FOR IMMEDIATE
RELEASE





Contact:


Keira
Ullrich


Smithfield
Foods, Inc.


(212)
758-2100


keiraullrich@smithfieldfoods.com





Smithfield
Foods Reports Fourth Quarter And Full Year Results





SMITHFIELD,
Virginia (June 16, 2009)—Smithfield Foods, Inc. (NYSE: SFD) today reported
fiscal 2009 fourth quarter and full year results.





Highlights
 
 Fourth
Quarter
 ·
              Net
      loss was $78.8 million ($.55 per diluted share) versus net income of $2.4
      million ($.02 per diluted share) in the prior
  year
 ·
              Liquidity
      in excess of $1.1 billion; all financial covenants were
  met
 ·
              Packaged
      meats continued to achieve record
margins
 ·
              Hog
      production losses continued; raising costs expected to begin to
      moderate
 ·
              Export
      volume remained strong
 ·
              A(H1N1)
      virus had no significant effect on the
quarter
 
 Fiscal
Year
 ·
              Net
      loss was $190.3 million ($1.35 per diluted share) versus net income of
      $128.9 million ($.96 per diluted share) last
  year
 ·
              Sales
      increased over $1.1 billion, or 10%, from the previous fiscal year
      (including the effect of an extra week in fiscal
  2009)
 ·
              Hog
      production suffered substantial losses due to record high feed
      costs
 ·
              Packaged
      meats achieved record profits
 ·
              Export
      sales achieved record profits
 ·
              Debt
      was reduced by over $890 million from the previous fiscal year, lowering
      debt to capitalization to 53%
 ·
              Cash
      flows from operations totaled more than $269 million, despite heavy losses
      in hog production
 ·
              Year-to-date
      capital expenditures were 62% lower than last
  year
 ·
              Reduced
      our U.S. sow herd by 10%
 ·
              Initiated
      Pork Group restructuring designed to improve pre-tax results by $55
      million in fiscal 2010 and $125 million in fiscal 2011; current results
      included pre-tax restructuring charges of $88.2 million ($.40 per diluted
      share)
 ·
              Groupe
      Smithfield merged with Campofrío; ownership stake raised to
      37%
 ·
              Completed
      sale of beef processing and cattle feeding operations for $575.5 million,
      recording a pre-tax gain of $99.7
million





Following
are the company’s sales and operating profit (loss) from continuing operations
by segment:


Three
      Months Ended
                                                            
                                                            
                                                            Twelve
      Months EndedMay
      3,
                                                              2009
                                                            
                                                            
                                                            April
      27,
                                                              2008
                                                            
                                                            
                                                            May
      3,
                                                              2009
                                                            
                                                            
                                                            April
      27,
                                                              2008Sales:Segment
      sales—Pork
                                                            
                                                            $
                                                            2,455.0
                                                            
                                                            
                                                            $
                                                            2,450.5
                                                            
                                                            
                                                            $
                                                            10,450.9
                                                            
                                                            
                                                            $
                                                            9,627.5International
                                                            
                                                            
                                                            257.2
                                                            
                                                            
                                                            
                                                            344.8
                                                            
                                                            
                                                            
                                                            1,398.2
                                                            
                                                            
                                                            
                                                            1,224.5Hog
      Production
                                                            
                                                            
                                                            615.8
                                                            
                                                            
                                                            
                                                            620.9
                                                            
                                                            
                                                            
                                                            2,750.9
                                                            
                                                            
                                                            
                                                            2,399.3Other
                                                            
                                                            
                                                            63.8
                                                            
                                                            
                                                            
                                                            36.5
                                                            
                                                            
                                                            
                                                            250.8
                                                            
                                                            
                                                            
                                                            148.8Total
      segment sales
                                                            
                                                            
                                                            3,391.8
                                                            
                                                            
                                                            
                                                            3,452.7
                                                            
                                                            
                                                            
                                                            14,850.8
                                                            
                                                            
                                                            
