectively.  During  both  fiscal  years 2003 and 2002,  disposal of
property,  plant,  equipment and breeding  stock  consisted  primarily of culled
breeding stock.

     Net cash flow provided by (used in) financing activities was $36.1 million,
($0.6)  million  and  $88.5  million  in  fiscal  years  2003,  2002  and  2001,
respectively.  In the first quarter of fiscal year 2002,  Premium Standard Farms
issued $175 million of 9 1/4% senior  unsecured notes due 2011 ("9 1/4% Notes"),
which were used to retire $137.9 million of 11% senior  secured  payment-in-kind
notes ("PIK Notes") on July 7, 2001.  An  associated  1%  prepayment  penalty on
these PIK Notes was also paid on July 7, 2001. With the remaining  proceeds,  we
also  prepaid  $25  million of bank term  debt,  made a $6.3  million  quarterly
payment  on bank term debt and paid down $4.0  million on our  revolving  credit
facility.  The 9 1/4% Notes contain  customary  covenants and are  redeemable by
Premium Standard Farms under certain circumstances.

     Borrowings  are provided  under a Credit  Agreement that provides for up to
$150 million of revolving credit (with actual credit limit determined monthly by
reference to a borrowing base  formula),  including up to $15 million of letters
of credit, and a term loan facility with $56.3 million  outstanding at March 29,
2003.   Obligations   under  the  Credit  Agreement  are  secured  by  liens  on
substantially all of our assets. In addition to customary  financial  covenants,
the Credit  Agreement  contains  customary  restrictions on, among other things,
encumbrance  or  disposal  of  assets,  acquisitions,  additional  indebtedness,
capital  investment,  payment of subordinated  debt and  construction of new hog
production  facilities.  In addition to  customary  fees  payable  under  credit
facilities  of this  type,  amounts  borrowed  under the Credit  Agreement  bear
interest at fluctuating rates selected by us. These rates are based on the agent
bank's prime rate (the Federal Funds Rate plus one half of one percent) or LIBOR
plus, in each case, an applicable margin, currently ranging from 1.5% to 3.125%,
determined by our leverage  ratio.  All  borrowings  under the revolving  credit
facility  mature on August  21,  2004,  and all  borrowings  under the term debt
mature on August 21, 2005. Quarterly term loan payments have been deferred until
September 30, 2003.

     Total  indebtedness  at March 29, 2003 was $305.2  million,  as compared to
$272.8  million  at March 30,  2002.  At March 29,  2003,  we had $69.8  million
outstanding  under our revolving  credit  facility,  $10.0 million in letters of
credit and $64.8  million  available for  borrowing  under our revolving  credit
facility.

                                       22

     In fiscal 2004, we expect to spend approximately $33 million on net capital
expenditures, of which we expect to spend:

     •    Approximately   $13  million  in  upgrades  and  improvements  in  our
          processing operations;

     •    Approximately   $9  million  in  upgrades  and   improvements  in  our
          production operations; and

     •    Approximately $11 million in net breedstock purchases.

     We believe that available  borrowings under our credit facility,  available
cash and  internally  generated  funds will be sufficient to support our working
capital,  capital expenditures and debt service requirements for the foreseeable
future. Our ability to generate cash, however, is subject to a certain extent to
general  economic,  financial,  competitive,  legislative,  regulatory and other
factors beyond our control. We cannot assure you that our business will generate
sufficient cash flow from operations or that future borrowings will be available
under our revolving credit facility in an amount  sufficient to enable us to pay
our  indebtedness,  including the 9 1/4% Notes,  or to fund our other  liquidity
needs. If we consummate any material  acquisitions or expand our operations,  we
may need to seek additional  sources of funding,  which might  potentially  come
from the issuance of additional equity, debt or the pursuit of joint ventures to
the extent that such options are available.

     The  following  table   represents  a  summary  of  our  contractual   cash
obligations as of March 29, 2003.

                                                       **Payments due by period****Contractual Cash Obligations****Total****Current****1-3 years****4-5 years****Thereafter****(in thousands)**

     Long Term Debt                $ 301,049      $ 12,500   $ 113,549     $      -     $  175,000
     Capital Lease Obligations         4,135           773       1,740        1,528             94
     Operating Leases                 26,063         5,973       9,370        5,673          5,047
     Unconditional Purchase
       Obligations                    11,074        11,074           -            -              -
     Other Long Term Obligations       1,000         1,000           -            -              -
                                   ---------      --------   ---------     --------     ----------
     Total Contractual Cash
       Obligations                  $343,321      $ 31,320   $ 124,659     $  7,201     $  180,141
                                   =========      ========   =========     ========     ==========

*Amounts not included in above table*

     Most of our hog production is raised in company-owned  facilities.  Some of
the  production,  however,  is raised  under  farrowing,  nursery,  or finishing
contracts with individual farmers. In these relationships,  we typically own the
livestock and provide the necessary  feed,  genetics,  and veterinary  supplies,
while the contract producer provides the land, facilities, labor, utilities, and
other costs of production. These contracts vary from terms of less than one year
to up to twelve years.  Payments under these  agreements are included in cost of
goods  sold.  These  payments  represented  approximately  11 percent of our hog
production  segment's  cost of goods  sold for fiscal  year  2003.  All of these
contracts are cancelable by us if the producer fails to perform to an acceptable
level.

     At our North  Carolina pork  processing  facility,  we have  contracts with
producers to provide us with market hogs for the amount we don't  produce at our
hog production facilities in order to meet our processing needs. These contracts
vary in length but are all based on a market price and grade and yield  formula.
Over the next 5 years we are  contracted  to  purchase  approximately  1,750,000
market hogs under these contracts.

     Under the Missouri Consent Decree with the Attorney General we are required
to spend $13.1 million on additional  investments in research and development on
or before May 19, 2004. We anticipate an extension of this expenditure  deadline
because   both  the  State  of  Missouri  and  the  expert  panel  want  further
confirmation of the efficacy of any chosen technology.

                                       23

**Critical Accounting Policies**

     In preparing the  consolidated  financial  statements  in  accordance  with
generally accepted accounting principles,  we are required to make estimates and
assumptions that affect the reported amounts of assets,  liabilities,  revenues,
expenses,  and related  disclosures  at the date of the  consolidated  financial
statements and during the reporting period. Actual results may differ from those
estimates due to the complexity and subjectivity of those estimates.  Management
has identified  the accounting  policies it believes to be the most important as
inventory  valuation of livestock,  contingent  liabilities,  and accounting for
derivative instruments.

     Inventory  valuation of livestock is  calculated  based on a standard  cost
model for each  geographic  hog  production  region.  This model is based on the
current year's budgeted costs and inventory projections at each age and phase of
the  production  cycle,  adjusted  to actual  costs and  reduced to the lower of
actual cost or market when required. Management believes this method for valuing
livestock most accurately represents actual inventory costs.

     Contingent  liabilities,  such as self-insured  workers'  compensation  and
health  insurance,  bonuses,  and  legal  obligations  are  estimated  based  on
information  received  from  third  parties  and  management  estimates.   These
obligations  are  provided  for when  the loss is  probable  and the  amount  is
reasonably  estimable.  Actual settlement costs may vary from estimates we made.
Management believes the estimates are reasonable based on current information.

     Derivative  instruments  are  accounted for in  accordance  with  Financial
Standards  Board  Statement  No.  133 (SFAS  133),  "Accounting  for  Derivative
Instruments  and  Hedging  Activities."  Because of the  complexity  involved in
qualifying  for hedge  treatment  for our  commodity  contracts,  we mark  these
exchange-traded  contracts to market with the resulting gain or loss recorded in
sales for lean hog contracts or cost of sales for all other commodity contracts.
This may result in large fluctuations in our earnings depending on the volume of
commodity contracts and their corresponding volatility.

**Market Risk**

     Our operating  results are influenced by  fluctuations  in the price of our
primary feed  components,  corn and soybean meal, and by  fluctuations in market
hog and wholesale pork sales prices.  The cost and supply of feed components and
market hog and wholesale pork sales prices are determined by constantly changing
market  forces of supply and demand,  which are driven by matters  over which we
have no control, including weather, current and projected worldwide grain stocks
and prices,  grain export prices and supports,  hog production and  governmental
agricultural  policies.  In our hog production segment we use forward contracts,
as well as futures and options  contracts,  to  establish  adequate  supplies of
future grain  requirements,  to secure  margins and to reduce the risk of market
fluctuations.  To secure  margins and minimize  earnings  volatility in our pork
processing  segment,  we utilize  lean hog futures to hedge  future pork product
sales.  While this may tend to limit our  ability to  participate  in gains from
favorable  commodity  price  fluctuation,  it also  tends to  minimize  earnings
volatility and secure future margins.  For the fiscal year ended March 29, 2003,
we  recognized  income  under  SFAS 133 of $1.4  million  in net sales for gains
related to lean hog  futures  and losses of $0.9  million in costs of goods sold
relating  to the  hedging  of feed  components.  As of March  29,  2003,  we had
deposits  with  brokers  for  outstanding  futures  contracts  of $0.1  million,
included  in  prepaid  expenses  and  other  current  assets.  For open  futures
contracts,  we use a sensitivity  analysis technique to evaluate the effect that
changes  in the  market  value  of  commodities  will  have on  these  commodity
derivative instruments. As of March 29, 2003, the potential change in fair value
of exchange-traded contracts,  assuming a 10% change in the underlying commodity
price, was $4.9 million.

     We are exposed to changes in interest rates.  Our term and revolving credit
facilities  have  variable  interest  rates.  Interest  rate  changes  therefore
generally  do not affect the market  value of such debt but do impact the amount
of our interest  payments and,  therefore,  our future  earnings and cash flows.
Assuming  other factors are held  constant,  a 1% change in interest rates would
have an approximately $1.3 million impact on interest expense.  Conversely,  for
fixed rate debt,  interest  rate  changes  do not impact  future  cash flows and
earnings,  but do impact  the fair  market  value of such debt,  assuming  other
factors  are held  constant.  During the fiscal year ended  March 30,  2002,  we
entered  into an  interest  rate swap  agreement  to convert the  variable  base
interest  rate of our bank term debt to a fixed rate of  3.0125%  plus the agent
bank's  applicable  margin  (currently  3.125% at March 29,  2003).  The swap

                                       24

is accounted  for as a cash flow hedge under SFAS 133.  During  fiscal 2003,  we
recognized a $0.7 million loss, net of tax, into Accumulated Other Comprehensive
Income for the market value of the swap.

     The 9 1/4% Notes had a fair  value of  approximately  $155.8  million as of
March 29, 2003 based on  inter-dealer  prices,  as compared to the book value of
$175.0 million as of March 29, 2003.

**Forward-Looking Statements**

     This report on Form 10-K contains  "forward-looking  statements" within the
meaning of Section  17A of the  Securities  Act of 1933,  and Section 21E of the
Securities   Exchange  Act  of  1934.  When  used  in  this  report,  the  words
"anticipates,"  "believes,"  "expects,"  "intends,"  "may,"  "will" and  similar
expressions identify such forward-looking  statements.  Although we believe that
such  statements  are based on  reasonable  assumptions,  these  forward-looking
statements are subject to numerous factors,  risks and uncertainties  that could
cause  actual  outcomes  and  results  to be  materially  different  from  those
projected.  These factors,  risks and uncertainties  include,  among others, the
following:

     •    economic conditions generally and in our principal markets;

     •    competitive  practices  in the  pork  production  and  processing
          industries;

     •    the impact of consolidation in the pork production and processing
          industries;

     •    the impact of current and future laws,  governmental  regulations
          and  fiscal  policies  affecting  our  industry  and  operations,
          including environmental laws and regulations, trade embargoes and
          tariffs;

     •    domestic and international transportation disruptions;

     •    food safety;

     •    the availability of additional capital to fund future commitments
          and expansion and the cost and terms of financing;

     •    outbreaks of disease in our herds;

     •    feed ingredient costs;

     •    fluctuations in live hog prices and the price of pork products;

     •    customer demands and preferences; and

     •    the occurrence of natural disasters and other occurrences  beyond
          our control.

     Our actual  results,  performance or achievements  could differ  materially
from those expressed in, or implied by, the forward-looking  statements.  We can
give no assurances  that any of the events  anticipated  by the  forward-looking
statements  will occur or, if any of them do,  what impact they will have on our
results of operations and financial  condition.  Please review our  Registration
Statement on Form S-4 filed on August 10, 2001 for other important  factors that
could cause results to differ materially from those in any such  forward-looking
statements.  Information in these archived  materials may not be current and may
be superceded by more recent information published by us.

**Item 7A.  Quantitative and Qualitative Disclosures About Market Risk**

     The  information  required by this item is incorporated by reference to the
section entitled "Market Risk" in Item 7 to this Annual Report on Form 10-K.

                                       25

**Item 8.  Financial Statements and Supplementary Data**

     Our consolidated  financial statements are filed under this Item, beginning
on page F-1 of this  Report.  Our  financial  statement  schedule is filed under
"Exhibits, Financial Statements Schedules and Reports on Form 8-K."

     Selected  quarterly  financial data required under this Item is included in
Note 13 to the consolidated financial statements.

**Item 9.  Changes  in and  Disagreements  with  Accountants  on  Accounting  and
         Financial Disclosure**

         None.

                                    **PART III****Item 10.  Directors and Executive Officers of Registrant**

     The following table sets forth certain information concerning the directors
and executive officers of PSF Group Holdings and Premium Standard Farms:

             **Name                 Age                     Position(s)
-----------------------       ----------  ---------------------------------------------------------------**
John M. Meyer...............      41      Chief Executive Officer and Director of PSF Group Holdings
                                          and Premium Standard Farms
Robert W. Manly.............      50      President of PSF Group Holdings and Premium Standard Farms
Stephen A. Lightstone.......      57      Executive Vice President, Chief Financial Officer and
                                          Treasurer of PSF Group Holdings and Premium Standard Farms
J. Michael Townsley.........      43      Senior Vice President, Sales and Marketing of Premium
                                          Standard Farms
Jere Null...................      38      Vice President, Processing Operations of Premium Standard Farms
David H. James..............      48      Vice President, Production Operations of Premium
                                          Standard Farms
Gerard J. Schulte...........      53      General Counsel and Secretary of PSF Group Holdings and
                                          Premium Standard Farms
Dennis D. Rippe.............      49      Vice President, Controller and Assistant Secretary of
                                          PSF Group Holdings and Premium Standard Farms,
Michael J. Zimmerman........      52      Chairman of the Board and Director of and PSF Group
                                          Holdings and Premium Standard Farms
Ronald E. Justice...........      57      Director of PSF Group Holdings and Premium Standard Farms
Dean Mefford................      62      Director of PSF Group Holdings and Premium Standard Farms
Maurice L. McGill...........      66      Director of PSF Group Holdings and Premium Standard Farms
Michael A. Petrick..........      41      Director of PSF Group Holdings and Premium Standard Farms
Paul J. Fribourg............      49      Director of PSF Group Holdings and Premium Standard Farms
Vart K. Adjemian............      60      Director of PSF Group Holdings and Premium Standard Farms
John Rakestraw..............      42      Director of Premium Standard Farms
Annabelle Lundy Fetterman...      82      Director of Premium Standard Farms

     *John M. Meyer* has been a Director  and the Chief  Executive  Officer of PSF
Group Holdings and Premium  Standard Farms since May 1998. Prior to May 1998, he
spent 15 years with  ContiGroup  Companies,  most recently as Vice President and
General Manager of ContiGroup's pork division. While with ContiGroup,  Mr. Meyer
served in the sales, credit and financial services functions.

