Form S-1

S-1 1 ds1.htm FORM S-1 Form S-1

As filed with the Securities and Exchange Commission on July 22, 2009

Registration No. 333-

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-1

REGISTRATION STATEMENT

under

The Securities Act of 1933

JBS USA Holdings, Inc.

(Exact name of Registrant as specified in its charter)

Delaware

2011

20-1413756

(State or other jurisdiction of

incorporation or organization)

(Primary Standard Industrial

Classification Code Number)

(I.R.S. Employer

Identification Number)

JBS USA Holdings, Inc.

1770 Promontory Circle

Greeley, Colorado 80634

(970) 506-8000

(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

André Nogueira de Souza

Chief Financial Officer

JBS USA Holdings, Inc.

1770 Promontory Circle

Greeley, Colorado 80634

(970) 506-8000

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Donald E. Baker

John R. Vetterli

White & Case LLP

1155 Avenue of the Americas

New York, New York 10036

(212) 819-8200

Arthur D. Robinson

John C. Ericson

Simpson Thacher & Bartlett LLP

425 Lexington Avenue

New York, New York 10017

(212) 455-7086

Approximate date of commencement of proposed sale to the public: As soon as practicable after this registration statement becomes effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box: ¨.

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this Form is a post effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this Form is a post effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):



Large accelerated filer ¨	Accelerated filer ¨	Non-accelerated filer x	Smaller reporting company ¨

(Do not check if a smaller reporting company)

CALCULATION OF REGISTRATION FEE



Title of each class of securities to be registered	Proposed maximum aggregate offering price(1)	Amount of registration fee
Common stock, par value $0.01 per share	$2,000,000,000	$111,600

(1)

Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457(o) of the Securities Act of 1933. Includes amounts attributable to shares of common stock that may be purchased by the underwriters to cover over-allotments, if any. See “Underwriting.”

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities, and we are not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

Subject to completion, dated , 2009

Prospectus

shares

LOGO

JBS USA HOLDINGS, INC.

Common stock

This is the global initial public offering of our common stock, which consists of an international offering in the United States and other countries outside Brazil and a concurrent offering in the form of Brazilian depositary receipts, or “BDRs,” in Brazil. Each BDR represents shares of our common stock. Of the shares of common stock to be sold in the offering, we are selling shares and JBS Hungary Holdings Kft., or the selling stockholder, is selling shares. We will not receive any of the proceeds from the shares of common stock being sold by the selling stockholder. We expect the initial public offering price to be between $ and $ per share.

The international offering is being underwritten by the international underwriters named in this prospectus. The Brazilian offering is being underwritten by a syndicate of Brazilian underwriters. The closing of the Brazilian offering will be conditioned upon the closing of the international offering.

Prior to the global offering, there has been no public market for our common stock. We expect to apply for listing of our common stock on The New York Stock Exchange under the symbol “JBS.” We also expect to apply to list the BDRs on the São Paulo Stock Exchange under the symbol “ .”

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed on the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.


	Per share	Total

Initial public offering price	$	$

Underwriting discount	$	$

Proceeds to JBS USA Holdings, Inc., before expenses	$	$

Proceeds to the selling stockholder, before expenses	$	$

We have granted the international underwriters an option for a period of 30 days to purchase from us up to additional shares of our common stock to cover over-allotments, if any, in connection with the international offering.

Investing in our common stock involves a high degree of risk. See “Risk factors” beginning on page 20 to read about certain factors you should consider before buying shares of our common stock.

The underwriters expect to deliver the shares on or about , 2009.



J.P.Morgan		BofA Merrill Lynch

, 2009

Table of contents


Prospectus summary		1

The offering		12

Summary historical and pro forma financial data		15

Risk factors		20

Special note regarding forward-looking statements and industry data		36

Basis of presentation		38

Use of proceeds		39

Dividend policy		40

Capitalization		41

Dilution		43

Selected historical consolidated financial data		45

Unaudited pro forma combined financial statements		49

Management’s discussion and analysis of financial condition and results of operations		55


Business		95

Management		119

Compensation discussion and analysis		125

Certain relationships and related party transactions		135

Principal and selling stockholder		139

Description of capital stock		143

Shares eligible for future sale		148

Certain material United States federal income and estate tax considerations for non-U.S. holders		151

Underwriting		154

Legal matters		161

Experts		161

Where you can find more information		162

Index to consolidated financial statements		F-1

You should rely only on the information contained in this prospectus or in any free writing prospectus prepared by or on behalf of us and delivered or made available to you. Neither we nor the selling stockholder have authorized anyone to provide you with information different from that contained in this prospectus. We and the selling stockholder are offering to sell, and seeking offers to buy, shares of common stock only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of our common stock. Our business, financial condition, results of operations and prospects may have changed since that date.

No action is being taken in any jurisdiction outside the United States to permit a public offering of our common stock or possession or distribution of this prospectus in that jurisdiction. Persons who come into possession of this prospectus in a jurisdiction outside the United States are required to inform themselves about and to observe any restrictions as to this offering and the distribution of this prospectus applicable to that jurisdiction.

Until , 2009, all dealers that buy, sell or trade in our common stock, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotment or subscriptions.

Prospectus summary

The following summary highlights information contained elsewhere in this prospectus. Before deciding whether to buy shares of our common stock, you should read this summary and the more detailed information in this prospectus, including our consolidated financial statements and related notes and the discussion of the risks of investing in our common stock in the section entitled “Risk factors.” Except as the context otherwise requires, references in this prospectus to JBS USA Holdings, Inc. and the terms “we,” “us” and “our” refer to JBS USA Holdings, Inc. and its subsidiaries. When we present financial data “on a pro forma basis,” it means that the financial data as of and for the fiscal year ended December 28, 2008 and as of and for the fiscal quarter ended March 30, 2008 reflects our acquisition of Smithfield Beef Group, Inc. (which we subsequently renamed JBS Packerland, Inc., or JBS Packerland), which included the acquisition of 100% of Five Rivers Ranch Cattle Feeding LLC, or Five Rivers, as if it had occurred at the beginning of the period presented as further discussed under “Unaudited pro forma combined financial information.”

JBS USA Holdings, Inc.

We process, prepare, package and deliver fresh, processed and value-added beef and pork products for sale to customers in over 60 countries on six continents. Our operations consist of supplying fresh meat products, processed meat products and value-added meat products. Fresh meat products include refrigerated beef and pork processed to standard industry specifications and sold primarily in boxed form. Our processed meat offerings, which include beef and pork products, are cut, ground and packaged in a customized manner for specific orders. Additionally, we process lamb and mutton products. Our value-added products include moisture-enhanced, seasoned, marinated and consumer-ready products. We also provide services to our customers designed to help them develop more comprehensive and profitable sales programs. Our customers are in the food service, international, further processor and retail distribution channels. We also produce and sell by-products that are derived from our meat processing operations, such as hides and variety meats, to customers in the clothing, pet food and automotive industries, among others.