                                                            13,400.1Intersegment
                                                            
                                                            
                                                            (541.2
                                                            )
                                                            
                                                            
                                                            (584.3
                                                            )
                                                            
                                                            
                                                            (2,363.1
                                                            )
                                                            
                                                            
                                                            (2,048.9
                                                            )Consolidated
      sales
                                                            
                                                            $
                                                            2,850.6
                                                            
                                                            
                                                            $
                                                            2,868.4
                                                            
                                                            
                                                            $
                                                            12,487.7
                                                            
                                                            
                                                            $
                                                            11,351.2Operating
      profit (loss):Pork
                                                            
                                                            $
                                                            110.7
                                                            
                                                            
                                                            $
                                                            138.5
                                                            
                                                            
                                                            $
                                                            395.2
                                                            
                                                            
                                                            $
                                                            449.4International
                                                            
                                                            
                                                            3.5
                                                            
                                                            
                                                            
                                                            30.5
                                                            
                                                            
                                                            
                                                            34.9
                                                            
                                                            
                                                            
                                                            76.9Hog
      Production
                                                            
                                                            
                                                            (170.8
                                                            )
                                                            
                                                            
                                                            (129.0
                                                            )
                                                            
                                                            
                                                            (521.2
                                                            )
                                                            
                                                            
                                                            (98.1
                                                            )Other
                                                            
                                                            
                                                            (18.3
                                                            )
                                                            
                                                            
                                                            (2.4
                                                            )
                                                            
                                                            
                                                            (46.6
                                                            )
                                                            
                                                            
                                                            28.2Corporate
                                                            
                                                            
                                                            (17.0
                                                            )
                                                            
                                                            
                                                            (8.3
                                                            )
                                                            
                                                            
                                                            (86.2
                                                            )
                                                            
                                                            
                                                            (59.6
                                                            )Consolidated
      operating profit (loss)
                                                            
                                                            $
                                                            (91.9
                                                            )
                                                            
                                                            $
                                                            29.3
                                                            
                                                            
                                                            $
                                                            (223.9
                                                            )
                                                            
                                                            $
                                                            396.8
  Sales
for the fourth quarter were $2.9 billion, nearly even with the fourth quarter of
fiscal 2008. Sales for the full year were $12.5 billion versus $11.4 billion a
year ago. Fiscal 2009 included 53 weeks compared to 52 weeks in the prior
year.
 
 The
company reported a net loss for the fourth quarter of fiscal 2009 of $78.8
million, or $.55 per diluted share, versus net income of $2.4 million, or $.02
per diluted share, a year ago. For the full fiscal year, the net loss was $190.3
million, or $1.35 per diluted share, versus net income in fiscal 2008 of $128.9
million, or $.96 per diluted share. In the current quarter, a benefit of $13.1
million was realized related to foreign tax credits which favorably impacted
income taxes. In the same period last year, $10.0 million of lower income tax
expense was attributed to lowering the company’s effective tax rate for the full
fiscal year and the favorable resolution of certain tax positions.
 
 At the
same time, the company reported a loss from continuing operations for fiscal
2009 of $242.8 million, or $1.72 per diluted share, versus income from
continuing operations of $139.2 million, or $1.04 per diluted share, in the same
period last year.
 
 Commentary
 “Fiscal
2009 was one of the most challenging years in over three decades for the
company. We faced grain and oil markets that reached record highs and then fell
precipitously. These input dynamics, combined with an oversupply of all proteins
as well as a worldwide recession and credit constraints, put significant
pressure on the business. But despite the challenges we confronted, we did not
sit on the sidelines and wait for the economic conditions to improve; we have
taken numerous actions to make us a more profitable company: namely, we
repositioned the company’s operations and made meaningful improvements to our
liquidity and financial strength. As a result, I am especially pleased with our
packaged meats business which delivered record profits even as fresh pork was
weak in the face of an economic downturn. For the full year, the pork segment
produced record profits, before the $88 million of restructuring costs, and is
set to deliver very strong results going forward,” Mr. Pope
commented.