     *Robert W. Manly* has been President of Premium  Standard Farms since October
1996. He has been  President of PSF Group  Holdings  since May 1998.  From April
1986 to October 1996, Mr. Manly served as Executive Vice President of Smithfield
Foods,  Inc.  He also served as  President  and Chief  Operating  Officer of the

                                       26

Smithfield  Packing  Company  subsidiary  from June 1994 to June 1995. Mr. Manly
held the position of Assistant to the  President of IBP,  Inc. from January 1981
to April 1986.

     *Stephen A.  Lightstone* has been Executive Vice  President,  Chief Financial
Officer and  Treasurer of PSF Group  Holdings and Premium  Standard  Farms since
August 1998. From 1983 to 1998, Mr. Lightstone was with Payless Cashways,  Inc.,
a building materials  retailer,  most recently serving as Senior Vice President,
Chief Financial Officer and Treasurer.

     *J. Michael Townsley* has been Senior Vice President,  Sales and Marketing of
Premium  Standard Farms since April 1997. From 1994 to 1997, Mr. Townsley served
as Vice  President  Sales and  Marketing,  Fresh  Meat with  Smithfield  Packing
Company,  Inc. Prior to that time, Mr. Townsley spent 11 years with IBP, Inc. in
various  sales  positions  and  concluded  his career  with IBP as  Director  of
Merchandising, Pork Division.

     *Jere  Null*  has been  Vice  President,  Processing  Operations  of  Premium
Standard  Farms since  September  2000.  For the eleven years prior to September
2000, Mr. Null was with Smithfield Foods,  Inc., last serving in the position of
Senior Vice  President of  Smithfield  Packing  Company from June 1999 to August
2000.  From June 1995 to May  1999,  Mr.  Null was Vice  President  and  General
Manager of Smithfield Packing Company's Tar Heel Division.

     *David H. James* is Vice President, Production Operations of Premium Standard
Farms,  having  served in this  capacity for Missouri  since April 1999,  adding
North Carolina in August 2000, and adding Texas in March 2001. He is responsible
for all of Premium Standard Farms' hog production.  From June 1992 to July 1998,
Mr. James served as Regional Manager for the 25,000-sow North Carolina operation
for  ContiGroup  Companies at which time he joined our  Missouri hog  production
operations team.

     *Gerard J.  Schulte*  has been  General  Counsel and  Secretary  of PSF Group
Holdings and Premium  Standard  Farms since July 1998. Mr. Schulte has been Vice
President and Assistant  General Counsel of ContiGroup  Companies since February
2001  and  previously   served  as  Vice   President  and  General   Counsel  of
ContiIndustries, an operating group of ContiGroup Companies, since 1990.

     *Dennis D. Rippe* has been Vice President, Controller and Assistant Secretary
of Premium  Standard Farms since January 1999. Prior to that date, Mr. Rippe had
been Vice President Finance and Administration-Operations  (Missouri) of Premium
Standard Farms since February 1997.

     *Michael J.  Zimmerman*  has been  Chairman of the Board of  Directors of PSF
Group Holdings and Premium Standard Farms since May 1998. Mr. Zimmerman has been
Executive Vice  President and Chief  Financial  Officer of ContiGroup  Companies
since 1999. From 1996 to 1999, he served as Senior Vice President -- Investments
and Strategy of  ContiGroup  Companies  and  President  of its  ContiInvestments
subsidiary.  Prior to joining  ContiGroup in 1996, he was a Managing Director of
Salomon Brothers.

     *Ronald E.  Justice*  has been a Director  of Premium  Standard  Farms  since
September 1996. He has been a Director of PSF Group Holdings since May 1998. Mr.
Justice has been an Adjunct Professor in Business Studies at Brookhaven  College
since April  2001.  He served as  Executive  Vice  President  of  Operations  of
Consolidated  Container  Company from  September 1998 to April 2000. Mr. Justice
was the Senior  Vice  President  of  Operations  of Scotts Co. from July 1995 to
September 1998.

     *Dean Mefford* has been a Director of Premium  Standard Farms since September
1996. He has been a Director of PSF Group Holdings since May 1998.  From January
1999 to  February  2001,  he  served  as  Chairman  of the  Board of  Doubletime
Corporation and from October 1999 to May 2000 he served as the Interim President
of Ocean Spray Corp. Mr. Mefford served as President and Chief Executive Officer
of Viskase  Corporation,  a manufacturer of flexible packaging and meat casings,
from 1994 to 1998.

     *Maurice L.  McGill* has been a Director  of  Premium  Standard  Farms  since
September 1996. He has been a Director of PSF Group Holdings since May 1998. Mr.
McGill has served as the  President of Wirmac Corp.  since 1986 and as a general
partner of McGill  Partners since 1989. Mr. McGill has also served as a director
of Bluebonnet Savings Bank since 1990.

                                       27

*Michael A.  Petrick* has been a Director of PSF Group  Holdings  and Premium
Standard Farms since May 1998. He is a Managing Director of Morgan Stanley & Co.
Incorporated,  and has been with Morgan  Stanley  since 1989.  Mr.  Petrick also
serves as a Director of Sunbeam Corporation,  DigitalGlobe Inc, V2 Music and TVN
Entertainment Corporation.

     *Paul J.  Fribourg*  has been a Director  of PSF Group  Holdings  and Premium
Standard  Farms since May 1998.  He has served as Chairman,  President and Chief
Executive  Officer of  ContiGroup  Companies  since 1999.  From 1997 to 1999, he
served as Chairman,  President and Chief Executive  Officer of Continental Grain
and,  from 1996 to 1997,  he served as Chief  Operating  Officer of  Continental
Grain.

     *Vart K.  Adjemian*  has been a Director  of PSF Group  Holdings  and Premium
Standard  Farms since  September  1999.  Mr.  Adjemian has been  Executive  Vice
President and Chief  Operating  Officer of ContiGroup  Companies  since February
2001.  From 1999 to  February  2001 he served as  Executive  Vice  President  of
ContiGroup and as Chief Executive Officer of the  ContiIndustries,  an operating
group of ContiGroup  Companies.  From 1998 to 1999, he was Senior Vice President
of  ContiGroup  Companies,  and  from  1996 to  1998,  he was  President  of the
Commodity Marketing Group of ContiGroup Companies.

     *John Rakestraw* has been a Director of Premium Standard Farms since February
2001.  He had  previously  served as director of PSF Group  Holdings and Premium
Standard  Farms  between  May 1998 and  October  1999.  Mr.  Rakestraw  has been
President and Chief Executive Officer of ContiBeef, LLC since 2000 and served as
Vice President and General Manager of the Cattle Feeding  Division of ContiGroup
Companies from 1995 to 2000.

     *Annabelle  Lundy  Fetterman* has been a Director of Premium  Standard  Farms
since August 2000. From 1985 to August 2000, she served as Chairman of the Board
and Chief  Executive  Officer of The Lundy  Packing  Company and was employed by
that company from its inception in 1950.

**Committees of the Board of Directors**

     The  Board of  Directors  of PSF Group  Holdings  has not  established  any
committees. The Board of Directors of Premium Standard Farms has established two
committees: a Compensation Committee and an Audit Committee. Each such committee
has three or more members, who serve at the pleasure of the Board of Directors.

     The  Compensation   Committee  is  responsible  for  reviewing  and  making
recommendations  to the Board of  Directors  with  respect  to  compensation  of
executive  officers,  other  compensation  matters  and awards  under the Equity
Incentive Plan. Currently, Messrs. Zimmerman,  Fribourg and Mefford serve on the
Compensation Committee. Mr. Fribourg is chairman of the committee.

     The Audit Committee is responsible for reviewing our financial  statements,
audit reports, internal financial controls and the services performed by Premium
Standard Farms' independent public accountants,  and for making  recommendations
with  respect to those  matters to the Board of  Directors.  Currently,  Messrs.
McGill,  Adjemian  and  Justice  serve on the  Audit  Committee.  Mr.  McGill is
chairman of the committee.

**Terms of Directors and Officers**

     Directors  of Premium  Standard  Farms are  elected  annually  by PSF Group
Holdings, as sole stockholder, to hold office for one-year terms and until their
successors are duly elected and qualified.

     The officers of PSF Group Holdings and Premium Standard Farms are appointed
by the respective Boards of Directors and serve at the pleasure of such Boards.

     Directors of PSF Group  Holdings are  nominated  and placed for election at
the annual meeting of  stockholders to hold office for a one-year term and until
their  successors  are duly  elected  and  qualified.  There are two  classes of
Directors. Four Class A Directors are elected by holders of Class A Common Stock
voting as a separate class. Messrs. Justice, McGill, Mefford and Petrick are the
current  Class A  Directors.  Five Class B  Directors  are elected by holders of
Class B Common  Stock  voting as a  separate  class.  Messrs.  Fribourg,  Meyer,

                                       28

Adjemian  and  Zimmerman  are the current  Class B  Directors,  with one vacancy
currently unfilled among the Class B Directors.

**Item 11.  Executive Compensation****Compensation of Directors**

     Premium Standard Farms has agreed to pay each person who is a member of its
Board  of  Directors  $1,000  per  meeting,  plus  reimbursement  of  reasonable
out-of-pocket  expenses incurred in connection with the performance of duties as
a Director.  In addition,  each director who is not affiliated  with  ContiGroup
Companies or Morgan Stanley receives $20,000 per year in exchange for his or her
services.  Members of the Audit and Compensation  Committees of Premium Standard
Farms receive an additional $1,000 per meeting.

     Directors  of PSF Group  Holdings  receive  no  separate  compensation  for
service on that company's Boards of Directors.

     PSF Group  Holdings  has  adopted  an Equity  Incentive  Plan that  permits
options,  stock  appreciation  rights,  restricted stock,  performance units and
performance  shares to be granted to the employees,  non-employee  directors and
consultants of PSF Group Holdings and its affiliates (including Premium Standard
Farms). As of the date of this report, there have been no grants to non-employee
directors of Premium Standard Farms or its affiliates under the Equity Incentive
Plan.

**Executive Compensation**

     The  following   summary   compensation   table   summarizes   compensation
information with respect to our Chief Executive  Officer and our four other most
highly compensated executive officers for our three most recent fiscal years.

                                                 **Summary Compensation Table

                                                                        Long-Term Compensation
                                                                        --------------------------
                                                    Annual              Number of
                                                 Compensation           Securities      Long-Term
                                   Fiscal   ------------------------    Underlying      Incentive          All Other
Name and Principal Position         Year    Salary($)(1)    Bonus($)    Options(2)      Payouts($)     Compensation($)(3)
-------------------------------    ------   ------------   ---------    ----------     -----------     ------------------**
John M. Meyer..................     2003    $   315,082    $     -            -        $      -        $     9,562
 Chief Executive Officer            2002        308,846      314,000          -               -              6,903
                                    2001        283,269      340,600     2,142.86         471,260            7,565

Robert W. Manly................     2003        300,336        -              -               -              9,400
 President                          2002        293,846      265,170          -               -              6,954
                                    2001        265,385      311,000     1,714.29         428,130            7,517

Stephen A. Lightstone..........     2003        260,639        -              -               -              8,969
  Executive Vice President,         2002        256,923      212,139          -               -              7,154
  Chief Financial Officer and       2001        245,769      259,000     1,571.43         373,090            7,464
  Treasurer

Jere Null......................     2003        209,136        -              -               -              4,692
  Vice President, Processing        2002        204,231       74,995          -               -            106,540
  Operations                        2001        112,709       56,000       571.43             -            205,877

David H. James.................     2003        199,019        -              -               -              8,323
  Vice President,                   2002        195,000       81,423          -               -              6,974
  Production Operations             2001        165,289      130,020       571.43         209,820            7,246

----------

(1)  Messrs.  Meyer,  Manly and Lightstone  have not received  salary  increases
     since June 2001 as part of the plan for senior  executives to have a larger
     percentage of their total compensation based on company performance through
     annual bonus opportunities.

                                       29

(2)  Options to acquire shares of Class B Common Stock of PSF Group Holdings.

(3)  Consists of employer  contributions  to the 401(k)  plan and  premiums  for
     group-term life and accidental death and  dismemberment  insurance.  In the
     case of Mr. Null only, the amounts  listed also include  $100,000 in fiscal
     year  2002 and  $200,000  in  fiscal  year 2001  related  to  non-recurring
     payments  which were  payable  over two years in  recognition  of  benefits
     forfeited from a former employer.

     No options or stock  appreciation  rights were granted to, or exercised by,
the named  executive  officers during fiscal year 2003. The following table sets
forth information  regarding  exercisable and  unexercisable  options held as of
March 29, 2003, by each of the named executive officers:

   **Aggregated Option Exercises in Last Fiscal Year and Year-End Option Values****Number of Securities
                                           Underlying Unexercised
                                        Options at March 29, 2003(1)
                                      --------------------------------
                Name                    Exercisable     Unexercisable
        --------------------          --------------  ----------------**
        John M. Meyer.............       2,142.86            --
        Robert W. Manly...........       1,714.29            --
        Stephen A. Lightstone.....       1,571.43            --
        Jere Null.................         377.14          194.29
        David H. James............         522.86           48.57
----------

(1)  All options are  options to acquire  shares of Class B Common  Stock of PSF
     Group Holdings.

     PSF Group  Holdings  adopted its 1999 Equity  Incentive Plan in April 2000.
The plan was  established  to attract,  motivate  and retain  employees  of that
company and its affiliates, including Premium Standard Farms, and to further the
growth and financial  success of that company and its affiliates by aligning the
interests of participants with the interests of the company's stockholders.

     The plan is administered by a committee of non-employee directors appointed
by the Board.  The plan provides for awards in the form of stock options,  stock
appreciation rights, restricted stock, performance units and performance shares,
as determined by the committee.  All employees and  non-employee  directors,  as
well as certain non-employee  advisors and consultants,  are eligible to receive
awards under the plan. A total of 15,000 shares of PSF Group Holdings Class A or
Class B Common  Stock may be issued  pursuant  to the plan.  Awards  vest upon a
change in control of PSF Group Holdings, as defined in the plan.