We are a wholly owned indirect subsidiary of JBS S.A., the world’s largest beef producer, which has a daily slaughtering capacity of 73,940 head of cattle. In the fiscal quarter ended March 29, 2009, we represented approximately 78% of JBS S.A.’s gross revenues. Over the past few years, JBS S.A. has acquired several U.S. and Australian beef and pork processing companies and slaughterhouses, which now comprise JBS USA Holdings, Inc. and its subsidiaries:

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on July 11, 2007, JBS S.A. acquired Swift Foods Company (our predecessor company, which was subsequently renamed JBS USA Holdings, Inc.), which we refer to as the Swift Acquisition;

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on May 2, 2008, we acquired substantially all of the assets of the Tasman Group Services, Pty. Ltd., or the Tasman Group, which we refer to as the Tasman Acquisition; and

•

on October 23, 2008, we acquired Smithfield Beef Group, Inc. (which we subsequently renamed JBS Packerland), which included the 100% acquisition of Five Rivers. We refer to this transaction as the JBS Packerland Acquisition.

In the United States, we conduct our operations through eight beef processing facilities, three pork processing facilities, one lamb processing facility, one case-ready beef and pork facility, one hide tannery, seven leased regional distribution centers, two grease-producing facilities, and 11 feedlots operated by Five Rivers, which supply approximately 30% of our fed cattle needs. In Australia, we operate ten beef and small animals processing facilities, including the largest and what we believe is the most technologically advanced facility in the country, and five feedlots which supply approximately 18% of our fed cattle needs. Our small animals processing facilities in Australia process hogs, lamb and sheep, or smalls. Our Australian facilities are strategically located to access raw materials in a cost effective manner and to service our global customer base. We have the capacity to process approximately 28,600 cattle, 48,500 hogs and 4,500 lambs daily in the United States and 8,690 cattle and 15,000 smalls daily in Australia based on our facilities’ existing configurations.

Our business operations are organized into two segments:

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our Beef segment, through which we conduct our domestic beef processing business, including the beef operations we acquired in the JBS Packerland Acquisition, and our international beef, lamb and sheep processing businesses that we acquired in the Tasman Acquisition; and

•

our Pork segment, through which we conduct our domestic pork and lamb processing business.

We had consolidated net sales of $15.4 billion on a pro forma basis in the fiscal year ended December 28, 2008, and we had consolidated net sales of $3.2 billion in the fiscal quarter ended March 29, 2009. In the same periods, we had gross profit of $608.0 million on a pro forma basis and $73.0 million, respectively, and Adjusted EBITDA of $531.8 million on a pro forma basis and $66.1 million, respectively. Our net income for the fiscal year ended December 28, 2008 was $192.1 million on a pro forma basis and $2.3 million for the fiscal quarter ended March 29, 2009. Our Beef and Pork segments represented 84% and 16%, respectively, of our net sales on a pro forma basis during the fiscal year ended December 28, 2008, and 84% and 16%, respectively, of our net sales during the fiscal quarter ended March 29, 2009.

Industry overview

Beef

United States

Beef products are second to chicken as the largest source of meat protein in the United States. The United States has the largest grain-fed cattle industry in the world and is the world’s largest producer of beef, which is primarily high-quality grain-fed beef for domestic and export use. The domestic beef industry is characterized by daily price changes based on seasonal consumption patterns and overall supply and demand for beef and other proteins in the United States and abroad. Cattle prices vary over time and are impacted by inventory levels, the production cycle, weather and feed prices, among other factors.

Beef processors include vertically integrated companies, who own and raise cattle on feed for use in their processing facilities, and pure processors, who do not own cattle on feed. Vertically integrated beef processors can be subjected to significant working capital demands, since cattle typically feed in the yards for 90-180 days without any revenue generation until processed. Additionally, as cattle on feed consume feed with a replacement price that is subject to market changes, vertically integrated beef processors have direct financial exposure to the volatility in corn and other feedstock prices. Pure U.S. beef processors generally purchase cattle in the spot market or pursuant to market-priced supply arrangements from feedlot operators, process the cattle in their own facilities and sell the beef at spot prices. Cattle are usually purchased at market prices and held for less than a day before processing, thus such processors are not exposed to changing market prices over as great a time span as vertically integrated beef processors. Pure beef processors are primarily “spread” operators, and their operating profit is largely determined by plant operating efficiency rather than by fluctuations in prices of cattle and beef.

During the past few decades, consumer demand for beef products in the United States has been in line with population growth, which is the primary driver of aggregate demand. Export demand has fluctuated widely due to the closing of certain international markets following the discovery of isolated cases of bovine spongiform encephalopathy, or BSE (also commonly referred to as mad cow disease), in 2003 and 2004, and the sporadic re-opening of such markets. We believe that consumer demand for U.S. exports in developing countries is driven by population growth compounded by economic growth. As consumers’ economic circumstances improve, they increasingly shift their diets to protein. Industry-wide export sales have been ramping up from 2004 through mid-2009, trending toward pre-2003 levels.

Between 2006 and January 2008, our largest U.S. beef competitor eliminated two million head per year of slaughter capacity in four plants. This represented a reduction of nearly 7% of total U.S. industry-wide capacity and has helped improve the supply/demand balance of beef in the U.S. and export markets.

Australia

Australia has traditionally been a supplier of grass-fed beef. Grass is a much cheaper feed source than grain. With the vast amount of land in Australia available for cattle raising and feeding, grass is the predominant feeding method. Australia also has a grain-fed beef cattle sector which primarily supplies processed cattle for export to Japan and South Korea and to the domestic market. Grain-fed cattle accounted for 27% of the adult cattle slaughter in 2008, representing 34% of total beef production in Australia. The majority of cattle slaughtered in Australia are range or grass-fed and not finished in the feedlots. Australia has been one of the leading beef export countries for more than a decade. We believe that approximately 75% of exports have historically been sold to the United States, Japan and South Korea, but Australian beef has been increasingly exported to Russia, Taiwan, Mexico, Chile and the United Arab Emirates, among other countries. Although Australian meat packers, including our Australian operations, benefited from the closure of many markets to North American beef as a result of BSE detections in North American cattle, Australian exports have remained strong following the reopening of international markets to North American beef.

Global exports

We sell our products in over 60 countries on six continents, and exports accounted for approximately 24% of our sales in 2008 on a pro forma basis and 21% of our sales for the fiscal quarter ended March 29, 2009. The international beef market is divided into two blocks based on factors that include common sanitary criteria, such as restrictions on imports of fresh beef from countries that permit foot-and-mouth disease, or FMD, vaccination programs or beef treated with growth hormones.