2





“While
the meat business looks very good, we are concerned about our hog production
business as it deals with an oversupply of live hogs and the unintended
consequences of the current ethanol policy. This mandate toward increased usage
of corn-based ethanol is resulting in more than 30% of the U.S. corn crop being
diverted from animal feed to ethanol production. Since this plan was announced,
there has already been a sharp run-up in corn prices tied to world oil markets.
While we fully support the development of alternative fuel sources, the usage of
corn, the primary source of feed for all livestock, as fuel is simply not good
economics. This is a dynamic the food industry has never before faced and has
the unintended consequence of increasing food costs for the American consumer in
the midst of a global recession,” he continued.
 
 Turning
to the company’s financial condition, Mr. Pope stated “We are constantly
evaluating options associated with pushing off near term maturities, seeking
permanent covenant relief and reducing our overall debt levels. Toward that end,
I am pleased to report that we are continuing discussions regarding refinancing
with various lenders, well in advance of current maturities. In addition, we
have made significant progress on improving our balance sheet, reducing debt and
increasing liquidity.”
 
 Fourth Quarter
Results
 
 Pork
 Packaged
meats margins expanded substantially compared to last year as operational
efficiencies and sales coordination began to take hold. Total pork volumes
increased 2.5% from the same period a year ago; however, weaker fresh pork
margins dampened the effect of significant gains in packaged meats.
 
 Total
pork exports increased 3.3% from last year’s record levels, as volume remained
strong, but prices fell.
 
 International
 International
segment results were below those of a year ago. Last year’s results included a
gain of $9.4 million related to asset sales and other restructuring activity at
Groupe Smithfield. There were no comparable gains in the current year
results.
 
 Campofrío
Food Group reported a quarterly loss of $1.4 million, as high input costs and
weakened demand in Western Europe took a toll on profitability. This compares to
a combined operating profit contribution of Groupe Smithfield and Campofrío of
$23.0 million last year.
 
 Our
Polish and Romanian operations performed well, but results were tempered by
weakened local currencies. In spite of currency losses, our Polish and Romanian
operating results were profitable during the quarter.
 
 Hog
Production
 As
expected, hog production losses continued through the fourth quarter. Live hog
market prices in the U.S. increased slightly to $43 per hundredweight compared
to $42 per hundredweight last year. Domestic raising costs increased to $63 per
hundredweight from $54 per hundredweight in the prior year, largely the result
of an increase in the cost of feed and feed ingredients of $88 million, or 21%
compared to the prior year quarter. The cost increase is the result of the spike
in U.S. corn prices last year and buying decisions that locked in corn purchases
at prices exceeding $6 per bushel. Raising costs are expected to begin
moderating in the first quarter of fiscal 2010.
 
 Other
 The
large increase in sales in the segment was a combination of the company’s
sell-off of cattle retained after the beef segment disposition and an improving
environment in the wholly-owned turkey operations.
 
 Production
cutbacks and lower grain prices are having a positive effect on our wholly-owned
turkey operations as losses in our turkey operations have begun to moderate from
previous quarters. Butterball LLC, the company's joint venture turkey operation
reported a loss that was $1.3 million higher than the year ago
period.
 
 Losses
related to cattle feeding closeouts also contributed to the segment operating
loss for the quarter.


3




Full Fiscal Year
Results





Pork


Record
packaged meats results were partially offset in the segment by $88.2 million
($.40 per diluted share) of restructuring charges and weaker fresh pork margins.
Excluding the extra week, fresh pork volume increased nine percent from last
year, as exports remained robust and the company processed three percent more
hogs than last year.





Packaged
meats margins were substantially higher than those a year ago. Packaged meats
volume declined two percent year over year, as the company continued to focus on
sales coordination and operating efficiencies.