     Options  granted  under  the  1999  Equity  Incentive  Plan  may be  either
incentive  stock options or  nonqualified  stock  options,  as determined by the
committee. No participant can be granted options with respect to more than 3,000
shares in any fiscal  year.  The terms of any option will be  determined  by the
committee,  but no stock option may be  exercised  later than 10 years after the
date of grant.  The award  agreement may provide that PSF Group Holdings has the
right to repurchase the stock if the grantee terminates employment.

     The committee may also grant stock appreciation  rights,  restricted stock,
performance units, or performance shares to eligible  individuals,  from time to
time,  in  amounts  as it  may  determine.  Each  stock  appreciation  right  or
performance  share relates to one share of PSF Group Holdings Class A or Class B
Common Stock. No participant can be granted stock  appreciation  rights covering
more than 3,000 shares in any fiscal  year,  and no  participant  can be awarded
more than 3,000  performance  shares or restricted  shares, or performance units
with an initial value of more than  $500,000 in any fiscal year.  The value of a
performance unit will be at the discretion of the committee.

                                       30

**Long-Term Incentive Plan**

     For the four year period  commencing  April 1, 2001, we have  established a
long-term  incentive  plan.  Those  generally  eligible  for the plan are senior
managers with  responsibility  for leadership and  accountability  for long-term
growth and  earnings  as  determined  by the  Compensation  Committee.  The plan
established both a formula-based incentive pool and a discretionary awards pool.
Incentive pool awards were determined at the plan's inception, and discretionary
pool awards will be determined at the end of the performance period. Awards will
be made in cash.  Participants  will have the  option to defer  awards  into the
Deferred Compensation Plan discussed below. The plan will be administered by the
Compensation Committee.

**Deferred Compensation Plan**

     The Deferred  Compensation  Plan for executives was adopted by our Board of
Directors in January 2001.  Participation  in the plan is restricted to a select
group of management  employees.  Under this plan,  participating  executives are
allowed to defer payment of  compensation  awarded as long-term  incentive  plan
compensation  until a date elected by the executive in accordance with the plan.
The plan  generally  allows  payment  in the  form of a  single  lump sum or ten
substantially  equal annual  installments  following  the date of payment.  A.G.
Edwards Trust Company acts as trustee for the plan, which is administered by the
Compensation Committee.

**401(k) Plan**

     We have  established  a 401(k) plan  covering  substantially  all employees
meeting  certain minimum  service  requirements.  The plan allows all qualifying
employees to contribute up to 20 percent of employee compensation limited to the
tax deferred  contribution  allowable by the Internal Revenue Code. We match 100
percent  of  the  employee's  contribution  up  to  three  percent  of  employee
compensation  and 50  percent of the  employee's  next two  percent of  employee
compensation,   for  a  maximum  company  match  of  four  percent  of  employee
compensation.  Effective  January 1, 2000,  the 401(k) plan was  amended  from a
three-year cliff-vesting period to a 100 percent immediate vesting.

**Severance Plan**

     We have  established  an Executive  Level  Severance  Pay Plan covering our
executive  employees,  which can be  terminated  by our  Board at any time.  The
purpose of the Plan is to provide  eligible  employees  with base severance pay,
supplemental  severance pay and supplemental  severance benefits for a specified
period of time in the event that their  employment is  involuntarily  terminated
other than for good reason. Under the Plan dated December 1, 1999, those persons
serving as Chief Executive  Officer,  President and Chief Financial  Officer are
entitled to receive the following benefits upon termination of the employment:

     •    Base severance pay equal to two weeks pay

     •    Supplemental severance pay equal to fifty weeks of pay

     •    Continuation of health benefits coverage for fifty-two weeks following
          termination.

     Severance  pay under the Plan is generally  payable in a lump sum following
the date of termination.  Supplemental  severance pay and continuation of health
benefits,  however,  are conditioned upon the employee's  execution of a general
waiver and release agreement,  and supplemental  severance pay will be paid only
after execution of that agreement.

**Special Executive Retirement Plan**

     We have adopted a nonqualified, unfunded special executive retirement plan.
The following table shows the approximate  annual  retirement  benefits that Mr.
James  and Mr.  Null are  expected  to  receive  based on their pay and years of
credited  service.  Mr.  Meyer,  Mr.  Manly and Mr.  Lightstone  are expected to
receive  approximately twice the annual retirement benefits shown below based on
their pay and years of credited service.

                                       31

**Special Executive Retirement Plan Table

                                          Years of Service
                        -----------------------------------------------------
   Remuneration             15         20         25         30         35
  --------------        ---------  ---------  ---------  ---------  ---------**
    $ 125,000           $  37,500  $  50,000  $  62,500  $  75,000  $  87,500
      150,000              45,000     60,000     75,000     90,000    105,000
      175,000              52,500     70,000     87,500    105,000    122,500
      200,000              60,000     80,000    100,000    120,000    140,000
      225,000              67,500     90,000    112,500    135,000    157,500
      250,000              75,000    100,000    125,000    150,000    175,000
      300,000              90,000    120,000    150,000    180,000    210,000
      400,000             120,000    160,000    200,000    240,000    280,000

     The  benefits  in the above  table are  annual  amounts  payable in monthly
installments  as single life  annuities  starting  at age 62, the plan's  normal
retirement age.  Benefits are payable as an annuity or a lump sum.  Benefits are
based on the  executive's  final three  calendar  years' base salary,  including
amounts  deferred  to the 401(k)  plan or  cafeteria  plan.  An  executive  must
complete  five years of service  after  January 1,  2000,  to be  entitled  to a
benefit.  Benefits  vest upon a change in  control of  Premium  Standard  Farms.
Benefits shown above are offset by one-half of the Social Security benefits paid
or  payable  at age 62  attributable  to  years  of  service  with us and by any
retirement  benefits  paid or payable  under any  ContiGroup  qualified  defined
benefit pension plan.

     Credited service for benefit  determination  purposes as of March 29, 2003,
is  shown  below  for  each  of the  executive  officers  named  in the  summary
compensation table above:

                                                       **Years of
                            Name                       Service
                 -----------------------               --------**
                 John M. Meyer.................            4
                 Robert W. Manly...............            6
                 Stephen A. Lightstone.........            4
                 David H. James................            4
                 Jere Null.....................            2

**Item 12.  Security Ownership of Certain Beneficial Owners and Management**

     All of the issued and outstanding  capital stock of Premium  Standard Farms
is owned by PSF Group Holdings.

     The following table sets forth certain  information  regarding ownership of
the common  stock of PSF Group  Holdings as of April 30, 2003 by (i) each person
who is known by us to own beneficially more than 5% of the outstanding shares of
each class of stock,  (ii) each of our  directors,  (iii) each of the  executive
officers set forth in the Summary  Compensation  table above and (iv) all of our
directors and named executive officers as a group.

                                       32

**Shares Beneficially Owned(3)
                                                                --------------------------------------
                                                                                 Percent      Percent
Title of Class(1)   Name and Address of Beneficial Owner(2)        Number        of Class     of Total
------------------  ------------------------------------------  -------------   ---------     --------**
Class B Common      ContiGroup Companies, Inc.................  113,300.64        100.0         53.1
                    277 Park Avenue
                    New York, NY 10172
Class A Common      Putnam Investments........................   37,741.5389(4)    37.7         17.7
                    One Post Office Square
                    Boston, MA  02109
Class A Common      Morgan Stanley Dean Witter & Co...........   40,341.2161(5)    34.8         17.6
                    1221 Avenue of the Americas
                    New York, NY 10020
Class A Common      Oaktree Capital Management, LLC...........   16,491.49(6)      16.4          7.7
                    550 South Hope Street, 22nd Floor
                    Los Angeles, CA 90071
Class A Common      Prudential Funds..........................   10,016.66(7)      10.0          4.7
                    c/o State Street Bank & Trust
                    1 Heritage Drive
                    Quincy, MA 02171
Class A Common      Continental Assurance Company
                    Investment Fund...........................    7,422.47          7.4          3.5
                    CNA Plaza, 235
                    Chicago, IL 60685
Class B Common      John M. Meyer.............................    2,142.86(8)       2.1            *
Class B Common      Robert W. Manly...........................    1,714.29(8)       1.7            *
Class B Common      Stephen A. Lightstone.....................    1,571.43(8)       1.5            *
Class B Common      David H. James............................      571.43(8)         *            *
Class B Common      Jere Null.................................      571.43(8)         *            *
                    Michael J. Zimmerman......................         0              *            *
                    Ronald E. Justice.........................         0              *            *
                    Dean Mefford..............................         0              *            *
                    Maurice L. McGill.........................         0              *            *
                    Michael A. Petrick........................         0              *            *
                    Paul J. Fribourg..........................         0(9)           *            *
                    Vart K. Adjemian..........................         0              *            *
                    John Rakestraw............................         0              *            *
                    Annabelle Lundy Fetterman.................         0              *            *
                    All directors and executive officers as
                    a group (17 persons)......................   6,571.44(9)        6.0          2.9
----------

    *  Signifies less than 1%.

(1)  PSF Group  Holdings is authorized by its  certificate of  incorporation  to
     issue  250,000  shares of Class A Common Stock,  300,000  shares of Class B
     Common Stock and 10,000 shares of preferred stock.  Each class of stock has
     a par value of $0.01 per share. As of the date of this report on Form 10-K,
     PSF Group  Holdings  has  issued  100,000  shares of Class A Common  Stock,
     113,300.64 shares of Class B Common Stock and no shares of preferred stock.
     Holders  of Class A Common  Stock  and  Class B  Common  Stock  participate
     equally in all  distributions.  With the  exception of electing  Directors,
     holders of Class A Common Stock and Class B Common Stock vote together as a
     single class on all matters  presented for a stockholder  vote. The holders
     of Class A Common Stock vote as a separate  class to elect four of the nine
     members of the Board of  Directors  of PSF Group  Holdings.  The holders of
     Class B Common  Stock  vote as a  separate  class to elect five of the nine
     members of the Board of Directors.  PSF Group Holdings cannot take a number
     of actions  without  the  approval  of a  "supermajority"  of the Board.  A
     "supermajority"  is  defined  as a  majority  that  includes  at least  one
     Director  elected  by  holders  of Class A Common  Stock  and one  Director
     elected by holders of Class B Common Stock.

                                       33

(2)  Unless  otherwise  indicated,  the business address of the persons named in
     the above  table is care of  Premium  Standard  Farms,  Inc.,  423 West 8th
     Street, Suite 200, Kansas City, Missouri 64105.

(3)  Unless  otherwise  indicated,  each person has sole  investment  and voting
     power with respect to the shares listed in the table, subject to applicable
     community  property  laws. For purposes of this table, a person or group of
     persons is deemed to have  "beneficial  ownership" of any shares which such
     person has the right to acquire  within 60 days.  For purposes of computing
     the  percentage  of  outstanding  shares  held by each  person  or group of
     persons named above, any security which such person or group of persons has
     the right to  acquire  within 60 days is deemed to be  outstanding  for the
     purpose of computing the  percentage  ownership for such person or persons,
     but is not  deemed to be  outstanding  for the  purpose  of  computing  the
     percentage ownership of any other person. As a result, the denominator used
     in calculating the beneficial ownership among our shareholders may differ.

(4)  Consists of Class A Common Stock beneficially owned by the following Putnam
     funds  and  trusts:  (a)  Asset  Allocation  Funds  --  Balanced  Portfolio
     (128.85),  Asset  Allocation  Funds  --  Growth  Portfolio  (33.05),  Asset
     Allocation  Funds -- Conservative  Portfolio  (41.86),  Diversified  Income
     Portfolio/Smith  Barney/  Travelers  Series  Fund  (22.03),  and High Yield
     Managed  Trust  (305.29),  (b) by  Gerlach & Co.,  as Nominee  for  Capital
     Management  Trust -- PCM  Diversified  Income Fund (528.10),  Equity Income
     Fund (11.01),  High Yield Advantage Fund  (7,071.86),  Global  Governmental
     Income  Trust  (113.27),  Premier  Income  Trust  (2,502.48),   Convertible
     Opportunities and Income Trust (220.25),  High Income  Convertible and Bond
     Fund (334.30),  Master Intermediate Income Trust (715.33),  The George Fund
     of Boston (220.25),  Managed High Yield Trust (575.79),  Diversified Income
     Trust (9,799.68), Master Income Trust (1,003.86),  Capital Management Trust
     -- PCM High Yield Fund  (1,578.53),  High Yield Trust  (11,857.08),  Income
     Fund (440.51),  Balanced  Retirement Fund (110.13),  and High Yield Managed
     Trust (49.00),  (c) by Bost & Co.,  Nominee for the High Yield Fixed Income
     Trust (77.6489) and Ameritech Pension Trust (1.38).

(5)  Consists of 24,260.6961 shares of Class A Common Stock and 16,080.52 shares
     of Class A Common Stock  issuable  upon  exercise of presently  exercisable
     warrants.  The shares of Class A Common Stock are held by:  Morgan  Stanley
     Dean Witter & Co.  (21,126.64),  Morgan Stanley & Co., Inc.  (778.73),  the
     Morgan Stanley Leveraged Equity Fund II, L.P. (1,056.8054),  Morgan Stanley
     Capital  Investors,  L.P.  (44.4981),  Morgan Stanley Capital Partners III,
     L.P. (1,113.1667),  MSCP III 892 Investors,  L.P. (140.8559).  The warrants
     are held by  Morgan  Stanley  Leveraged  Equity  Funds and  Morgan  Stanley
     Capital III Partners.

(6)  Consists of shares of Class A Common Stock held by OCM Opportunities  Fund,
     L.P.  (11,210.87),  Hare & Co. (4,697.52),  Columbia/HCA  Master Retirement
     Trust (467.10) and Jefco (116.00).

(7)  Consists of shares of Class A Common Stock held by Gimlet & Co. (9,517.17),
     Deerway & Co. (279.24) and IFTCO (220.25).

(8)  Consists  of shares  of Class B Common  Stock  issuable  upon  exercise  of
     presently exercisable options.

(9)  Excludes shares owned by ContiGroup Companies, Inc.

     For  information  concerning  securities  authorized for issuance under our
equity  compensation  plans,  see "Market  for  Registrant's  Common  Equity and
Related Stockholder Matters" and "Executive Compensation."

**Item 13.  Certain Relationships and Related Transactions**

     In connection with our acquisition of The Lundy Packing  Company,  we lease
farm land and hog production  buildings from Goshen Ridge Farms,  LLC, a company
owned by Annabelle Lundy Fetterman,  who is one of our directors, and members of
her family, under a capital lease agreement.  The capital lease obligation as of
March 29, 2003 was $2.0 million.