The United States has been an FMD-free country since the eradication of the disease, and it does not implement vaccination programs. However, the United States treats most of their cattle with growth hormones, and, accordingly, the European Union and several other countries have banned imports of beef treated with growth hormones from the United States.

In contrast, Brazil and Argentina have prohibited the use of growth hormones on their cattle. JBS S.A. is a large exporter of beef to the European Union.

We believe that our U.S. export operations of fresh beef today do not directly compete with our parent company’s Brazilian and Argentine export operations of fresh beef in our main export destinations. Consequently, we do not have formal arrangements with JBS S.A. to coordinate our exports in our export markets. However, to the extent that sanitary restrictions change in the future, we could become direct competitors of our parent company in certain export markets.

We do compete with JBS S.A. to a limited degree, however, for example, to the extent that our Australian operations export to the European Union, the Middle East and Southeast Asia, which are also export markets for JBS S.A. We do not believe our Australian business’ competition with JBS S.A. in these markets has a material adverse effect on our current business.

Pork

Pork products are the most widely consumed meat in the world. Pork is the third largest source of meat protein in the United States, behind chicken and beef. The United States, which is widely regarded as a world leader in food safety standards, is the third largest producer worldwide, behind China and the European Union, and one of the largest exporters of pork products.

The domestic pork industry is characterized by daily price changes based on seasonal consumption patterns and overall supply/demand for pork and other meats in the United States and abroad. Generally, domestic and worldwide consumer demand for pork products drive pork processors’ long-term demand for hogs. To operate profitably, hog processors seek to acquire or raise hogs at the lowest possible costs and minimize processing costs by maximizing plant operating rates. Hog prices vary over time and are impacted by inventory levels, the production cycle, weather and feed prices, among other factors.

the volatility in corn and other feedstock prices. Pure processors generally purchase finished hogs under long-term supply contracts at prevailing market prices, process the hogs in their own facilities and sell the finished products at spot prices. Finished hogs are typically purchased at market prices and held for less than one day before processing, thus pure processors are not exposed to changing market prices over as great a time span as vertically integrated processors. Pure pork processors are primarily “spread” operators, and their operating profit is largely determined by plant operating efficiency and not by fluctuations in prices of hogs and pork.

While affected by seasonal consumption patterns, demand for pork has remained consistently strong. During the past few decades, population growth has been the primary driver of increased aggregate pork product demand in the United States. We believe that consumer demand for U.S. exports in developing countries is driven by population growth compounded by economic growth: as consumers’ economic circumstances improve, they increasingly shift their diets to protein. To satisfy the growing global demand, U.S. pork exports have more than tripled in the past decade. The top three leading export markets for U.S. pork and pork variety meats are Japan, Mexico and Canada.

Competitive strengths

We are well positioned as a leading meat processor in the U.S. and Australia. We have implemented significant operational improvements over the last several years, resulting in increases in throughput, additional value-added products, improved food safety and industry-leading worker safety. Our competitive strengths include:

Scale and leading market positions in beef and pork industries

As a standalone company we would be the largest beef processor in the world. In terms of daily slaughtering capacity, we are among the leading beef and pork processors in the United States and we have been the number one processor of beef in Australia for the past 15 years. With a slaughtering capacity of 37,290 heads per day in beef, 48,500 heads per day in hogs and over 19,500 heads per day in smalls, our scale provides us with operational flexibility to:

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source our products based on the most favorable conditions of input costs,

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diversify our operations to minimize sanitary risk, and

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attain proximity to our raw materials and end customers given our geographical reach, saving freight and storage costs.

During the past few decades, consumer demand for beef and pork products in the United States has been increasing primarily as a result of population growth. Global protein demand has remained strong due to continued population growth and economic growth in developing countries. Despite the current economic recession, we believe protein demand will continue to increase in the long-term in conjunction with rising living standards and a growing middle class in developing countries. As part of JBS S.A., the world’s leading beef producer, and given the industry’s significant barriers to entry, we believe we are well-positioned to serve this growing global demand.

Diversified business model with international reach

Our business is well diversified across proteins and all major distribution channels, as well as geographically with respect to production and distribution.

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Diversified protein offerings: We sell beef, pork and lamb products. Selling multiple proteins offers us the opportunity to cross-sell to our customers and to diversify typical industry risks such as industry cycles, the impact of species-based diseases and changes in consumer protein preferences. As a result of our multiple proteins, our businesses, when taken as a whole, are less likely to be severely impacted by issues affecting any one protein. Additionally, our JBS Packerland beef processing facilities are engineered to provide us with the flexibility to process a variety of cattle, which allows further diversification of our beef product offerings. For example, our JBS Packerland facilities are engineered to process both cattle raised for beef production and cattle bred for dairy production. This flexibility enables us to shift our operations on a daily basis between beef and dairy cattle depending on market availability, seasonal demand and relative margin attractiveness, setting us apart from many beef processing facilities in the United States.

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Sales and distribution channel diversification: We benefit from our diversified sales and distribution channels, which include national and regional retailers (including supermarket chains, independent grocers, club stores and wholesale distributors), further processors (including those that make bacon, sausage and deli and luncheon meats), international markets and the food service industry (including food service distributors, which service restaurant and hotel chains and other institutional customers). We sell our products to over 6,000 customers worldwide with no customer accounting for more than 4.5% of our net sales. This reduces our dependence on any market or customer and provides multiple channels for potential growth. In the retail segment, we further benefit from a variety of widely recognized brands, including Swift, Swift Premium, Swift Angus Select, Swift Premium Black Angus, Miller Blue Ribbon Beef and G.F. Swift 1855 among others. We also manufacture products for some of our main customers’ private label brands.

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Geographic diversification: We sell our products in over 60 countries on six continents. During fiscal 2008, on a pro forma basis, and the fiscal quarter ended March 29, 2009, we had international sales of $3.8 billion and $0.7 billion, respectively. Overall, exports accounted for approximately 24% of our sales in 2008 on a pro forma basis and 21% of our sales for the fiscal quarter ended March 29, 2009. Exports are an important part of our strategy and a competitive advantage. In fiscal 2008, we supplied Japan and South Korea with 36% and 47% of their total beef imports, respectively, according to Meat & Livestock Australia Limited. We believe we were the largest supplier of beef imported into Japan and South Korea in 2008. Our imports of beef to the United States from Australia totaled 32% of total Australian beef imports to the United States during fiscal 2008. Our geographic diversification enables us to reduce exposure to any one market and concurrently have access to all export markets. Additionally, having access to international markets allows us to potentially generate higher returns as many of our export products, such as tongue, heart, kidney and other variety meats, garner higher demand and pricing in foreign markets, particularly in Asia.