Smithfield’s
total exports for fiscal 2009 increased 29% in pounds and 35% in dollars, with
growth in all major importing countries. No one country constituted more than
25% of Smithfield’s total export volume.





International


International
operating profits declined versus last year. Campofrío/Groupe Smithfield
earnings were well below a year ago as the worldwide recession negatively
impacted demand in Western Europe. Results in Poland dropped due to currency
losses which offset significant cost reductions and a 15% increase in packaged
meats volume. In Romania, operating profit turned positive on a 39% increase in
sales.





Hog
Production


Hog
production suffered historic losses under the weight of sharply higher feed
costs. Domestic raising costs increased to $62 per hundredweight versus $50 per
hundredweight in the prior year as the cost of feed and feed ingredients
increased $527 million, or 36% compared to the prior year. Corn, which is the
major component in our livestock feed, increased 26% year over year. Although
prices have fallen dramatically from the record high levels seen last summer,
the company locked its corn needs through the end of fiscal 2009 at price levels
in excess of $6 per bushel as the industry became concerned over future
availability at that time. However, we expect our raising costs to reflect lower
corn prices in fiscal 2010. Live hog market prices in the U.S. averaged $48 per
hundredweight in fiscal 2009 compared to $44 per hundredweight last
year.





Other


The
large increase in sales in the segment was primarily related to the sell off of
$74.3 million of the company’s cattle inventory. Lower segment results reflect
cattle inventory write-downs to market value. Butterball experienced a
substantial loss versus a profit a year ago as higher grain prices increased
raising costs dramatically.





Liquidity
Remains Strong and Balance Sheet Improves


At the
end of the fiscal year, Smithfield had in excess of $1.1 billion of available
liquidity. The company reduced overall indebtedness by over $890 million during
the current fiscal year, including over $190 million in the fourth quarter
alone. Debt to total capitalization has been reduced from 56% last year to 53%.
The company lowered capital expenditures by 62% to $175 million versus $460
million a year ago. In fiscal 2009, the company generated more than $269 million
in cash flow from operations, despite the heavy losses in hog
production.





Outlook


“As we move into fiscal 2010, our highest priority is on
continuing the restructuring of the Pork Group, continuing to reduce debt,
improving liquidity and strengthening the balance sheet,” Mr. Pope stated. “I
strongly believe that the hog production industry has reached an inflection
point where, due to deep and extended losses, liquidation is now a recognized
reality by all in the industry. To date, Smithfield has already reduced the size
of its U.S. herd by two million market hogs annually, and we are initiating a
further reduction of three percent of our U.S. sow herd, effective immediately.
This reduction, combined with the additional cuts by our fellow producers should
shrink supply to a point where the industry can return to profitability. This
liquidation is long overdue,” he said.




4


“We
believe that the A(H1N1) virus had only a short-term effect on U.S. fresh pork
demand, which hurt our business last month. As the consumer received more
accurate information about the virus, we saw domestic market conditions begin to
move back to more normal levels. Unfortunately, we continue to experience
restrictions in some international markets, specifically China, which is
negatively impacting exports in the first quarter of fiscal 2010. While we are
seeing improvements in our near-term raising costs, live hog markets remain well
below historic levels and hog production remains unprofitable. Taking all of
this into account, I remain very optimistic about the long-term future of this
company, as we continue to further improve our fresh pork and packaged meats
businesses through our current restructuring plan which is well underway. We are
reshaping our business as the low-cost producer of high quality products to
value conscious consumers, in all trade channels. I am very bullish about this
end of the business. Our future is very bright,” Mr. Pope
concluded.
 
 With sales of $12 billion, Smithfield
Foods is the leading processor and marketer of fresh pork and packaged meats in
theUnited
States, as well as the
largest producer of hogs. For more information, visitwww.smithfieldfoods.com.
 