     We have entered into a contract grower agreement with ContiGroup related to
approximately 7,200 acres of farms used in our Missouri  operations.  Under that
agreement,  ContiGroup owns the real property at the farms. ContiGroup serves as
an independent  contractor in breeding and growing our hogs to market weight. In
exchange,

                                       34

we pay to  ContiGroup a fee for labor and  services  incurred by  ContiGroup  in
performing its  obligations  under the  agreement.  During the fiscal year ended
March 29,  2003,  the  amount  paid for  obligations  under this  agreement  was
approximately  $4.0 million.  The agreement will generally continue in effect so
long as  ContiGroup  continues to own an equity  interest in our  company.  Upon
termination of the agreement,  we have an option to acquire the real property at
the farms from ContiGroup, which can be assigned to third parties.

     We receive the  services  of Mr.  Schulte  and other  personnel  through an
agreement  with  ContiGroup.  Mr.  Schulte,  as well  as  other  personnel,  are
employees of ContiGroup but provide  services to us as well as other  affiliates
of  ContiGroup.  Other  services  from  ContiGroup  include  the  assistance  of
purchasing and risk management  staff,  environmental  consulting,  treasury and
strategic  planning.  We pay  ContiGroup  a monthly fee for these  services.  We
negotiate the fee annually.  In addition,  we reimburse ContiGroup for a portion
of Mr. Schulte's annual bonus and long-term  incentive  payment.  For the fiscal
year ended March 29, 2003, the amount paid for all services was $1.3 million. We
also provide Mr.  Schulte with the use of a rental car, and since July 2000,  we
provide him with an annual  allowance  of  approximately  $15,000 for travel and
housing.

**Item 14.  Controls & Procedures**

     (a)  Evaluation of disclosure controls and procedures.

     Within 90 days prior to the filing  date of this  report  (the  "Evaluation
Date"),  the Company  carried out an evaluation,  under the supervision and with
the  participation  of the Company's  management,  including the Company's chief
executive officer and its chief financial  officer,  of the effectiveness of the
design  and  operation  of the  Company's  disclosure  controls  and  procedures
pursuant to Rule 13a-14 of the  Securities  Exchange Act of 1934 (the  "Exchange
Act").  Based  upon that  evaluation,  the  chief  executive  officer  and chief
financial  officer  concluded  that as of the  Evaluation  Date,  the  Company's
disclosure  controls  and  procedures  (as defined in Rule  13a-14(c)  under the
Exchange Act) are effective to ensure that information  required to be disclosed
by the Company in reports  that it files or submits  under the  Exchange  Act is
recorded,  processed,  summarized and reported within the time periods specified
in Securities and Exchange Commission rules and forms.

     (b)  Changes in internal controls.

     There were no significant  changes in the Company's internal controls or in
other factors that could  significantly  affect these controls subsequent to the
date of their most recent evaluation nor were there any significant deficiencies
or material weaknesses in the Company's internal controls.

                                       35

**PART IV****Item 15.  Exhibits, Financial Statements Schedules, and Reports on Form 8-K.**

     (a)       Financial Statements and Schedules

          (1)  The following  financial  statements  are filed as a part of this
               Report on Form 10-K:

               Report of Independent Public Accountants

               Consolidated  Balance  Sheets as of March 29,  2003 and March 30,
                    2002

               Consolidated  Statements of Operations and  Comprehensive  Income
                    for the three years ended March 29, 2003, March 30, 2002 and
                    March 31, 2001

               Consolidated  Statements  of  Shareholders'  Equity for the three
                    years  ended  March 29,  2003,  March 30, 2002 and March 31,
                    2001

               Consolidated  Statements  of Cash Flows for the three years ended
                    March 29, 2003, March 30, 2002 and March 31, 2001

               Notes to the Consolidated Financial Statements

          (2)  The following  financial statement schedule is filed as a part of
               this Report on Form 10-K:

**Schedule II
Valuation and Qualifying Accounts
(Dollars in thousands)****Balance at
                                    beginning of   Charged to                  Less:       Balance at end
Description                             year        earnings     Other       Deduction         of year
--------------------------------  ------------------------------------------------------------------------**

Allowance for Losses
  on Accounts Receivable:
                            2003        $680.5      $ 137.2     $    -        $ 277.4           $ 540.3
                            2002         663.6        129.3          -          112.4             680.5
                            2001         183.5        180.2      416.9          117.0             663.6

          (b)  Reports on Form 8-K

               A Current  Report on Form 8-K was filed with the SEC on  February
               11, 2003, to report,  under Item 5, our third  quarter  earnings.
               The  earnings  release,   including  the  registrant's  Unaudited
               Condensed Consolidated Statements of Operations for the 13 and 39
               weeks ended December 28, 2002 and December 29, 2001, was filed as
               Exhibit 99.1 to the Current Report on Form 8-K.

          (c)  Exhibits

               The following exhibits are filed as a part of this Report on Form
               10-K or incorporated herein by reference as indicated below:

                                       36

**Exhibit
          Number                      Description of Exhibit
          -------   ------------------------------------------------------------**

          2.1       Articles of Merger of PSF  Acquisition  Corp. into The Lundy
                    Packing Company, filed August 25, 2000. (1)

          2.2       Stock Purchase  Agreement,  dated September 22, 2000, by and
                    among Premium Standard Farms, Inc., PSF Group Holdings, Inc.
                    and ContiGroup Companies, Inc. (1)

          3.1(a)    Certificate of  Incorporation  of PSF Group Holdings,  Inc.,
                    filed May 8, 1998. (1)

          3.1(b)    Certificate of Amendment of Certificate of  Incorporation of
                    PSF Group Holdings, Inc., filed September 16, 1994. (1)

          3.2       Amended and Restated By-laws of PSF Group Holdings, Inc. (1)

          4.1(a)    Indenture,  dated as of June 4, 2001, among Premium Standard
                    Farms,  Inc.,  PSF Group  Holdings,  Inc., The Lundy Packing
                    Company,  Lundy International,  Inc., Premium Standard Farms
                    of North Carolina, Inc., and Wilmington Trust Company. (1)

          4.1(b)    Specimen certificate of 91/4% Senior Notes due 2011. (1)

          4.1(c)    First Supplemental Indenture dated as of March 31, 2002. (3)

          4.2       Registration Rights Agreement, dated June 4, 2001, among PSF
                    Group Holdings,  Inc.,  Premium  Standard  Farms,  Inc., The
                    Lundy Packing Company,  Lundy  International,  Inc., Premium
                    Standard Farms of North Carolina, Inc., Morgan Stanley & Co.
                    Incorporated and J.P. Morgan Securities Inc. (1)

          4.3(a)    Credit  Agreement,  dated  August 27,  1997,  by and between
                    Premium  Standard  Farms,  Inc. and FBS Ag Credit,  Inc., as
                    Agent for Itself and Certain Other Lenders. (1)

          4.3(b)    First Amendment to Credit Agreement dated May 13, 1998. (1)

          4.3(c)    Second  Amendment to Credit  Agreement,  dated  February 26,
                    1999. (1)

          4.3(d)    Third Amendment to Credit  Agreement,  dated August 1, 2000.
                    (1)

          4.3(e)    Fourth Amendment to Credit Agreement, dated August 21, 2000.
                    (1)

          4.3(f)    Fifth  Amendment to Credit  Agreement,  dated  September 22,
                    2000. (1)

          4.3(g)    Sixth Amendment to Credit  Agreement,  dated as of March 31,
                    2002. (3)

          4.3(h)    Guaranty  Agreement,  dated May 13, 1998, by and between PSF
                    Group  Holdings,  Inc. and U.S.  Bancorp Ag Credit,  Inc. as
                    Agent for Itself and Certain Other Lenders. (1)

          4.3(i)    Seventh Amendment to Credit Agreement,  dated June 28, 2002.
                    (4)

                                       37

          4.3(j)    Eighth Amendment to Credit Agreement,  dated as of September
                    27, 2002. (5)

          10.1*     PSF Group Holdings,  Inc. 1999 Equity  Incentive Plan, dated
                    December 1, 1999. (1)

          10.2*     Premium  Standard  Farms,  Inc.  Long-Term  Incentive  Plan,
                    effective April 1, 2001 through March 31, 2005. (2)

          10.3*     Premium Standard Farms, Inc. Executive Level Severance Plan,
                    dated December 1, 1999. (1)

          10.4*     Premium Standard Farms,  Inc. Vice President Level Severance
                    Plan, dated December 1, 1999. (1)

          10.5*     Premium Standard Farms,  Inc. Special  Executive  Retirement
                    Plan, dated January 1, 2000. (1)

          10.6(a)*  Premium Standard Farms,  Inc.  Deferred  Compensation  Plan,
                    dated December 29, 2000. (1)

          10.6(b)*  Amendment  No. 1 to the Deferred  Compensation  Plan,  dated
                    June 8, 2001. (1)

          10.7*     Services  Agreement,  dated  October,  1998,  by and between
                    Premium Standard Farms,  Inc. and Continental Grain Company.
                    (1)

          10.8      Consulting Agreement, dated December 9, 1999, by and between
                    ContiGroup Companies,  Inc. and Premium Standard Farms, Inc.
                    (1)

          10.9      Market Hog Contract Grower Agreement,  dated May 3, 1998, by
                    and  between   Continental   Grain  Company  and  CGC  Asset
                    Acquisition Corp. (1)

          21.1      Subsidiaries of the Registrant.

          24.1      Power of Attorney (see signature page).

----------

     *    Indicates management or compensatory plan or contract.

     (1)  Incorporated  by reference to the  Registration  Statement on Form S-4
          (Commission File No. 333-64180),  filed by the Registrant with the SEC
          on June 29, 2001.

     (2)  Incorporated  by  reference  to  Amendment  No. 1 to the  Registration
          Statement on Form S-4 (Commission  File No.  333-64180),  filed by the
          Registrant with the SEC on August 10, 2001.

     (3)  Incorporated  by  reference  to the Form 10-K for the year ended March
          30, 2002 filed by the Registrant with the SEC on May 14, 2002.

     (4)  Incorporated  by reference to the Form 10-Q for the quarter ended June
          29, 2002 filed by the Registrant with the SEC on August 8, 2002.

     (5)  Incorporated by reference to the Form 8-K filed by the Registrant with
          the SEC on October 1, 2002.

                                       38

**SIGNATURES**

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                             PSF GROUP HOLDINGS, INC.

June 3, 2003                                 /s/ John M. Meyer
----------------------                       -----------------------------------
Date                                         John M. Meyer,
                                             Chief Executive Officer
                                             (Principal Executive Officer)

                                       39

     Each  individual  whose  signature  appears  below  hereby  designates  and
appoints John M. Meyer, Stephen A. Lightstone and Gerard J. Schulte, and each of
them,  for him or her and in his or her name,  place and  stead,  in any and all
capacities,  to  file  on  behalf  of  PSF  Group  Holdings,  Inc.,  a  Delaware
corporation  (the  "Company"),  the Company's Annual Report on Form 10-K for the
fiscal year ended March 29, 2003 (the "Annual Report"),  with the Securities and
Exchange  Commission  (the  "Commission"),   to  sign  any  and  all  subsequent
amendments  to the Annual  Report (the  "Amendments"),  to file any and all such
Amendments with the Commission,  with all exhibits to the Annual Report and such
Amendments,  together with any and all other documents in connection  therewith,
and to appear before the  Commission in connection  with any matter  relating to
such Annual Report and such Amendments, hereby granting to the attorneys-in-fact
and agents, and each of them, full power and authority to do and perform any and
all acts and things requisite and necessary to be done in and about the premises
as fully  and to all  intents  and  purposes  as he or she  might or could do in
person,  hereby  ratifying and  confirming all that such  attorneys-in-fact  and
agents, or any of them, may lawfully do or cause to be done by virtue hereof.

     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned, thereunto duly authorized.

             **Signature****Title****Date**

/s/ John M. Meyer                     Chief Executive Officer and Director        June 3, 2003
---------------------------------     (Principal Executive Officer)
           John M. Meyer

/s/ Stephen A. Lightstone             Chief Financial Officer                     June 3, 2003
---------------------------------     (Principal Financial Officer)
       Stephen A. Lightstone

/s/ Michael J. Zimmerman              Director                                    June 3, 2003
---------------------------------
       Michael J. Zimmerman

/s/ Ronald E. Justice                 Director                                    June 3, 2003
---------------------------------
         Ronald E. Justice

/s/ Dean Mefford                      Director                                    June 3, 2003
---------------------------------
           Dean Mefford

/s/ Vart K. Adjemian                  Director                                    June 3, 2003
---------------------------------
         Vart K. Adjemian

/s/ Maurice L. McGill                 Director                                    June 3, 2003
---------------------------------
         Maurice L. McGill

/s/ Michael A. Petrick                Director                                    June 3, 2003
---------------------------------
        Michael A. Petrick

/s/ Paul J. Fribourg                  Director                                    June 3, 2003
---------------------------------
         Paul J. Fribourg

                                       40

**CERTIFICATIONS**

I, John M. Meyer, certify that:

1.   I have  reviewed  this  annual  report on Form 10-K of PSF Group  Holdings,
     Inc.;

2.   Based on my  knowledge,  this  annual  report  does not  contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this annual report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information included in this annual report,  fairly present in all material
     respects the financial  condition,  results of operations and cash flows of
     the registrant as of, and for, the periods presented in this annual report;

4.   The  registrant's  other  certifying  officers  and I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a)   designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within those
          entities,  particularly  during the period in which this annual report
          is being prepared;

     b)   evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this annual report (the "Evaluation Date"); and

     c)   presented   in  this   annual   report  our   conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's other certifying  officers and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of  registrant's  board of directors (or persons  performing  the
     equivalent function):

     a)   all  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and

     b)   any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and

6.   The  registrant's  other  certifying  officers and I have indicated in this
     annual  report  whether or not there were  significant  changes in internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.

Date:  June 3, 2003

                                             /s/ John M. Meyer
                                             -----------------------------------
                                             John M. Meyer
                                             Chief Executive Officer
                                             (Principal Executive Officer)

                                       41

I, Stephen A. Lightstone, certify that:

1.   I have  reviewed  this  annual  report on Form 10-K of PSF Group  Holdings,
     Inc.;

2.   Based on my  knowledge,  this  annual  report  does not  contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this annual report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information included in this annual report,  fairly present in all material
     respects the financial  condition,  results of operations and cash flows of
     the registrant as of, and for, the periods presented in this annual report;

4.   The  registrant's  other  certifying  officers  and I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a)   designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within those
          entities,  particularly  during the period in which this annual report
          is being prepared;

     b)   evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this annual report (the "Evaluation Date"); and

     c)   presented   in  this   annual   report  our   conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's other certifying  officers and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of  registrant's  board of directors (or persons  performing  the
     equivalent function):

     a)   all  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and

     b)   any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and

6.   The  registrant's  other  certifying  officers and I have indicated in this
     annual  report  whether or not there were  significant  changes in internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.