Our processing platforms in the United States and Australia, which are two major beef producing countries, provide us with enough geographic diversification and operating flexibility to satisfy

demand depending on market conditions and sanitary restrictions. For example, our facilities in Dinmore, Beef City, Brooklyn and Longford, Australia accommodate non-hormone-treated fed cattle allowing us to market our products to the European Union (which prohibits imports of hormone-treated products). Accordingly, each of these facilities is eligible to ship to the European Union. We also benefit from greater international market access through our Worthington pork plant, which is one of only three facilities in the United States certified for export to the European Union. Additionally, our JBS Packerland facilities are located near major metropolitan areas, resulting in lower freight costs relative to cattle processing facilities in more rural locations.

While the closure of foreign markets to U.S. beef in 2003 negatively impacted the U.S. beef industry, our Australian beef operation retained access to those markets and benefited from reduced competition. Furthermore, we have a U.S. sales office which annually sources over $160 million of meat products from our Australian facilities into the U.S. market—products that provide U.S. customers, particularly in the food service and further processing channels, with a source of lean protein.

World class operations

We believe our operations are among the most efficient in the industry. We operate three of the six highest-throughput beef facilities in the United States. Furthermore, we continuously focus on improving our operating efficiencies. We have developed a program to improve the coordination of our planning, forecasting, scheduling, procurement and manufacturing functions to drive performance in the supply chain. Our efforts in 2008 were focused on increasing beef yields, reducing operational costs and lowering overhead. One of the key initiatives in delivering on this strategy was returning our Greeley, Colorado processing facility to its originally designed capacity as a two-shift operation. Producing more volume in the same length of time reduces our cost per pound. As a measure of our progress, excluding the JBS Packerland Acquisition and the Tasman Acquisition, during the fiscal year ended December 28, 2008, our Beef and Pork segments demonstrated an 8.5% and 3.8% increase in throughput, respectively, compared to the fiscal year ended December 30, 2007. As a result, we remain focused on leveraging our fixed cost base to improve our operating margins.

Strong balance sheet and limited derivative exposure relative to our peers

We have lower leverage than certain of our competitors. Moreover, since we are not vertically integrated in our U.S. operations, we are not significantly exposed to commodity hedging losses. We believe that our business and capital structure provides us with flexibility to respond to market conditions and to capitalize on business opportunities, particularly in the current credit-constrained environment.

Established customer relationships

with our customers, who we believe view us as a long-term strategic partner and consider us an extended part of their operations. We believe that the high-quality long-standing relationships we have developed provide us with revenue stability and forecasting transparency.

Proven management team and high performance work force

We have a proven senior management team whose experience in the protein industry has spanned numerous market cycles. Since the Swift Acquisition, we have simplified our management structure through headcount reduction and streamlined decision-making processes, effectively empowering our employees. We also benefit from management ideas, best practices, and talent shared with the seasoned management team at our parent company, who has over 50 years of experience operating beef processing facilities in Brazil. Members of JBS S.A.’s South American management team have been appointed to management positions in our United States and Australian operations. In addition, members of our Australian management team have been appointed to management positions in the United States, and vice-versa. Moreover, our management and that of our parent company have significant experience in acquiring and successfully integrating operations as evidenced by the more than 30 acquisitions made by JBS S.A. in the last 15 years, and more recently the integration of the JBS Packerland Acquisition and the Tasman Acquisition by us.

Our strategy

Prior to 2002, our predecessor was owned and operated by a multinational food company. From 2002 to 2007, our predecessor was owned by a private equity company. Since the Swift Acquisition in July 2007, we have significantly changed our business strategy. Our current strategy is to continue to grow our business’ revenues and profitability through the following strategic initiatives:

Continuously improve profitability through process optimization

We continue to focus on enhancing our production yields and operational abilities and improving our information technology systems, with a view toward reducing our operating costs and improving throughput yields. Our initiatives in 2008 geared towards cost reductions led to approximately $90 million in cost savings as compared to the fiscal year ended December 30, 2007. These cost reductions included renegotiating vendor contracts, insourcing of contract services previously outsourced and plant cost initiatives. We expect to further improve our operating performance by adopting best practices and leveraging additional operating expertise that we have access to as a member of the JBS S.A. group. Separately, we have been able to reduce operating costs by, among other measures, eliminating our reliance on third-party consultants and performing certain services in-house that were formerly outsourced at a premium. We have decreased our selling, general and administrative expenses by eliminating multiple layers of management positions and by requiring our service providers to participate in competitive bidding processes. As a measure of this progress, we have reduced annual selling, general and administrative expenses by over $24.5 million, or 20.7%, for the fiscal year ended December 28, 2008, and in 2008 ranked as having the lowest ratio of selling, general and administrative expense to net sales among publicly traded protein companies in the United States. In addition to contract renegotiations and management efficiencies, operating efficiencies

have led to annual incremental cost savings and margin improvements of approximately $115 million for the fiscal year ended December 28, 2008. These operating efficiencies include adding a second shift at our Greeley plant, our yield improvement projects, including introduction of a pork casing sorting system (a margin enhancement strategy brought to the United States by JBS S.A.) in all of our U.S. pork plants, improved deboning training and cutting techniques on the fabrication floor and increased value-added production.

Continue to successfully integrate recent acquisitions and selectively pursue additional value-enhancing growth opportunities

We have a proven track record of successfully acquiring and integrating companies, resulting in production and operating synergies. In 2008, we increased production through the Tasman Acquisition and the JBS Packerland Acquisition. These acquisitions have increased our daily cattle processing capacity from approximately 26,500 to 37,290 cattle. Additionally, as a result of the Tasman Acquisition, we added the ability to process 15,000 smalls per day in Australia. The Tasman Group is currently fully integrated with our legacy northern Australia operations in livestock procurement and sales. We expect to complete full integration of all information technology systems by the end of 2009. Similarly, JBS Packerland is fully integrated with respect to our customer credit, legal, treasury, financial reporting, insurance procurement and tax functions and certain employee benefit plans. We have identified and captured shared purchasing opportunities in certain packaging areas and continue to identify additional opportunities as contracts expire. We intend to complete our operational and financial information technology integration of JBS Packerland by September 2009. We will continue to work to maximize potential synergies from these acquisitions. Additionally, we intend to continue to selectively pursue additional value-enhancing growth opportunities as they arise.