 This news release contains
"forward-looking" statements within the meaning of the federal securities laws.
The forward-looking statements includes statements concerning the Company's
outlook for the future, as well as other statements of beliefs, future plans and
strategies or anticipated events, and similar expressions concerning matters
that are not historical facts. The Company's forward-looking information and
statements are subject to risks and uncertainties that could cause actual
results to differ materially from those expressed in, or implied by, the
statements. These risks and uncertainties include the availability and prices of
live hogs and cattle, raw materials, fuel and supplies, food safety, livestock
disease, live hog production costs, product pricing, the competitive environment
and related market conditions, the inability to refinance or otherwise amend our
existing indebtedness on terms favorable to us or at all, hedging risk,
operating efficiencies, changes in interest rate and foreign currency exchange
rates, access to capital, the investment performance of the Company's pension
plan assets and the availability of legislative funding relief, the cost of
compliance with environmental and health standards, adverse results from
on-going litigation, actions of domestic and foreign governments, labor
relations issues, credit exposure to large customers, the ability to make
effective acquisitions and successfully integrate newly acquired businesses into
existing operations, the Company’s ability to effectively restructure portions
of its operations and achieve cost savings from such restructurings and other
risks and uncertainties described in the Company's Annual Report on Form 10-K
for fiscal 2008 and in its subsequent Quarterly Reports on Form 10-Q. Readers
are cautioned not to place undue reliance on forward-looking statements because
actual results may differ materially from those expressed in, or implied by, the
statements. Any forward-looking statement that the Company makes speaks only as
of the date of such statement, and the Company undertakes no obligation to
update any forward-looking statements, whether as a result of new information,
future events or otherwise. Comparisons of results for current and any prior
periods are not intended to express any future trends or indications of future
performance, unless expressed as such, and should only be viewed as historical
data.
 
 ###
 
 (Tables
follow)


5
  SMITHFIELD
      FOODS, INC. AND SUBSIDIARIESCONSOLIDATED
      STATEMENTS OF INCOME(In
      millions, except per share data)Three
      Months Ended
                      
                      
                      Twelve
      Months EndedMay
      3,
                        2009
                      
                      
                      April
      27,
                        2008
                      
                      
                      May
      3,
                        2009
                      
                      
                      April
      27,
                        2008Sales
                      
                      $
                      2,850.6
                      
                      
                      $
                      2,868.4
                      
                      
                      $
                      12,487.7
                      
                      
                      $
                      11,351.2Cost
      of sales
                      
                      
                      2,735.6
                      
                      
                      
                      2,662.4
                      
                      
                      
                      11,855.3
                      
                      
                      
                      10,196.6Gross
      profit
                      
                      
                      115.0
                      
                      
                      
                      206.0
                      
                      
                      
                      632.4
                      
                      
                      
                      1,154.6Selling,
      general and administrative expenses
                      
                      
                      195.9
                      
                      
                      
                      194.3
                      
                      
                      
                      798.4
                      
                      
                      
                      813.6Equity
      in (income) loss of affiliates
                      
                      
                      8.5
                      
                      
                      
                      (19.4
                      )
                      
                      
                      50.1
                      
                      
                      
                      (62.0
                      )Minority
      interests
                      
                      
                      2.5
                      
                      
                      
                      1.8
                      
                      
                      
                      7.8
                      
                      
                      
                      6.2Operating
      profit (loss)
                      
                      
                      (91.9
                      )
                      
                      
                      29.3
                      
                      
                      
                      (223.9
                      )
                      
                      
                      396.8Interest
      expense
                      
                      
                      54.5
                      
                      
                      
                      41.8
                      
                      
                      
                      209.1
                      
                      
                      
                      184.8Other
      income
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (63.5
                      )
                      
                      
                      -Income
      (loss) from continuing operations before income taxes
                      
                      
                      (146.4
                      )
                      
                      
                      (12.5
                      )
                      
                      
                      (369.5
                      )
                      
                      
                      212.0Income
      tax expense (benefit)
                      
                      
                      (67.6
                      )
                      
                      
                      (14.3
                      )
                      
                      
                      (126.7
                      )
                      