Date:  June 3, 2003

                                             /s/  Stephen A. Lightstone
                                             -----------------------------------
                                             Stephen A. Lightstone
                                             Chief Financial Officer
                                             (Principal Financial Officer)

                                       42

**INDEX TO CONSOLIDATED FINANCIAL STATEMENTS****Page
                                                                            ----**
Report of Independent Public Accountants.....................................F-2

Consolidated Balance Sheets as of March 29, 2003 and March 30, 2002..........F-4

Consolidated Statements of Operations and Comprehensive Income for the
   three years ended March 29, 2003, March 30, 2002 and March 31, 2001.......F-6

Consolidated Statements of Shareholders' Equity for the three years
   ended March 29, 2003, March 30, 2002 and March 31, 2001...................F-7

Consolidated Statements of Cash Flows for the three years ended
   March 29, 2003, March 30, 2002 and March 31, 2001.........................F-8

Notes to the Consolidated Financial Statements...............................F-9

                                      F-1

**Report of independent public accountants**

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Shareholders of
PSF Group Holdings, Inc.
Kansas City, Missouri

We have audited the accompanying consolidated balance sheet of PSF Group
Holdings, Inc. and subsidiaries (the "Company") as of March 29, 2003, and the
related consolidated statements of operations and comprehensive income,
shareholders' equity, and cash flows for the year then ended. Our audit also
included the financial statement schedule, as of and for the year ended March
29, 2003 listed at Item 15. These financial statements and financial statement
schedule are the responsibility of the Company's management. Our responsibility
is to express an opinion on the financial statements and financial statement
schedule based on our audit. The consolidated financial statements and financial
statement schedule of the Company as of March 30, 2002 and March 31, 2001, and
for the years ended March 30, 2002 and March 31, 2001, before the inclusion of
the reclassifications discussed in Note 1 to the consolidated financial
statements, were audited by other auditors who have ceased operations. Those
auditors expressed an unqualified opinion on those financial statements and
stated that such March 30, 2002 and March 31, 2001 financial statement schedule,
when considered in relation to the March 30, 2002 and March 31, 2001 basic
consolidated financial statements taken as a whole, present fairly, in all
material respects, the information set forth therein, in their report dated May
3, 2002 which included an explanatory paragraph for the change in method of
accounting for derivative financial instruments and goodwill.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of the Company as of
March 29, 2003, and the results of their operations and their cash flows for the
year then ended, in conformity with accounting principles generally accepted in
the United States of America. Also, in our opinion, the March 29, 2003 financial
statement schedule, when considered in relation to the basic consolidated
financial statements taken as a whole presents fairly, in all material respects,
the information set forth therein.

As discussed above, the consolidated financial statements of the Company for the
years ended March 30, 2002 and March 31, 2001 were audited by other auditors who
have ceased operations. As described in Note 1, the financial statements for the
year ended March 30, 2002 have been reclassified to give effect to Statement of
Financial Accounting Standards No. 145, "Rescission of FASB Statements No. 4,
44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections"
("SFAS 145"), which was adopted by the Company on March 29, 2003. We audited the
adjustments described in Note 1 that were applied to conform the March 30, 2002
financial statements to the presentation required by SFAS 145. Our audit
procedures with respect to the March 30, 2002 disclosures in Note 1 included (1)
comparing the amounts shown as loss on early extinguishment of debt, net of tax
in the Company's consolidated statements of operations to the Company's
underlying accounting analysis obtained from management, (2) comparing the
amounts comprising the loss on early extinguishment of debt and related income
tax benefit to independent supporting documentation obtained from management,
and (3) testing the mathematical accuracy of the underlying analysis. In our
opinion, such reclassifications have been properly applied. However, we were not
engaged to audit, review, or apply any procedures to the March 30, 2002 and
March 31, 2001 financial statements of the Company other than with respect to
such reclassifications and, accordingly, we do not express an opinion or any
form of assurance on the March 30, 2002 and March 31, 2001 financial statements
taken as a whole.

/s/ DELOITTE & TOUCHE LLP

Kansas City, Missouri
May 12, 2003

                                      F-2

**Report of independent public accountants**

To the Shareholders of
PSF Group Holdings, Inc.:

We have audited the accompanying consolidated balance sheets of PSF Group
Holdings, Inc. (a Delaware corporation) and Subsidiaries (the Company), as of
March 30, 2002 and March 31, 2001, and the related consolidated statements of
operations and comprehensive income, shareholders' equity and cash flows for
each of the three years in the period ended March 30, 2002. These financial
statements and schedule referred to below are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and schedule based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of PSF Group Holdings, Inc. and
Subsidiaries, as of March 30, 2002, and March 31, 2001, and the results of their
operations and their cash flows for each of the three years in the period ended
March 30, 2002, in conformity with accounting principles generally accepted in
the United States.

As explained in Note 13 to the financial statements, effective April 1, 2001,
the Company changed its methods of accounting for derivatives and goodwill.

Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The schedule of valuation and qualifying accounts
included in Item 14 is presented for purposes of complying with the Securities
and Exchange Commission's rules and is not part of the basic financial
statements. This schedule has been subjected to the auditing procedures applied
in the audit of the basic financial statements and, in our opinion, fairly
states in all material respects the financial data required to be set forth
therein in relation to the basic financial statements taken as a whole.

/s/ ARTHUR ANDERSEN LLP(1)

Kansas City, Missouri,
May 3, 2002

(1)  This report is a copy of the previously issued report covering fiscal years
2002, 2001 and 2000. The predecessor auditors have not reissued their report.

                                      F-3

**PSF Group Holdings, Inc. and Subsidiaries**

Consolidated balance sheets
March 29, 2003, and March 30, 2002
(in thousands, except share information)

                                                                  2003             2002
                                                               ----------       ---------
ASSETS
------
CURRENT ASSETS:
  Cash and cash equivalents                                    $    -           $   7,182
  Accounts receivable, less allowance of $540 and $680 in
    2003 and 2002, respectively                                   21,907           21,332
  Inventories                                                    158,402          141,165
  Federal income tax receivable                                    4,525            3,319
  Deferred income taxes                                           13,064           15,680
  Prepaid expenses and other                                       2,341            2,158
                                                               ---------        ---------
         Total current assets                                    200,239          190,836

PROPERTY, PLANT, EQUIPMENT AND BREEDING STOCK:
  Land and improvements                                          100,510           95,349
  Buildings                                                      293,538          292,154
  Machinery and equipment                                        266,268          251,664
  Breeding stock                                                  36,672           38,126
  Construction in progress                                         4,287           16,306
                                                               ---------        ---------
                                                                 701,275          693,599
  Less- Accumulated depreciation                                 213,314          166,591
                                                               ---------        ---------
         Total property, plant, equipment and breeding stock     487,961          527,008

GOODWILL                                                          75,998           75,998

OTHER LONG-TERM ASSETS:
  Deferred financing costs, net                                    7,085            7,241
  Other                                                            7,779            6,556
                                                               ---------        ---------
         Total other long-term assets                             14,864           13,797
                                                               ---------        ---------
         Total assets                                          $ 779,062        $ 807,639
                                                               =========        =========
(continued)

                                      F-4

**PSF Group Holdings, Inc. and Subsidiaries**

Consolidated balance sheets
March 29, 2003, and March 30, 2002
(in thousands, except share information)
(continued)

                                                                                     2003             2002
                                                                                ---------------  ---------------
LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
  Checks issued against future deposits                                          $     5,129      $      -
  Accounts payable                                                                     6,581            8,385
  Accrued expenses                                                                    28,576           29,494
  Due to related party                                                                   979            1,317
  Accrued interest                                                                     6,178            4,914
  Current maturities of long-term debt and capital leases                             13,273           26,629
                                                                                ---------------  ---------------
         Total current liabilities                                                    60,716           70,739

LONG-TERM LIABILITIES:
  Long-term debt and capital leases, less current maturities                         291,911          246,153
  Other long-term liabilities                                                          6,345            8,243
  Due to related party                                                                  -                 921
  Deferred income taxes                                                               75,795           98,016
                                                                                ---------------  ---------------
         Total long-term liabilities                                                 374,051          353,333
                                                                                ---------------  ---------------
         Total liabilities                                                           434,767          424,072

SHAREHOLDERS' EQUITY:
  Preferred stock, $.01 par value, 10,000 shares authorized,
    no shares issued or outstanding                                                     -                -
  Class A common stock, $.01 par value; 250,000 shares authorized, 100,000
    shares issued and outstanding                                                          1                1
  Class B common stock, $.01 par value; 300,000 shares authorized, 113,301
    shares issued and outstanding                                                          1                1
  Additional paid-in capital                                                         373,693          373,673
  Accumulated other comprehensive income, net of tax                                    (347)             345
  Retained earnings (deficit)                                                        (29,053)           9,547
                                                                                ---------------  ---------------
         Total shareholders' equity                                                  344,295          383,567
                                                                                ---------------  ---------------
         Total liabilities and shareholders' equity                              $   779,062      $   807,639
                                                                                ===============  ===============

The  accompanying  notes are an integral  part of these  consolidated  financial
statements.

                                      F-5

**PSF Group Holdings, Inc. and Subsidiaries**

Consolidated statements of operations and comprehensive income
For the fiscal years ended
March 29, 2003, March 30, 2002 and March 31, 2001
(in thousands)

                                                                  2003           2002           2001
                                                             -------------- --------------  ------------

NET SALES                                                     $    608,414   $    674,946    $  540,576

COST OF GOODS SOLD                                                 631,870        589,183       456,184
                                                             -------------- --------------  ------------
         Gross profit                                              (23,456)        85,763        84,392

OPERATING EXPENSES:
  Selling, general and administrative expenses                      18,267         21,551        19,413
  Amortization expense                                                -              -            2,436
  Other (income) expense, net                                       (2,293)          (558)        1,210
                                                             -------------- --------------  ------------
         Total operating expenses                                   15,974         20,993        23,059
                                                             -------------- --------------  ------------
         Operating (loss) income                                   (39,430)        64,770        61,333

OTHER (EXPENSE) INCOME:
  Interest expense                                                 (24,000)       (20,835)      (24,885)
  Interest income                                                      255            431           933
  Loss on early extinguishment of debt                                -            (2,192)         -
                                                             -------------- --------------  ------------
         Other expense, net                                        (23,745)       (22,596)      (23,952)
                                                             -------------- --------------  ------------
         (Loss) income before income taxes                         (63,175)        42,174        37,381

INCOME TAX BENEFIT (EXPENSE):
  Current tax provision                                              5,411         (4,965)        1,458
  Deferred tax provision                                            19,164        (11,844)      (16,825)
                                                             -------------- --------------  ------------
         Income tax benefit (expense)                               24,575        (16,809)      (15,367)
                                                             -------------- --------------  ------------

NET (LOSS) INCOME                                             $    (38,600)  $     25,365    $   22,014
                                                             -------------- --------------  ------------

  Unrealized (loss) gain on interest rate swap, net of tax            (692)           345          -

                                                             -------------------------------------------
COMPREHENSIVE (LOSS) INCOME                                   $    (39,292)  $     25,710    $   22,014
                                                             ===========================================

The  accompanying  notes are an integral  part of these  consolidated  financial
statements.

                                      F-6

**PSF Group Holdings, Inc. and Subsidiaries**

Consolidated statements of shareholders' equity
For the fiscal years ended
March 29, 2003, March 30, 2002 and March 31, 2001
(in thousands)

                                                                Accumulated
                                                   Additional      Other        Retained
                                          Common    Paid-In    Comprehensive     Earnings
                                           Stock     Capital    Income (Loss)   (Deficit)       Total
                                         --------- ----------- --------------- ------------ --------------

BALANCE, March 25, 2000                   $     2   $ 357,498   $        -      $ (37,832)   $    319,668
  Issuance of common stock                     -       16,155            -            -            16,155
  Net income                                   -          -              -         22,014          22,014
                                         --------- ----------- --------------- ------------ --------------

BALANCE, March 31, 2001                   $     2   $ 373,653   $        -      $ (15,818)   $    357,837
  Net income                                   -          -              -         25,365          25,365
  Unrealized gain on interest rate swap        -          -              345          -               345
  Other                                        -           20            -            -                20
                                         --------- ----------- --------------- ------------ --------------

BALANCE, March 30, 2002                   $     2   $ 373,673   $        345    $   9,547    $    383,567
  Net loss                                    -           -              -        (38,600)        (38,600)
  Unrealized loss on interest rate swap       -           -             (692)         -              (692)
  Other                                       -            20            -            -                20
                                         --------- ----------- --------------- ------------ --------------

BALANCE, March 29, 2003                   $     2   $ 373,693   $       (347)   $ (29,053)   $    344,295
                                         ========= =========== =============== ============ ==============

The  accompanying  notes are an integral  part of these  consolidated  financial
statements.

                                      F-7

**PSF Group Holdings, Inc. and Subsidiaries**

Consolidated statements of cash flows
For the fiscal years ended
March 29, 2003, March 30, 2002 and March 31, 2001
(in thousands)

                                                                               2003          2002           2001
                                                                          -------------  ------------  -------------

OPERATING ACTIVITIES:
  Net (loss) income                                                        $   (38,600)   $   25,365    $    22,014
  Adjustments to reconcile net (loss) income to net cash
    provided by operating activities-
      Depreciation and amortization                                             61,508        56,054         50,959
      Amortization of deferred financing costs                                   1,546         1,209            738
      Deferred income taxes                                                    (19,164)        9,946         16,825
      Net loss (gain) on sale of fixed assets                                    1,298        (4,950)        (3,763)
      Changes in operating assets and liabilities, net-
        Accounts receivable                                                       (575)        4,417         (2,084)
        Inventories                                                            (17,237)      (13,337)        (6,463)
        Prepaid expenses and other assets                                       (1,559)       10,066        (13,271)
        Accounts payable, accrued expenses and other liabilities                (4,597)       (8,255)          (575)
                                                                          -------------  ------------  --------------
                   Net cash (used in) provided by operating activities         (17,380)       80,515         64,380
                                                                          -------------  ------------  --------------

INVESTING ACTIVITIES:
  Acquisition of Lundy, net of cash acquired                                      -             -           (98,206)
  Acquisition of PSFNC, net of cash acquired                                      -             -           (16,239)
  Investment in joint venture                                                   (2,184)         -              -
  Purchases of property, plant, equipment and breeding stock                   (35,505)      (96,232)       (43,224)
  Proceeds from disposal of property, plant, equipment and breeding stock       11,745        14,931         11,677
                                                                          -------------  ------------  --------------
                   Net cash used in investing activities                       (25,944)      (81,301)      (145,992)
                                                                          -------------  ------------  --------------

FINANCING ACTIVITIES:
  Checks issued against future deposits                                          5,129          -              -
  Proceeds from long-term debt                                                    -          173,591        125,000
  Proceeds from (payments on) revolving debt, net                               46,530        13,269         (7,205)
  Payments for deferred financing costs                                         (1,390)       (4,749)        (2,701)
  Repayments on long-term debt                                                 (14,127)     (182,703)       (26,576)
                                                                          -------------  ------------  --------------
                   Net cash provided by (used in) financing activities          36,142          (592)        88,518
                                                                          -------------  ------------  --------------
                   Net (decrease) increase in cash and
                       cash equivalents                                         (7,182)       (1,378)         6,906

CASH AND CASH EQUIVALENTS, beginning of period                                   7,182         8,560          1,654
                                                                          -------------  ------------  --------------

CASH AND CASH EQUIVALENTS, end of period                                   $      -       $    7,182    $     8,560
                                                                          =============  ============  ==============

SUPPLEMENTAL DISCLOSURES:
  Interest paid                                                            $    18,699    $   20,462    $    21,980
  Income tax (received) paid                                                    (4,205)        7,890            716

The  accompanying  notes are an integral  part of these  consolidated  financial
statements.