Increase sales and enhance margins by significantly expanding our direct distribution network

Since the Swift Acquisition, we have built a leading global production platform. Capitalizing on our production platform, we are now pursuing a global direct distribution strategy that will enable us to improve our ability to service current customers and allow us the opportunity to directly service new customers, primarily in the food service and retail channels. Our historical sales strategy has relied upon the use of third-party distributors who purchase our product and resell it to end-user customers at higher prices, retaining the incremental margin for their own benefit. We intend to shift a significant part of our sales efforts into direct sales to end-user customers in order to capture this incremental margin. This is consistent with our approach of in-sourcing activities previously outsourced in order to eliminate margin leakage to third parties. Direct distribution will include regional distribution centers, portion control fabrication, or “cutting room” facilities (taking primal cuts which we would have sold only as whole muscle cuts to third parties and fabricating them into individual serving chops or steaks), and direct sales and shipment of products to individual end-user customers by our sales personnel using our own delivery vehicles. This direct distribution strategy will require us to substantially expand our distribution network and sales force domestically and internationally by both acquisitions and greenfield investments. During the next five years, we intend to make substantial investments, including with a portion of the net proceeds of this offering, in order to significantly expand our direct distribution network. Ultimately, we believe that our investment in this direct distribution strategy will allow us to capture incremental sales and operating margin opportunities.

Increase processed and value-added offerings

Historically, we have realized greater margins by offering value-added products and services to our customers. These offerings reduce their costs and help stimulate consumer demand. Examples of our value-added product and service offerings include additional processing to create sliced, cubed and tenderized products and consumer-ready chops and steaks. Similarly we also provide marinated and seasoned meats. These services help reduce labor costs for our food service customers and are examples of our focus on providing our customers with solutions to increase their beef and pork sales.

We believe our retail and food service customers will continue to value more convenient processed products from us. We currently operate 20 plants that produce beef and pork products that are cut, ground and packaged in a customized manner for specific orders that are primarily sold through the food service and retail distribution channels. We intend to expand our processed offerings through line expansions, acquisitions and/or greenfield investments. Increasing our value-added offerings is not limited to growth in processing capabilities, as our Five Rivers operations provide us the ability to design feeding programs that allow us to consistently deliver products that meet the exact specifications desired by our customers. We believe that increased value-added capabilities will drive margin improvement and increase the value we provide to customers.

Promote innovation across the value chain

We believe we can increase our profitability by developing and implementing innovative process and product improvements across the value chain. Our innovations include implementing a casing sorting system utilized in Brazil which enables the sorting of hog intestines (casings) for sale to end-users from all of our U.S. pork processing facilities, resulting in significantly improved margins. Additionally, we have developed and implemented energy conversion and recovery processes including real-time processes by which byproducts of purchased natural gas or grease produced in our rendering operations are converted into useable fuels and a methane recovery process resulting in useable methane gas that is subsequently resold in North American pipelines. We have also instituted Halal processing capabilities in our Australian operations, providing us with the opportunity to expand our exports to Muslim customers located in the Middle East, which we believe sets us apart from our competitors in Australia. We will continue to seek to develop innovative process and product improvements across the value chain.

Maintain leadership in food and employee safety

We prioritize our food and employee safety objectives in order to accomplish two principal goals. First, we focus on maintaining a high standard of food safety in order to ensure the quality of our products and attempt to avoid the potential adverse market reaction that is associated with recalls that occur from time to time in the meat processing industry. Second, we strive to continuously improve our employee safety in order to increase the efficiency of our facilities and reduce our operating costs. Since January 2003, we have reduced the number of lost-time injury events by approximately 50% at our beef processing facilities and by approximately 45% at our pork processing facilities through design and implementation of a comprehensive multi-faceted employee safety and injury prevention program.

Recent developments

On April 27, 2009, our wholly owned subsidiaries JBS USA, LLC and JBS USA Finance, Inc. issued $700.0 million in senior unsecured notes due May 2014 bearing interest at 11.625%, which, after deducting initial purchaser discounts, commissions and expenses in respect of this notes offering, generated net proceeds of approximately $650.8 million. The notes have semi-annual interest payment dates in May and November, commencing November 2009. The proceeds of the notes issuance were used to repay $100.0 million of borrowings under our secured revolving credit facility and to repay $550.8 million of the outstanding principal and accrued interest on intercompany loans to us from a subsidiary of JBS S.A., as described below.

As of March 29, 2009, we owed to JBS S.A. an aggregate of $658.6 million under various intercompany loans, which were subsequently assigned to JBS HU Liquidity Management LLC (Hungary), a wholly owned, indirect subsidiary of JBS S.A. The proceeds of these intercompany loans were used for the Tasman Acquisition and the JBS Packerland Acquisition, as well as to fund our operations. On April 27, 2009, these intercompany loan agreements were consolidated into one loan agreement. The maturity dates of the intercompany loans were extended to April 18, 2019, and the interest rate was changed to 12% per annum. The net proceeds of the offering of the 11.625% senior unsecured notes due 2014 (other than $100.0 million) were used to repay accrued interest and a portion of the principal on these intercompany loans. As of May 31, 2009, we owed an aggregate principal amount of $133.0 million under the consolidated intercompany loan agreement. See “Certain relationships and related party transactions.”

Corporate information

JBS USA Holdings, Inc. was incorporated in Delaware on July 23, 2004. We are a holding company and a direct, wholly owned subsidiary of JBS Hungary Holdings Kft., the selling stockholder, and a wholly owned, indirect subsidiary of JBS S.A. JBS S.A. is a publicly traded company in Brazil and the world’s largest beef producer. On July 11, 2007, JBS S.A. acquired Swift Foods Company for an aggregate purchase price of $1,470.6 million. JBS S.A. made this acquisition through J&F Acquisition Co., which thereafter merged with Swift Foods Company and changed its name to JBS USA, Inc., and subsequently JBS USA, Inc. changed its name to JBS USA Holdings, Inc.

Our corporate headquarters and principal executive offices are located at 1770 Promontory Circle, Greeley, Colorado, and our telephone number is (970) 506-8000. Our website is www.jbsswift.com. Information contained on our website is not incorporated into, and does not constitute a part of, this prospectus.

The offering

The following summary contains basic information about the shares and is not intended to be complete. It does not contain all of the information that is important to you. For a more complete understanding of the shares, please read the section of this prospectus entitled “Description of capital stock.”

Issuer

JBS USA Holdings, Inc.

Selling stockholder

JBS Hungary Holdings Kft.

Global offering

The global offering consists of the international offering and the concurrent Brazilian offering.

International offering

We and the selling stockholder are offering shares of common stock through the international underwriters in the United States and other countries outside Brazil.

Brazilian offering

Concurrently with the international offering, we and the selling stockholder are offering shares of common stock in the form of BDRs through the Brazilian underwriters in Brazil.

Common stock offered by us

shares.

Common stock offered by the selling stockholder

shares.

Common stock to be outstanding after this offering

shares (or shares if the underwriters exercise in full their option to purchase additional shares to cover over-allotments, if any).

Offering price

We expect the offering price to be between $ and $ per share.