                      
                      72.8Income
      (loss) from continuing operations
                      
                      
                      (78.8
                      )
                      
                      
                      1.8
                      
                      
                      
                      (242.8
                      )
                      
                      
                      139.2Income
      (loss) from discontinued operations, net of tax
                      
                      
                      -
                      
                      
                      
                      0.6
                      
                      
                      
                      52.5
                      
                      
                      
                      (10.3
                      )Net
      income (loss)
                      
                      $
                      (78.8
                      )
                      
                      $
                      2.4
                      
                      
                      $
                      (190.3
                      )
                      
                      $
                      128.9Income
      (loss) per common share:Basic
      and Diluted:Continuing
      operations
                      
                      $
                      (.55
                      )
                      
                      $
                      .01
                      
                      
                      $
                      (1.72
                      )
                      
                      $
                      1.04Discontinued
      operations
                      
                      
                      -
                      
                      
                      
                      .01
                      
                      
                      
                      .37
                      
                      
                      
                      (.08
                      )Net
      income (loss) per share
                      
                      $
                      (.55
                      )
                      
                      $
                      .02
                      
                      
                      $
                      (1.35
                      )
                      
                      $
                      .96Weighted
      average shares:Weighted
      average basic shares
                      
                      
                      143.6
                      
                      
                      
                      134.4
                      
                      
                      
                      141.1
                      
                      
                      
                      133.9Effect
      of dilutive stock options
                      
                      
                      -
                      
                      
                      
                      0.2
                      
                      
                      
                      -
                      
                      
                      
                      0.3Weighted
      average diluted shares
                      
                      
                      143.6
                      
                      
                      
                      134.6
                      
                      
                      
                      141.1
                      
                      
                      
                      134.2
   6
  SMITHFIELD FOODS, INC. AND
    SUBSIDIARIESSCHEDULE
      OF EQUITY IN (INCOME) LOSS OF AFFILIATESThe
      following is a breakdown of the major investments included in equity in
      (income) loss of affiliates as presented in the consolidated statements of
      income:(in
      millions)Three
      Months Ended
                      
                      
                      Twelve
      Months EndedEquity
      Investment
                      Segment
                      
                      May
      3,
                        2009
                      
                      
                      April
      27,
                        2008
                      
                      
                      May
      3,
                        2009
                      
                      
                      April
      27,
                        2008Butterball
                      Other
                      
                      $
                      2.9
                      
                      
                      $
                      1.6
                      
                      
                      $
                      19.5
                      
                      
                      $
                      (23.4
                      )Campofrío
      Food Group
                      International
                      
                      
                      1.4
                      
                      
                      
                      (23.0
                      )
                      
                      
                      5.6
                      
                      
                      
                      (43.0
                      )Cattleco,
      LLC (Cattleco)
                      Other
                      
                      
                      4.8
                      
                      
                      
                      -
                      
                      
                      
                      15.1
                      
                      
                      
                      -Mexican
      joint ventures
                      Various
                      
                      
                      (0.5
                      )
                      
                      
                      2.1
                      
                      
                      
                      9.8
                      
                      
                      
                      4.8All
      other equity method investments
                      Various
                      
                      
                      (0.1
                      )
                      
                      
                      (0.1
                      )
                      
                      
                      0.1
                      
                      
                      
                      (0.4
                      )Equity
      in (income) loss of affiliates
                      
                      
                      $
                      8.5
                      
                      
                      $
                      (19.4
                      )
                      
                      $
                      50.1
                      
                      
                      $
                      (62.0
                      )Prior
      to the third quarter of fiscal 2009, we owned 50% of Groupe
      Smithfield S.L. (Groupe Smithfield) and 24% of Campofrío Alimentación,
      S.A. (Campofrío). Those entities merged in the third quarter of
      fiscal 2009 to form Campofrío Food Group, of which we own 37%. The amounts
      presented for Campofrio Food Group represent the combined results of
      Groupe Smithfield and Campofrio.


7