                                      F-8

**PSF Group Holdings, Inc. and Subsidiaries

                   Notes to consolidated financial statements
                March 29, 2003, March 30, 2002 and March 31, 2001****1.****Summary of significant accounting policies:**Nature of operations

PSF Group Holdings, Inc. (Group) is incorporated in the state of Delaware. Group
has a wholly owned subsidiary, Premium Standard Farms, Inc. (PSF, Inc.). PSF,
Inc., and its subsidiaries are an integrated business engaged principally in the
business of hog production and pork processing and selling to domestic and
international markets. Group and PSF, Inc., collectively referred to as the
Company, succeeded the Continental Grain Company North Missouri Pork Operations
and PSF Holdings L.L.C. (Holdings) on May 13, 1998, pursuant to a stock purchase
transaction.

Fiscal year

The Company's fiscal year is the 52 or 53-week period, which ends on the last
Saturday in March. The accompanying consolidated statements of operations and
comprehensive income, statements of shareholders' equity and cash flows include
activity from the period of March 31, 2002, through March 29, 2003 (52 weeks),
April 1, 2001, through March 30, 2002 (52 weeks), and the period March 26, 2000,
through March 31, 2001 (53 weeks).

Principles of consolidation

The consolidated financial statements include the accounts of the Company and
its majority-owned subsidiaries. Entities in which the Company has ownership of
20 percent to 50 percent and does not control are accounted for using the equity
method. All significant intercompany balances and transactions have been
eliminated in consolidation.

Use of estimates

The preparation of consolidated financial statements in conformity with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the amounts reported in
the consolidated financial statements and accompanying notes. Actual results
could differ from those estimates.

Revenue recognition

Revenues from product sales are recorded when title to the goods and risks of
ownership has transferred to the customer, generally upon shipment. Net sales
reflect units shipped at selling prices reduced by certain sales allowances.

Cash and cash equivalents

The Company considers all highly liquid investments with a maturity of three
months or less to be cash equivalents. The carrying value of cash equivalents
approximates market value.

                                      F-9

Inventories

Inventories are valued at the lower of cost, determined on a first-in, first-out
(FIFO) basis, or market.

Inventories consist of the following at March 29 and March 30 (in thousands):

                                                       2003        2002
                                                    ---------   ---------
        Hogs                                         $142,675    $124,449
        Processed pork products                         9,568      10,704
        Packaging and supplies                          2,822       2,762
        Grain, feed additives and other                 3,337       3,250
                                                    ---------   ---------
                                                     $158,402    $141,165
                                                    =========   =========

Property, plant, equipment and breeding stock

Depreciation of property, plant, equipment and breeding stock is computed using
the straight-line method over the estimated useful lives of the assets as
follows:

                                                          Years
                                                         --------

                 Land improvements                       15 to 20
                 Buildings                               20 to 40
                 Machinery and equipment                  3 to 10
                 Breeding stock                                 3

Assets held under capital leases are classified as property, plant, equipment
and breeding stock and amortized over the lease terms. Lease amortization is
included in depreciation expense.

Maintenance, repairs and minor renewals are charged to operations while major
renewals and improvements are capitalized.

Depreciation expense relating to the Company's property, plant, equipment and
breeding stock amounted to $61,508,000, $56,054,000 and $48,523,000 for fiscal
years ended March 29, 2003, March 30, 2002, and March 31, 2001, respectively.

Impairment of fixed assets

Long-lived assets, primarily property, plant and equipment, are reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying value may not be recoverable. Recoverability of assets to be held and
used is measured by a comparison of the carrying value of the asset to future
net cash flows expected to be generated by the asset. If such assets are
considered to be impaired, the impairment to be recognized is measured by the
amount by which the carrying value of the assets exceeds the fair value of the
assets. Assets to be disposed of are reported at the lower of the carrying value
or fair value less costs to sell.

Market-risk management instruments

The Company uses price-risk management techniques to enhance sales and reduce
the effect of adverse price changes on the Company's profitability. The
Company's price-risk management and hedging activities currently are utilized in
the areas of forward grain sales and hog production margin management. The
Company's currently held commodity contracts do not qualify as hedges for
financial reporting purposes. These instruments are marked to market and
included in revenue or cost of goods sold in the consolidated statements of
operations and comprehensive income.

                                      F-10

The Company has entered into an interest rate swap agreement. The swap has been
designated as a cash flow hedge and qualifies for hedge accounting with the
changes in fair value recorded in other comprehensive income. See "Derivative
instruments and hedging activities" below.

Self-insurance programs

The Company is self-insured for certain levels of general and vehicle liability,
workers' compensation and health care coverage. The cost of these self-insurance
programs is accrued based upon estimated settlements for known and anticipated
claims incurred through the balance sheet date. Any resulting adjustments to
previously recorded reserves are reflected in current operating results.

Income taxes

The Company uses the liability method of accounting for income taxes. Under this
method, deferred income tax assets and liabilities are determined based on the
difference between financial reporting and income tax basis of assets and
liabilities using the enacted tax rates. The deferred income tax provision or
benefit is based on changes in the asset or liability from period to period.

Fair value of financial instruments

The fair value of long-term debt and capital leases is determined using quoted
market prices from interdealers. At March 29, 2003, and March 30, 2002, the fair
value of the Company's debt was $285,934,000 and $277,284,000, respectively,
with a carrying value of $305,184,000 and $272,782,000, respectively.

Accounts receivable, accounts payable and cash equivalents are carried at
historical cost, which approximates fair value.

Goodwill

Costs in excess of net assets acquired are classified as goodwill. The carrying
value of goodwill is reviewed annually for possible impairment. Beginning April
1, 2001, the Company used an estimate of fair value to determine whether
goodwill is impaired rather than an undiscounted cash flow approach adopted
under prior standards. See "Business combination, goodwill and intangible
assets" below.

Deferred financing costs

Costs associated with debt issuance and amendments of debt facilities are
capitalized and amortized using the interest method over the related debt
facility life. Accumulated amortization on deferred financing costs at March 29,
2003 and March 30, 2002 was $4,071,000 and $2,525,000, respectively.

Derivative instruments and hedging activities

On April 1, 2001, the Company adopted Financial Accounting Standards Board
Statement No. 133 (SFAS 133), "Accounting for Derivative Instruments and Hedging
Activities" requiring every derivative instrument be recorded in the balance
sheet as either an asset or liability at its fair value, and changes in a
derivative's fair value be recognized in current earnings or other comprehensive
income.

The Company believes that its exchange traded commodity contracts serve as
economic hedges, however, management has elected not to designate and account
for these contracts as hedges. Effective as of April 1, 2001, these contracts
were marked to market through earnings. On April 1, 2001, the Company recorded a
transition adjustment reflecting an unrealized loss on commodity contracts of
approximately $7,271,000 as a liability and a decrease to accumulated other
comprehensive income of $4,380,000, net of $2,920,000 in deferred taxes. For the
fiscal year ended March 30, 2002, the Company recorded $7,271,000 of this
liability as a reduction to gross profit as the related commodity contracts
expired during this period. Changes in the fair value of the existing commodity
contracts and those commodity contracts entered into subsequent to April 1,
2001, are recorded in the period in which they occur. For the fiscal years ended
March 29, 2003, March 30, 2002, and March 31, 2001, gains (losses) marked to

                                      F-11

market on commodity contracts recognized in revenue and cost of goods sold were
$524,000, ($13,625,000), and $1,720,000 respectively. At March 29, 2003, and
March 30, 2002, the fair value of the outstanding commodity contracts was
$1,509,000 and ($322,000), respectively.

During the fiscal year ended March 30, 2002, the Company entered into an
interest rate swap agreement in order to effectively convert the base interest
rate on the bank term note from variable to a fixed rate. The Company has
designated the interest rate swap as a cash flow hedge and for the fiscal years
ended March 29, 2003, and March 30, 2002, recorded ($567,000) and $565,000,
respectively, in the consolidated balance sheet relating to the fair value of
the swap. For the fiscal year ended March 29, 2003, the Company decreased
accumulated other comprehensive income by ($692,000), net of $440,000 in
deferred taxes and for the fiscal year ended March 30, 2002, increased
accumulated other comprehensive income by $345,000, net of $220,000 in deferred
taxes. The interest rate swap will mature on September 30, 2004.

Business combination, goodwill and intangible assets

On June 30, 2001, the Financial Accounting Standards Board issued its Statements
of Financial Accounting Standards Nos. 141 (SFAS 141), "Business Combinations"
and 142 (SFAS 142), "Goodwill and Intangible Assets," which establish reporting
and accounting standards for business combinations, goodwill and intangible
assets. SFAS 141 requires all business combinations after June 30, 2001, to be
accounted for using the purchase method. Under SFAS 142, companies no longer
amortize goodwill over the estimated useful life. Goodwill is assessed each year
for impairment by applying a fair value based test.

The Company early adopted these rules effective April 1, 2001. Assessment of the
fair value of the relevant reporting units was completed during the second
quarter, resulting in no impairment of recorded goodwill. Prior to April 1,
2001, goodwill was amortized over 30 years. The effect of discontinuing goodwill
amortization increased income before income taxes by approximately $2,741,000
for the fiscal years ended March 29, 2003 and March 30, 2002. Had SFAS 142 been
applied retroactively, the effect of discontinuing amortization of goodwill
would have resulted in adjusted net income (loss) of $24,450,000 for the fiscal
year ended March 31, 2001.

Stock-based compensation

The Company adopted the disclosure provisions of Statement of Financial
Accounting Standards No. 148 (SFAS 148), "Accounting for Stock-Based
Compensation - Transition and Disclosure, and amendment of FASB Statement No.
123." SFAS 148 requires prominent disclosures in both annual and interim
financial statements regarding the method of accounting for stock-based employee
compensation and the effect of the method used on report results.

In the fiscal year ended March 31, 2001, the Company's board of directors
authorized an equity incentive plan whereby options have been granted to senior
management for the purchase of 7,428 shares of Class B common stock at an
exercise price of $1,666.48 per share. Substantially all of the options are
fully exercisable at March 29, 2003. At December 31, 2005, 6,714 shares expire
and at December 31, 2007, 714 shares expire. No options have been exercised as
of March 29, 2003.

The Company records stock compensation in accordance with Accounting Principles
Board Opinion No. 25 (APB 25). For fiscal years ending March 29, 2003, March 30,
2002 and March 31, 2001, the Company recorded compensation expense of $20,000,
$20,000 and $5,000, respectively, in accordance with APB 25. The fair value of
stock options granted was calculated using the minimum value method as defined
in the Statement of Financial Accounting Standards No. 123 (SFAS 123). Under
SFAS 123, the pro forma net income is disclosed as if it reflected the estimated
fair value of options as compensation at the date of grant or issue over the
vesting period. For the fiscal years ended March 29, 2003, and March 30, 2002,
there was no pro forma expense as the effect of option grants are recorded in
the year of grant. For the fiscal year ended March 31, 2001, on a pro forma
basis, net income would have been reduced by approximately $2,683,000.

New accounting pronouncements

On June 30, 2001, the Financial Accounting Standards Board (FASB) issued its
Statement of Financial Accounting Standards No. 143 (SFAS 143), "Accounting for
Asset Retirement Obligations." SFAS 143 applies to legal obligations associated
with the retirement of long-lived assets that result from the acquisition,
construction,

                                      F-12

development, and the normal operation of long-lived assets. This
statement requires that the fair value of a liability for an asset retirement
obligation be recognized in the period in which it is incurred if a reasonable
estimate of fair value can be made. The associated asset retirement costs are
capitalized as part of the carrying amount of the long-lived asset. This
statement is effective for financial statements issued for fiscal years
beginning after June 15, 2002, and earlier application is encouraged. The
Company has determined that it has a legal obligation to close lagoons in the
future should the Company ever cease operations or plan to close lagoons
voluntarily in accordance with a changed operating plan. Based on estimates and
assumptions as to the cost and timing of any potential lagoon closure, the
Company has determined that the present value of the projected costs are not
considered material to the consolidated financial statements. However, should
laws, assumptions or other circumstances change which require lagoon closure
before the periods assumed in the present value calculations, the costs could
have a material impact on the consolidated financial statements in the period
the change occurs.

In April 2002, the FASB issued SFAS No. 145 (SFAS 145), "Rescission of FASB
Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
Corrections." SFAS Nos. 4 and 64 required gains and losses from extinguishment
of debt to be classified as extraordinary items. SFAS 145 rescinds this
requirement and stipulates that gains or losses on extinguishment of debt would
have to meet the criteria of APB Opinion No. 30 to be classified as an
extraordinary item. In addition, any extraordinary gains or losses on
extinguishment of debt in prior periods presented would require
reclassification. SFAS 145 is required, with early adoption encouraged, for
fiscal years beginning after May 15, 2002. The Company early adopted SFAS 145
during the fourth quarter of fiscal 2002 and as a result, reclassified the
$1,315,000 (net of a related tax benefit of $877,000) extraordinary loss from
the extinguishment of debt in the fiscal year 2002 consolidated statements of
earnings to other expense and income taxes.

In November 2002, the FASB issued Interpretation No. 45 (FIN 45), "Guarantor's
Accounting and Disclosure Requirements for Guarantees, including Indirect
Guarantees of Indebtedness of Others." FIN 45 supersedes Interpretation No. 34,
"Disclosure of Indirect Guarantees of Indebtedness of Others," and provides
guidance to guarantors on the recognition and disclosure concerning obligations
under certain guarantees in interim and annual financial statements. The initial
recognition and measurement provisions of FIN 45 are effective for guarantees
issued or modified after December 31, 2002, and are to be applied prospectively.
The disclosure requirements are effective for financial statements for interim
or annual periods ending after December 15, 2002. The adoption of FIN 45 did not
have a material impact on the Company's consolidated financial statements.