Over-allotment option

We have granted the international underwriters an option for a period of 30 days to purchase from us up to additional shares of our common stock to cover over-allotments, if any.

Use of proceeds

We expect to receive net proceeds from the sale of our common stock in this global offering, after deducting the underwriting discount and other estimated expenses, of approximately $ million. We intend to use a portion of our net proceeds from this offering to selectively pursue value-enhancing growth opportunities as they arise. For example, during the next five years, we intend to make substantial investments in order to significantly expand our direct distribution

network. We also intend to use a portion of the net proceeds from this offering for working capital and general corporate purposes. See “Use of proceeds.”

We will not receive any of the sales proceeds associated with common stock offered by the selling stockholder.

Dividend policy

Our board of directors will adopt a dividend policy pursuant to which any future determination relating to dividend policy will be made at its discretion and will depend on a number of factors, including our business and financial condition, any covenants under our debt agreements and our parent company’s legal obligation to distribute dividends described below. However, our board of directors may, in its discretion and for any reason, amend or repeal this dividend policy. Our board of directors may increase or decrease the level of dividends provided for in our dividend policy or entirely discontinue the payment of dividends. Future dividends with respect to our common shares, if any, will depend on, among other things, our results of operations, cash requirements, financial condition, distribution of dividends made by our subsidiaries, contractual restrictions, business opportunities, provisions of applicable law and other factors that our board of directors may deem relevant.

Our parent company, JBS S.A., is required by the Brazilian corporate law to distribute on an annual basis dividends representing 25% of its net income (as calculated under generally accepted accounting principles in Brazil, subject to certain adjustments mandated by Brazilian corporate law) unless its board of directors has determined, in its discretion, that such distribution would not be advisable or appropriate in light of its financial condition.

Voting rights

Holders of our common stock will be entitled to one vote per share on all matters submitted to a vote of our stockholders.

Proposed New York Stock Exchange and São Paulo Stock Exchange symbols

We intend to apply to have our common stock listed on The New York Stock Exchange under the trading symbol “JBS.”

We expect to apply to have the BDRs listed on the São Paulo Stock Exchange under the symbol “ .”

Directed share program

know if these persons will choose to purchase all or any portion of these reserved shares, but any purchases they do make will reduce the number of shares available to the general public. See “Underwriting.”

Lock-up agreements

In connection with this offering, we, the selling stockholder and our executive officers and directors will enter into lock-up agreements with the underwriters of this global offering under which neither we nor they may, for a period of 180 days after the date of this prospectus, directly or indirectly sell, dispose of or hedge, or file or cause to be filed a registration statement with the SEC under the Securities Act or the Brazilian Securities Commission (Comissão de Valores Mobiliários, or “CVM”) relating to, any shares of common stock, including BDRs representing such shares, or any securities convertible into or exchangeable for shares of common stock, including BDRs representing such shares, without the prior written consent of J.P. Morgan Securities Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated on behalf of the international underwriters and the Brazilian underwriters.

Certain relationships and related party transactions

Please read “Certain relationships and related party transactions” for a discussion of business relationships between us and related parties and “Underwriting” for information regarding relationships between us and the underwriters.

Risk factors

You should carefully read and consider the information set forth under “Risk factors” and all other information set forth in this prospectus before investing in our common stock.

Unless otherwise indicated, all information contained in this prospectus assumes:

•

no exercise of the international underwriters’ option to purchase up to additional shares of common stock to cover over-allotments, if any, and

•

that the common stock to be sold in this global offering is sold at $ , which is the midpoint of the range set forth on the cover page of this prospectus.

Except as otherwise noted, the number of shares of our common stock to be outstanding after this global offering:

•

excludes shares available for future awards under our stock option plan (see “Compensation discussion and analysis—2009 stock incentive compensation plan” for more information), and

•

gives effect to a -for-one stock split to take place immediately prior to completion of this offering.

Summary historical and pro forma financial data

The following tables set forth our summary historical and unaudited pro forma financial data at the dates and for the periods indicated.

Our summary historical financial information contained in this prospectus is derived from:

(1)

our predecessor’s audited historical consolidated financial statements as of and for

(a)

the fiscal year ended December 24, 2006, and

(b)

the 198 days from December 25, 2006 through July 10, 2007 (the date immediately preceding the Swift Acquisition),

(2)

our audited historical consolidated financial statements as of and for

(a)

the 173 days from July 11, 2007 through December 30, 2007, and

(b)

the fiscal year ended December 28, 2008,

(3)

our unaudited historical consolidated financial statements for the fiscal quarter ended March 30, 2008, and

(4)

our unaudited historical consolidated financial statements as of and for the fiscal quarter ended March 29, 2009.

The financial statements in (1)(a) and (b) and (2)(a) were audited by Grant Thornton LLP. The financial statements in (2)(b) were audited by BDO Seidman, LLP. The financial statements in (4) were reviewed by BDO Seidman, LLP.

The financial statements in (1), (2) and (4) above are included elsewhere in this prospectus, all of which have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP. We have prepared our unaudited historical consolidated financial statements on the same basis as our audited financial statements and have included all adjustments, consisting of normal and recurring adjustments, that we consider necessary to present fairly our financial position and results of operations for the unaudited periods. The results of operations for any partial period are not necessarily indicative of the results of operations for other periods or for the full fiscal year.

Also included in the tables below are unaudited pro forma combined balance sheet data as of March 29, 2009 and unaudited pro forma combined statement of operations data for the fiscal year ended December 28, 2008 and the fiscal quarter ended March 29, 2009. The summary unaudited pro forma combined statement of operations data for the fiscal year ended December 28, 2008 have been prepared as if

•

our issuance and sale of our 11.625% senior unsecured notes due 2014 and the application of the proceeds therefrom,

•

the JBS Packerland Acquisition, and

•

the acquisition of 50% of the equity interest in Five Rivers not previously owned by JBS Packerland had occurred as of December 31, 2007.

The summary unaudited pro forma combined financial data for the fiscal year ended December 28, 2008 are derived from (1) our audited historical consolidated financial statements for the fiscal year ended December 28, 2008, (2) unaudited historical financial information of Smithfield Beef Group, Inc. for the period from January 1, 2008 through October 22, 2008 and (3) unaudited historical financial information of Five Rivers for the period from January 1, 2008 through October 22, 2008.

The summary unaudited pro forma combined financial data as of and for the fiscal quarter ended March 29, 2009 have been prepared as if our issuance and sale of our 11.625% senior unsecured notes due 2014 and the application of the proceeds therefrom had occurred as of December 30, 2007, and the unaudited pro forma combined balance sheet data as of March 29, 2009 have been prepared as if such event had occurred on March 29, 2009. The unaudited pro forma combined financial data do not give any pro forma effect to the Tasman Acquisition as it was not material and did not constitute a significant subsidiary under Regulation S-X.