In January 2003, the FASB issued Interpretation No. 46 (FIN 46),
"Consolidation of Variable Interest Entities". FIN 46 applies to entities if its
total equity at risk is not sufficient to permit the entity to finance its
activities without additional subordinated support or if the equity investors
lack certain characteristics of a controlling financial interest. If an entity
is determined to meet those certain characteristics, FIN 46 requires a test to
identify the primary beneficiary based on expected losses and expected returns
associated with the variable interest. The primary beneficiary is then required
to consolidate the entity. The consolidation requirements apply to all variable
interest entities (VIEs) created after January 31, 2003. The Company must apply
the consolidation requirements for VIEs that existed prior to February 1, 2003
and remain in existence as of July 1, 2003. Management does not believe the
adoption of FIN 46 will have a material impact on the Company's consolidated
financial statements.

Risk factors

There are certain risk factors that can materially impact the Company's
business, financial condition and results of operations. These risks include
sensitivity to pork and hog prices, sensitivity to grain commodity prices,
environmental factors and legislation, changes in herd productivity and feed
efficiency, impact of disease, international market risks, competition,
restrictions under corporate farming laws, dependence on favorable labor
relations, pork product contamination and product liability claims, distribution
channels and consumer preferences.

**2.****Business acquisitions**

On August 25, 2000, the Company completed the stock acquisition of The Lundy
Packing Company and its affiliated companies (Lundy) for $67,200,000 in cash and
the assumption of approximately $31,000,000 in debt. Lundy is located in
Clinton, North Carolina, and operated a 6,500-head per day processing plant and
owned approximately 41,000 sows, the offspring of which are finished in a
combination of company-owned, contract and joint venture facilities.

                                      F-13

On September 22, 2000, the Company completed the stock acquisition of Premium
Standard Farms of North Carolina, Inc. (PSFNC) for a total purchase price of
$32,300,000, of which $16,150,000 was payable in cash and $16,150,000 was
payable by delivery of 9,219 shares of Class B common stock. A fairness opinion
was received from a third party related to the value of the transaction. PSFNC
was formerly a division of ContiGroup Companies, Inc. (CGC or ContiGroup), a
53.1 percent owner of Group, and owned approximately 25,000 sows, the offspring
of which are finished in company-owned, contract and joint venture facilities.
This stock issuance increased CGC's ownership in Group from 51.0 percent to 53.1
percent. Subsequent to the PSFNC acquisition, Lundy contributed its production
operations to PSFNC.

Both the Lundy and PSFNC transactions were accounted for under the purchase
accounting method with the corresponding assets and liabilities recorded at fair
value. Excess purchase price over the fair value of net assets acquired of
$21,036,000 for the transactions have been recorded as goodwill. As of March 30,
2002, and March 29, 2003, net goodwill associated with the Lundy and PSFNC
transactions amounted to $20,679,000.

Pro forma operating results

The following unaudited pro forma financial information assumes that both the
Lundy and PSFNC acquisitions described above occurred at the beginning of the
year ended March 31, 2001 (in thousands):

                               Unaudited Year-End
                             ----------------------
                                 March 31, 2001
                             ----------------------

             Net sales              $680,076
             Net income               19,260

The pro forma results are not necessarily indicative of the actual results that
would have been obtained had the acquisitions been made at the beginning of the
respective period or of results which may occur in the future.

**3.****Shareholders' equity**Common stock

There are two classes of common stock which Group can issue. Class A common
stock was issued to the holders of the outstanding units of Holdings. Class B
common stock was issued to CGC. Class A holders have the sole right to vote in
the election or for removal, without cause, of four Class A directors. Class B
holders have the sole right to vote in the election or for removal, without
cause, of five Class B directors. All distributions, dividends and liquidation
preferences are equal between the two classes of stock.

Preferred stock

The Company has authorized 10,000 shares at $.01 par value of preferred stock.
No shares have been issued or are outstanding. Terms of the preferred stock
including voting rights, dividend preference and other limitations or
restrictions have yet to be assigned.

Stockholder warrants

The Company has warrants outstanding entitling the holders to purchase 20,481.92
shares of Class A common stock at an exercise price of $2,205 per share. As of
March 29, 2003, all warrants were exercisable and none have been exercised. All
unexercised warrants expire on September 17, 2006. Warrant holders are entitled
to certain registration rights associated with their ownership.

                                      F-14

**4.****Accrued expenses**

Accrued expenses are comprised of the following at March 29 and March 30 (in
thousands):

                                              2003             2002
                                            ---------        ---------

           Salaries and benefits payable    $  8,304           $13,238
           Workers' compensation payable       4,133             3,314
           Grain and feed                        816             2,287
           Claims reserves                     4,271             1,846
           Accrued payables and other         11,052             8,809
                                            --------         ---------
                                             $28,576           $29,494
                                             =======           =======

**5.****Long-term debt and capital leases**

Long-term debt consists of the following at March 29 and March 30 (in
thousands):

                                                                        2003               2002
                                                                    -----------        -----------

              Senior unsecured notes, due on June 15, 2011,
                interest at 9.25%, interest payable semiannually       $175,000           $175,000
              Revolving loan, due on August 21, 2004,
                interest at variable rates (ranging from 4.375%
                to 5.75% at March 29, 2003)                              69,799             23,269
              Term loan, due on August 21, 2005, interest based
                on LIBOR rates plus 3.125% ($43,750 fixed with a
                swap agreement for 6.1375%, $12,500 at 4.5675% at
                March 29, 2003), payable in quarterly
                installments of $6,250 beginning September 30,
                2003                                                     56,250             68,750
              Note payable, due December 31, 2002, interest
                at prime rate plus 1.5% per annum (6.25% at
                March 30, 2002)                                            -                   898
              Capital leases                                              4,135              4,865
                                                                    -----------        -----------
                             Total debt and capital leases              305,184            272,782

              Less- Current portion                                      13,273             26,629
                                                                    -----------        -----------
                             Long-term debt and capital leases         $291,911           $246,153
                                                                    ===========        ===========

Future maturities of long-term debt and capital leases are as follows (in
thousands):

                 Fiscal Year
                 -----------
                 2004              $  13,273
                 2005                 95,631
                 2006                 19,657
                 2007                  1,079
                 2008                    449
                 Thereafter          175,095
                                   ---------
                                    $305,184

The indenture associated with the $175,000,000 senior notes limits the Company's
ability, among other things, to incur additional debt, pay dividends, acquire
shares of capital stock, make payments on subordinated debt or make certain
investments. In addition, the indenture places limitations on the Company's
ability to: make distributions from subsidiaries, issue or sell capital stock of
subsidiaries, issue guarantees, sell or exchange assets, enter into transactions
with shareholders and affiliates, create liens, and effect mergers.

                                      F-15

The senior notes may be redeemed beginning on June 15, 2006, at an initial
redemption price of 104.625 percent of their principal amount plus accrued
interest, declining to 100 percent on and after June 15, 2009. In addition,
before June 15, 2004, up to 35 percent of the notes may be redeemed at a price
of 109.25 percent of principal plus accrued interest, using proceeds from the
sale of capital stock.

The Company has a bank credit agreement that includes a term loan and revolving
loans. Effective June 28, 2002, the Company and its bank group amended the
credit agreement to extend the revolving credit facility one year, increase the
letter of credit commitment from $10,000,000 to $15,000,000, and amend certain
financial covenants and pricing terms.

Effective September 27, 2002, the Company and its bank group amended the credit
agreement to increase the Company's revolving credit facility by $50,000,000 to
$150,000,000 in total availability subject to a borrowing base calculation,
among other things. The amendment also defers quarterly principal payments on
the Company's term debt for a one year period and amends certain financial
covenants. Obligations under the Credit Agreement are secured by liens on
substantially all of the Company's assets. In addition to customary financial
covenants, the Credit Agreement contains customary restrictions on, among other
things, encumbrance or disposal of assets, acquisitions, additional
indebtedness, capital investment, payment of subordinated debt and construction
of new hog production facilities. In addition to customary fees payable under
credit facilities of this type, amounts borrowed under the Credit Agreement bear
interest at fluctuating rates selected by the Company. These rates are based on
the agent bank's base rate (the greater of the agent bank's prime rate or the
federal funds rate plus one half of one percent) or LIBOR plus, in each case, an
applicable margin, currently ranging from 1.5% to 3.125%, determined by the
Company's leverage ratio. All borrowings under the revolving credit facility
mature on August 21, 2004 and the term debt matures on August 21, 2005.
Financing costs associated with the amendment have been capitalized and are
being amortized over the life of the amended Credit Agreement.

The revolving loans are not to exceed $150,000,000 of total borrowings,
including up to $15,000,000 in letters of credit. Fees of 1.75 percent per annum
are paid quarterly only on outstanding letter-of-credit amounts. At March 29,
2003, and March 30, 2002, the Company had $10,034,000 and $8,510,000 of
outstanding letters of credit, respectively.

The bank credit agreement is secured by virtually all of the Company's assets.
The amount available under the revolving credit facility is determined by a
borrowing base formula determined from the sum of eligible accounts receivable
and a formula value for inventory based on current book value. The borrowing
base at March 29, 2003, was approximately $144,675,000 and at March 30, 2002, it
was approximately $100,000,000, and accordingly, unused available borrowing was
$64,841,000 and $68,221,000, respectively (net of outstanding letters of credit
and revolving loans). The agreement contains various restrictive covenants
which, among others, substantially limit additional borrowings, prohibit payment
of dividends and restrict capital additions and sale of assets. The agreement
also contains covenants, among others, regarding earnings before interest,
taxes, depreciation and amortization (EBITDA) and a cash interest coverage
ratio. Annual EBITDA, as defined in the bank credit agreement (calculated on a
rolling four-quarter basis), cannot be less than ($3,000,000) as of the end of
the first quarter in fiscal year 2004, increasing to $45,000,000 as of the end
of the fourth quarter in fiscal year 2004, and $75,000,000 as of the end of each
fiscal quarter thereafter. The cash interest coverage ratio (calculated on a
rolling four-quarter basis) as of the end of each fiscal quarter cannot be less
than 1.25-to-1.0 as of the end of the third quarter in fiscal year 2004,
1.75-to-1.0 as of the end of the fourth quarter in fiscal year 2004, and
2.5-to-1.0 as of the end of each fiscal quarter thereafter. As of March 29,
2003, the Company was in compliance with all covenants relating to the bank
credit agreement.

During November 2001, the Company entered into an interest rate swap agreement
to convert the variable base interest rate of its bank term debt to a fixed rate
of 3.0125 percent plus the agent bank's applicable margin (currently 3.125
percent at March 29, 2003). The swap has a lower notional amount and matures
more quickly than the term debt.

                                      F-16

**6.****Income taxes**

A reconciliation of statutory federal income tax and income tax expense is shown
below (in thousands):

                                                                    2003        2002         2001
                                                                -----------  ----------   ----------

                Amount based on federal statutory rate            $  5,419     $(4,215)     $1,276
                State income taxes, net of federal                      (8)       (750)        182
                Other                                                 -           -           -
                                                                -----------  ----------   ----------
                         Current income tax benefit (expense)        5,411      (4,965)      1,458
                                                                -----------  ----------   ----------

                Amount based on federal statutory rate              15,365     (10,547)    (14,039)
                State income taxes, net of federal                   3,799      (1,297)     (2,005)
                Other                                                 -           -           (781)
                                                                -----------  ----------   ----------
                         Deferred income tax benefit (expense)      19,164     (11,844)    (16,825)
                                                                -----------  ----------   ----------

                         Total income tax benefit (expense)        $24,575    $(16,809)    $15,367
                                                                ===========  ==========   ==========

Components of the net deferred tax balances at March 29 and March 30, are as
follows (in thousands):

                                                                    2003         2002
                                                              ------------  ------------
                  Net current deferred tax assets-
                      Goodwill                                $       221   $       221
                      Inventory                                     1,454         1,201
                      Other accruals and reserves                   7,034         7,099
                      Alternative minimum tax credits                -            5,687
                      Net operating loss carryforwards              4,355         1,472
                                                              ------------  ------------
                           Net current deferred tax assets    $    13,064   $    15,680
                                                              ============  ============

                  Net long-term deferred tax liabilities-
                      Fixed assets                               $(99,652)  $  (102,142)
                      Net operating loss carryforwards             21,479          -
                      Goodwill                                      1,072         1,293
                      Other                                         1,306         2,833
                                                              ------------  ------------
                        Net long-term deferred tax liability  $   (75,795)  $   (98,016)
                                                              ============  ============

At March 29, 2003, the Company has operating loss carryforwards of $64,584,000
available to offset future taxable income. The operating loss carryforwards will
expire as follows; $3,558,000 in 2020 and $61,026,000 in 2023. The Company
believes that its future taxable income will be sufficient for full realization
of the deferred tax assets.

**7.****Investments in partnerships**

The Company has a 50 percent ownership interest in the L&H Farms partnership.
L&H Farms partnership is in the business of breeding and raising hogs in rural
North Carolina. The Company accounts for the earnings and losses of the
partnership using the equity method of accounting. As of March 29, 2003, and
March 30, 2002, the investment in the L&H Farms partnership was $893,000 and
$1,383,000, respectively, and is included in other long-term assets in the
consolidated balance sheets. The Company's share of the partnership's (losses)
earnings was ($240,000) for fiscal year ended March 29, 2003, $732,000 for
fiscal year ended March 30, 2002, and $340,000 from August 25, 2000 (date of
acquisition), through March 31, 2001. These amounts are included in other
expense (income) in the consolidated statements of operations and comprehensive
income.

In addition, the Company has a 60 percent ownership in L&S Farms, LLC, a limited
liability company, in the business of breeding and raising hogs in rural North
Carolina. The Company consolidates this operation for financial reporting
purposes. Minority interest of $113,000 for fiscal year ended March 29, 2003,
$394,000 for fiscal year ended March 30, 2002, and $99,000 from August 25, 2000
(date of acquisition), through March 31, 2001, was charged to other

                                      F-17

expense (income) in the consolidated statements of operations and comprehensive
income. As of March 29, 2003, and March 30, 2002, the minority interest
obligation was $629,000 and $394,000, respectively, recorded in other long-term
liabilities in the consolidated balance sheets.

On March 28, 2003, the Company funded a 50 percent ownership interest in
Oldham's LLC for $2,184,000, which subsequently was finalized on April 4, 2003.
Oldham's LLC is in the business of processing sows and producing raw materials
for sausage products. The Company will account for the earnings and losses of
Oldham's using the equity method of accounting.

**8.****Related parties**

The Company has contracted with ContiGroup to provide certain services pursuant
to an amended and restated services agreement and a contract grower finish
agreement. Under these agreements, ContiGroup provides purchasing assistance,
legal services, employee benefits, payroll and grow finishing services to the
Company. For fiscal years ended March 29, 2003, March 30, 2002, and March 31,
2001, the total amount of these expenses and other related-party expenses with
CGC were $5,331,000, $6,788,000, and $6,523,000, respectively. At March 29,
2003, and March 30, 2002, the Company recorded amounts due to related party for
these items of $58,000 and $469,000, respectively, included in the consolidated
balance sheets.

The Company provided ContiGroup management and human resources services with
respect to ContiGroup's prior pork operations, hog and feed production services
and environmental and other business consulting services. The total billings for
the fiscal years ended March 30, 2002, and March 31, 2001, amounted to $112,000,
and $568,000, respectively.

During fiscal year ended March 25, 2000, an agreement was entered into with CGC
to pay $1,000,000 annually for five years, in consulting fees to CGC for work
done in the settlement agreement with the attorney general of Missouri (Note
11). The Company paid the first four of five annual installments in fiscal years
2003, 2002, 2001, and 2000, respectively. The Company discounted the liability
at its current borrowing rate and as of March 29, 2003, has recorded a liability
of $921,000, of which all is classified as current. Liabilities are reflected in
the due to related party in the consolidated balance sheets.

The Company leases farmland and hog production buildings from the former owners
of Lundy, one of which is currently a board member of PSF, Inc., under a capital
lease agreement that existed prior to the acquisition. The capital lease
obligation as of March 29, 2003, and March 30, 2002 was $2,031,000 and
$2,296,000, respectively, and is included in long-term debt and capital leases
in the consolidated balance sheet.

Morgan Stanley & Co. Incorporated and certain funds owned, controlled and
managed by it and its affiliates, beneficially own approximately 17.6 percent of
the outstanding common stock of Group and is represented on the board of
directors. Morgan Stanley & Co. Incorporated served as placement agent for the
Company's $175,000,000 senior unsecured notes.

**9.****Commitments**

The Company enters into forward grain purchase contracts with market risk in the
ordinary course of business. In the opinion of management, settlement of such
commitments, which were open at March 29, 2003, and March 30, 2002, will have no
adverse impact on the financial position or results of operations of the
Company.

The Company utilizes forward contracts, as well as exchange traded futures and
options contracts, to establish adequate supplies of future grain purchasing
requirements and minimize the risk of market fluctuations. These contracts are
dependent on fluctuations in the grain, lean hog, and natural gas commodity
markets. Market risk resulting from a position in a particular contract may be
offset by other on or off-balance-sheet transactions. The Company continually
monitors its overall market position. Fair values of futures and options, and
gross contract or notional amounts of forward contracts, in place as of March
29, 2003 are as follows (in thousands except wtd.-avg. price/unit):

                                      F-18

**Contract        Volumes      Wtd.-avg.      Fair
                                              Quantity         Units       Price/Unit     Value
                                             -------------------------------------------------------****Futures Contracts
     -----------------**
Corn purchases - long                        11,380             bushels    $  2.37     $  (859)
Corn sales - short                            1,600             bushels       2.38         117
Soybean meal purchases - long                    17             tons        153.54          14
Soybean meal sales - short                        1             tons        171.60          (2)
Lean hog sales - short                       26,120             pounds        0.61         939
Lean hog purchases - long                     5,400             pounds        0.57        (228)
Wheat sales - short                             130             bushels       3.43          55
Pork belly purchases - long                     520             pounds        0.83          31

     **Option Contracts
     ----------------**
Corn puts - short                               505             bushels    $  2.20     $   (28)
Corn calls - short                              505             bushels       3.00         (16)
Corn calls - long                               505             bushels       2.60          43
Lean hog calls - long                         4,000             pounds        0.46         176
Lean hog puts - short                        42,680             pounds        0.53        (622)
Lean hog puts - long                         37,600             pounds        0.61       1,889
**Contract         Volumes      Wtd.-avg.   Notional
                                             Quantity         Units       Price/Unit    Amount
                                             -------------------------------------------------------
          Forward Contracts
          -----------------**
Corn                                          3,922             bushels    $  2.78     $10,914
Meal                                              1             tons        180.52         159

Substantially all these contracts expire within one year.

The Company leases rolling stock and certain equipment under noncancelable
operating leases. Rental expense under operating leases was approximately
$6,861,000, $5,435,000 and $3,656,000 in the fiscal years ended March 29, 2003,
March 30, 2002, and March 31, 2001, respectively. Future minimum rental
commitments at March 29, 2003, are as follows (in thousands):

                2004                        $  5,973
                2005                           5,054
                2006                           4,316
                2007                           3,282
                2008                           2,391
                Thereafter                     5,047
                                               -----
                                             $26,063
                                             =======
At the Company's Clinton, North Carolina pork processing facility, the Company
has contracts with producers to provide this facility with market hogs for the
amount the Company's hog production operations can't provide in order to meet
this facility's processing needs. These contracts vary in length but are all
based on a market price and grade and yield formula. Over the next 5 years the
Company is contracted to purchase approximately 1,750,000 market hogs under
these contracts.

The Company also has contracts with two large processors to sell the Company's
hogs produced from its Texas hog production operations. Over the next 5 years we
are to provide approximately 1,500,000 market hogs to these processors under
these contracts.
**10.  Employee benefit plans**

The Company has a 401(k) plan covering substantially all employees meeting
certain minimum service requirements. The plan allows all qualifying employees
to contribute up to 20 percent of employee compensation limited to the tax
deferred contribution allowable by the Internal Revenue Code. The Company
matches 100 percent of the employee's contribution up to 3 percent of employee
compensation and 50 percent of the employee's next 2 percent of employee
compensation, for a maximum company match of 4 percent of employee compensation.
Effective January 1, 2000, the Company amended its 401(k) plan from a three-year
cliff-vesting period to a 100 percent immediate vesting. Employer contribution
expense related to the plan was approximately $1,870,000, $1,816,000 and
$1,407,000 for the fiscal years ended March 29, 2003, March 30, 2002, and March
31, 2001, respectively.

                                      F-19

The Company has a long-term incentive plan with performance thresholds tied to
return on net assets in place for key executives selected by the compensation
committee. At March 29, 2003, the Company had no liability recorded for the
long-term incentive plan. At March 30, 2002, the Company had a liability
recorded of $1,507,000 in other long-term liabilities toward the long-term
incentive plan. The Company expensed $1,500,000, and $2,106,000 in the fiscal
years ended March 30, 2002, and March 31, 2001, respectively. In fiscal year
ended March 29, 2003, the Company credited the amount accrued for the year ended
March 30, 2002, due to the probability of the Company not meeting its minimum
requirement for payout because of its fiscal year 2003 performance.

The Company has a nonqualified, unfunded special executive retirement plan for
certain key executives. Benefits generally accrue based on pay and years of
credited service. As of March 29, 2003, and March 30, 2002, the Company has
recorded in other long-term liabilities $1,354,000 and $834,000 relating to this
plan, respectively. For the fiscal years ended March 29, 2003, March 30, 2002,
and March 31, 2001, the Company expensed $520,000, $480,000 and $354,000 related
to this plan, respectively. The actuarial assumptions used in calculating the
liability were:
                            March 29, 2003             March 30, 2002
                            --------------             --------------
           Discount rate             6.25%                     7.50%
           Salary Increases          4.00%                     4.50%
**11.  Litigation**Environmental matters

The Company has settled two citizens' action suits which sought to enforce
alleged violations of the Clean Air Act, Clean Water Act and CERCLA against the
Company and ContiGroup Companies, Inc. ("ContiGroup"). The U.S. Environmental
Protection Agency (the "E.P.A.") had intervened in this action and filed a
separate notice of violation against the Company under the Clean Air Act. This
settlement, in the form of a consent decree ("EPA Consent Decree"), resolved all
outstanding issues of ContiGroup and the Company with the E.P.A. In 1998, the
Company engaged in a series of transactions with ContiGroup pursuant to which it
purchased from ContiGroup its North Missouri Farms hog production operations and
ContiGroup purchased a 51.0% ownership interest in the Company (the "1998
ContiGroup transaction"). To the extent that ContiGroup incurred any liability
in this litigation, the Company assumed that liability pursuant to the terms of
the 1998 ContiGroup transaction. The EPA Consent Decree, built upon the 1999
consent decree with the State of Missouri referenced below, requires the Company
and ContiGroup to meet certain performance standards, such as a 50 percent
reduction in nitrogen concentration of the effluent applied to area fields over
a prescribed time period. Other key elements of the EPA Consent Decree include:
monitoring air emissions from lagoons and barns; compliance with certain best
management practices to reduce the risk of spills; testing of selective lagoons
to ensure integrity; and the payment of a $350,000 civil penalty. The counsel
for the citizen plaintiffs has submitted a petition for recovery of attorneys'
fees in connection with the lawsuits against both the Company and ContiGroup.
The Company believes the majority of these fees have been previously paid and
resolved. The Company believes the resolution of this matter will not have a
material adverse effect upon its financial position or results of operations.

In 1999, the Company settled a suit filed by the Attorney General of the State
of Missouri against the Company and ContiGroup. As referenced above, the Company
assumed ContiGroup's liability in this action in connection with the 1998
ContiGroup transaction. The settlement required the Company and ContiGroup to
enter into a consent judgment ("Missouri Consent Decree") pursuant to which the
Company is obligated to invest $25 million on or before May 19, 2004, for
researching, installing and operating improved technology to control wastewater,
air and odor emissions from its Missouri farms. All such investments are subject
to the approval of an expert panel of independent university experts. To date
the Company has spent $11.9 million to satisfy the settlement. The Company
anticipates an extension of this expenditure deadline because both the State of
Missouri and the expert panel want further confirmation of the efficacy of any
chosen technology. In addition, pursuant to the Missouri Consent Decree the
Company and ContiGroup were issued a $1 million civil penalty. Of this, $650,000
has been paid and $350,000 is suspended pending certain conditions.

In addition to the suits discussed above, the Company has received notices of
violations from the Missouri Department of Natural Resources alleging releases
of wastewater. The Company has responded to these notices in an effort to
resolve these matters. The State of Missouri filed a lawsuit in June 2002
seeking penalties and injunctive

                                      F-20

relief for these violations. The Company has filed an answer, believes it has
good defenses, and intends to vigorously defend the suit.

Two nuisance suits were filed against ContiGroup and the Company during the
second quarter of fiscal year 2003 in the Circuit Court of Jackson County,
Kansas City, Missouri. There are multiple plaintiffs in each suit, who claim to
live near swine farms owned by ContiGroup but under production contracts with
the Company. The primary allegation is that offensive odors from these farms
interfered with the plaintiffs' right to use and have quiet enjoyment of their
respective properties. The Company is obligated by contract to indemnify
ContiGroup for any liabilities arising from this litigation. The Company has
filed an answer, believes it has good defenses to these actions, and intends to
vigorously defend these suits.

Other legal matters

In addition, the Company is involved from time to time in routine litigation
incidental to its business. Although no assurance can be given as to the outcome
or expense associated with any of these routine proceedings, the Company
believes that none of such proceedings currently pending should, individually or
in the aggregate, have a material adverse effect on its financial statements.
**12.  Segment information**

The Company operates a vertically integrated business with two operating
segments, Pork Processing and Hog Production. The Pork Processing segment sells
fresh and value-added pork products to food retailers, distributors,
wholesalers, further processors, pharmaceutical and animal feed manufacturers in
both domestic and international markets. The Hog Production segment supplies a
majority of the live hogs used in the Pork Processing segment and sells the
excess production to other hog processing operations. Intersegment live hog
sales are based on market prices. The following tables present specific
financial information about each segment as reviewed by the Company's
management. The Corporate and Other classification in the following tables
represent unallocated corporate expenses and assets, deferred and current taxes,
Group's goodwill and goodwill amortization, interest expense and intersegment
elimination (in thousands):
                                                                          Corporate
                                              Pork                           and
                                           Processing    Hog Production     Other        Total
                                           ----------    --------------     -----        -----
                Fiscal 2003-
                  Net sales                  $558,329     $357,154       $(307,069)    $608,414
                  Intersegment sales           (7,976)    (299,093)           -            -
                  Operating income             34,444      (63,134)        (10,740)     (39,430)
                  Assets                      186,164      504,972          87,926      779,062
                  Depreciation and
                      amortization             15,278       45,270             960       61,508
                  Capital expenditures          5,076       29,903             526       35,505

                Fiscal 2002-
                  Net sales                  $599,565     $440,825       $(365,444)    $674,946
                  Intersegment sales           (4,005)    (361,439)           -            -
                  Operating income             23,011       59,440         (17,681)      64,770
                  Assets                      199,714      514,787          93,138      807,639
                  Depreciation and
                       amortization            11,787       43,462             805       56,054
                  Capital expenditures         37,806       57,671             755       96,232

                                      F-21

                                                                          Corporate
                                              Pork                           and
                                           Processing    Hog Production     Other        Total
                                           ----------    --------------     -----        -----
              Fiscal 2001-
                  Net sales                  $475,673     $359,149       $(294,246)    $540,576
                  Intersegment sales           (1,857)    (292,389)           -            -
                  Operating income             16,276       62,681         (17,624)      61,333
                  Assets                      179,126      502,371          91,943      773,440
                  Depreciation and
                      amortization              9,476       38,715           2,768       50,959
                  Capital expenditures         12,213       30,343             668       43,224

Geographic information

No individual foreign country or customer accounts for 10 percent or more of
sales to external customers. The following table provides a geographic summary
of the Company's net sales based on the location of product delivery (in
thousands):

                                           2003         2002         2001
                                        ----------   ----------   ----------

           United States                 $557,764     $626,245     $496,461
           Far East                        37,013       35,913       33,815
           Europe and Russia                  139        1,474        1,758
           Canada                           8,544        9,366        7,056
           Mexico and South America         4,954        1,948        1,486
                                      -----------  -----------  -----------
                Totals                   $608,414     $674,946     $540,576
                                         ========     ========     ========

All of the Company's assets are located within the United States.
**13.      Quarterly results of operations (unaudited in thousands):**

The following represents the unaudited quarterly results of operations for
fiscal years 2003 and 2002. All amounts are expressed in thousands.

                                              First         Second        Third      Fourth
                                              -----         ------        -----      ------
                Fiscal 2003-
                  Net sales                   $149,049    $145,735      $154,090    $159,540
                  Gross profit                   2,900      (7,541)       (9,303)     (9,512)
                      Net (loss)                (4,274)    (10,492)      (12,253)    (11,581)

                Fiscal 2002-
                  Net sales                   $171,162    $176,567      $173,278    $153,939
                  Gross profit                  29,786      37,223        11,006       7,748
                      Net income (loss)          9,098      15,942         1,028        (703)

                                      F-22

**EXHIBIT INDEX

     Exhibit
     Number             Description of Exhibit
     ------             ----------------------**

      21.1              Subsidiaries of the Registrant.

      24.1              Power of Attorney (see signature page).
```