The summary unaudited pro forma combined financial data as of and for the fiscal quarter ended March 29, 2009 are derived from our unaudited historical consolidated financial statements for the fiscal quarter ended March 29, 2009.

Historically, Smithfield Beef Group, Inc. and Five Rivers reported their financial results using the last Sunday in April, and March 31, respectively, as their fiscal year ends. Accordingly, the historical amounts presented for JBS Packerland and Five Rivers in the unaudited pro forma combined financial information do not agree with Smithfield Beef Group, Inc.’s and Five Rivers’ financial statements appearing elsewhere in this prospectus.

All pro forma financial information in this prospectus is presented for informational purposes only and does not purport to be indicative of what would have occurred had (1) our issuance of our 11.625% senior unsecured notes due 2014, (2) the JBS Packerland Acquisition and (3) the acquisition of 50% of the equity interest in Five Rivers actually been consummated at the beginning of the period presented or as of the balance sheet date, as the case may be, nor is it necessarily indicative of our future combined operating results.

You should read the information contained in this table in conjunction with “Unaudited pro forma combined financial data,” “Selected historical consolidated financial data,” “Management’s discussion and analysis of financial condition and results of operations” and the financial statements and the accompanying notes thereto included elsewhere in this prospectus.


	JBS USA Holdings, Inc.
	Predecessor						Successor
	As of and for the fiscal year ended December 24, 2006			As of and for the 198 days from December 25, 2006 through July 10, 2007			As of and for the 173 days from July 11, 2007 through December 30, 2007			As of and for the fiscal year ended December 28, 2008						As of and for the fiscal quarter ended March 30, 2008			As of and for the fiscal quarter ended March 29, 2009
in thousands, except earnings per share	Historical			Historical			Historical			Historical			Pro forma(1)			Historical			Historical			Pro forma(2)

	(audited)			(audited)			(audited)			(audited)			(unaudited)			(unaudited)			(unaudited)			(unaudited)

Statement of operations data:
Net sales	$	9,691,432		$	4,970,624		$	4,988,984		$	12,362,281		$	15,445,791		$	2,461,657		$	3,196,339		$	3,196,339
Cost of goods sold		9,574,715			4,920,594			5,013,084			11,917,777			14,837,751			2,451,413			3,123,358			3,123,358

Gross profit (loss)		116,717			50,030			(24,100	)		444,504			608,040			10,244			72,981			72,981
Selling, general and administrative		158,783			92,333			60,727			148,785			218,697			31,042			61,598			61,598
Foreign currency transaction loss (gain)(3)		(463	)		(527	)		(5,201	)		75,995			75,995			(12,614	)		(5,075	)		(5,075	)
Other income		(4,937	)		(3,821	)		(3,581	)		(10,107	)		(10,470	)		(3,782	)		(1,475	)		(1,475	)
Loss (gain) on sales of property, plant and equipment		(666	)		(2,946	)		182			1,082			1,096			19			180			180
Interest expense, net		118,754			66,383			34,340			36,358			82,621			8,108			14,592			24,616

Total expenses		271,471			151,422			86,467			252,113			367,939			22,773			69,820			79,844

Income (loss) before income tax expense		(154,754	)		(101,392	)		(110,567	)		192,391			240,101			(12,529	)		3,161			(6,863	)
Income tax expense (benefit)		(37,348	)		(18,380	)		1,025			31,287			47,986			5,613			909			(2,600	)

Net income (loss)	$	(117,406	)	$	(83,012	)	$	(111,592	)	$	161,104		$	192,115		$	(18,142	)	$	2,252		$	(4,263	)

Basic and diluted net income (loss) per share of common stock(4)		N/A			N/A		$	(1,115,920.00	)	$	1,611,040.00		$	1,921,150.00		$	(181,420.00	)	$	22,520.00		$	(42,630.00	)
Basic and diluted pro forma net income (loss) per share of common stock(5)		N/A			N/A		$			$			$			$			$			$
Balance sheet data (at period end):
Cash and cash equivalents	$	83,420		$	44,673		$	198,883		$	254,785					$	77,365		$	156,737		$	154,322
Accounts receivable, net		334,341			365,642			417,375			588,985						438,515			514,160			514,160
Inventories		457,829			487,598			466,756			649,000						541,519			650,026			650,026
Property, plant and equipment, net		487,427			505,172			708,056			1,229,316						716,334			1,241,055			1,241,055
Total assets		1,538,597			1,578,350			2,165,815			3,315,571						2,125,696			3,308,815			3,309,315
Long-term debt		1,065,553			1,201,975			32,433			806,808						32,347			901,517			933,242
Total debt		1,067,503			1,203,912			810,718			878,319						395,154			977,048			1,008,773
Stockholder’s equity		(40,090	)		(98,818	)		838,818			1,388,250						1,281,075			1,394,939			1,394,939
Other financial data:
EBITDA(6)		53,122			9,829			(40,983	)		321,123			454,724			14,718			51,105			51,105
Adjusted EBITDA(6)		51,993			6,356			(46,002	)		398,200			531,815			2,123			66,110			66,110
Cash provided by (used in):
Operating activities		67,823			(110,661	)		(107,784	)		282,147						(128,911	)		51,003
Investing activities(7)		(11,923	)		(27,777	)		(39,409	)		(783,739	)					(15,376	)		(206,440	)
Financing activities		(25,947	)		100,492			346,711			571,265						22,135			55,689
Capital expenditures	$	47,294		$	33,700		$	33,461		$	118,320		$	137,958		$	11,676		$	35,189		$	35,189
Other operating data:
Heads killed, Beef		5,808			2,731			2,824			6,872			8,721			1,355			2,025			2,025
Heads killed, Pork		12,105			6,511			6,123			13,113			13,113			3,315			3,114			3,114

(1)

As adjusted to (i) give effect to the JBS Packerland Acquisition as if it had occurred at the beginning of the period presented, and (ii) give effect to the sale of $560.9 million of our 11.625% senior unsecured notes due 2014 and the application of proceeds therefrom as if they had occurred at the beginning of the period presented.

(2)

As adjusted to give effect to the sale of $560.9 million of our 11.625% senior unsecured notes due 2014 and the use of proceeds therefrom as if it had occurred at the beginning of the period presented, in the case of statement of operations data, and give effect to the sale of all of our 11.625% senior unsecured notes due 2014 and the use of proceeds therefrom as if it had occurred at the end of the period presented, in the case of balance sheet data.

(3)

Foreign currency transaction loss (gain) reflects changes in value of our U.S. dollar-denominated intercompany note payable and receivable within Australia due to changes in the exchange rate between the U.S. dollar and the Australian dollar.

(4)

The capital structure of our predecessor company was significantly different from our capital structure. Prior to this offering, our capital structure consists of 100 common shares issued and outstanding, and we do not have any warrants or options that may be exercised. Accordingly, we do not believe our predecessor company’s earnings per share information is meaningful to investors and have not included such information.

(5)

In calculating shares of our common stock outstanding, we give retroactive effect to the stock split to occur immediately prior to completion of this offering.

(6)

EBITDA represents net income (loss) before income tax expense (benefit), interest expense, net, and depreciation and amortization. EBITDA and Adjusted EBITDA are presented as supplemental financial measurements in the evaluation of our business. Adjusted EBITDA as used in this prospectus represents EBITDA as defined in our 11.625% senior unsecured notes due 2014. Adjusted EBITDA, as used in our 11.625% senior unsecured notes due 2014, represents EBITDA as adjusted to exclude loss (gain) on sales of property, plant and equipment, non-recurring items and foreign currency transaction losses (gains). We present Adjusted EBITDA because we believe (1) the ratio of our net debt to Adjusted EBITDA is an important term of our 11.625% senior unsecured notes due 2014, (2) our 11.625% senior unsecured notes due 2014 is material indebtedness to our company and (3) information about this ratio is important to investors to understand our liquidity. See “Management’s discussion and analysis of financial condition and results of operations––Liquidity and capital resources––Covenant compliance” for more information about this ratio. In addition, because EBITDA and Adjusted EBITDA exclude certain non-cash charges, as well as other items that we believe are not representative of our core business operations, we believe that the presentation of these financial measures helps investors to assess our operating performance from period to period and enhances understanding of our financial performance and highlights operational trends. These measures are widely used by investors and rating agencies in the valuation, comparison, rating and investment recommendations of companies. However, the measurement of EBITDA and Adjusted EBITDA in this prospectus may not be comparable to that of other companies in our industry, which limits their usefulness as a comparative measure. EBITDA and Adjusted EBITDA are not measures required by or calculated in accordance with GAAP and should not be considered as a substitute for income (loss) from continuing operations, net income (loss) or any other measure of financial performance reported in accordance with GAAP or as measures of operating cash flows or liquidity. You should rely primarily on our GAAP results, and use this non-GAAP financial measure only supplementally, in making your investment decision.

Each of EBITDA and Adjusted EBITDA is reconciled to net income (loss) as follows:


	JBS USA Holdings, Inc.
	Predecessor						Successor
	As of and for the fiscal year ended December 24, 2006			As of and for the 198 days from December 25, 2006 through July 10, 2007			As of and for the 173 days from July 11, 2007 through December 30, 2007			As of and for the fiscal year ended December 28, 2008				As of and for the fiscal quarter ended March 30, 2008			As of and for the fiscal quarter ended March 29, 2009
in thousands	Historical			Historical			Historical			Historical		Pro forma		Historical			Historical			Pro forma


Net income (loss)	$	(117,406	)	$	(83,012	)	$	(111,592	)	$	161,104	$	192,115	$	(18,142	)	$	2,252		$	(4,263	)
Income tax expense (benefit)		(37,348	)		(18,380	)		1,025			31,287		47,986		5,613			909			(2,600	)
Interest expense, net		118,754			66,383			34,340			36,358		82,621		8,108			14,592			24,616
Depreciation and amortization(a)		89,122			44,838			35,244			92,374		132,002		19,139			33,352			33,352


EBITDA (unaudited)		53,122			9,829			(40,983	)		321,123		454,724		14,718			51,105			51,105
Loss (gain) on sales of property, plant and equipment		(666	)		(2,946	)		182			1,082		1,096		19			180			180
Foreign currency transaction loss (gain)(b)		(463	)		(527	)		(5,201	)		75,995		75,995		(12,614	)		(5,075	)		(5,075	)
National Beef termination fee(c)		—			—			—			—		—		—			19,900			19,900

Adjusted EBITDA (unaudited)	$	51,993		$	6,356		$	(46,002	)	$	398,200	$	531,815	$	2,123		$	66,110		$	66,110

(a)

Depreciation and amortization includes a goodwill impairment charge of $4.5 million for the fiscal year ended December 24, 2006.

(b)

(c)

On February 18, 2009, we reached an agreement to terminate our efforts to acquire National Beef Packing Company, LLC, or National Beef, effective February 23, 2009. As a result of the termination of the agreement, we paid a breakage fee to the shareholders of National Beef totaling $19.9 million as full and final settlement of any and all liabilities relating to the potential acquisition in the fiscal quarter ended March 29, 2009.

(7)

Investing activities for the fiscal year ending December 28, 2008 include cash used in connection with the Tasman Acquisition and the JBS Packerland Acquisition.

Risk factors

Investing in our common stock involves a high degree of risk. You should carefully consider the risks described below as well as the other information contained in this prospectus before deciding to purchase any shares of our common stock. These risks could harm our business, operating results, financial condition and prospects. In addition, the trading price of our common stock could decline due to any of these risks and you might lose all or part of your investment.

Risks relating to our business and the beef and pork industries

Outbreaks of BSE, Foot-and-Mouth Disease, or FMD, or other species-based diseases in the United States, Australia or elsewhere may harm demand for our products.

An outbreak of disease affecting livestock, such as BSE, could result in restrictions on sales of products to our customers or purchases of livestock from our suppliers. Also, outbreaks of these diseases or concerns that these diseases may occur and spread in the future, whether or not resulting in regulatory action, can lead to cancellation of orders by our customers and create adverse publicity that may have a material adverse effect on customer demand for our products. In December 2003, the USDA reported the first confirmed case of BSE in the United States. Following the announcement, substantially all international export markets banned the import of U.S. beef. Canada also confirmed its first case of BSE in 2003, leading to the USDA’s closure to imports of live cattle from Canada. As a result, export demand declined and negatively impacted the volume of processing at our facilities. The United States currently imports cattle that is 30 months of age or younger from Canada, and Mexico reopened its borders to U.S. beef in April 2004. However, the late June 2005 announcement by the USDA of a second confirmed case of BSE in the United States followed by a third confirmed case in March 2006 has extended some border closures and slowed the re-entry of U.S. beef to some foreign markets. On July 27, 2006, Japan announced it would resume importing some U.S. beef, restricted to cattle that is 20 months or younger from approved U.S. processing plants. In 2006, South Korea reopened its market to boneless beef from the United States. However, disagreements and lack of clarity over import rules and procedures slowed the re-entry of U.S. boneless beef such that such exports to South Korea did not truly commence until 2008. As of March 29, 2009, 16 countries were still closed to U.S. beef. We are currently unable to assess whether or when these remaining foreign markets may fully open to U.S. beef or whether existing open markets may close.

In addition to BSE (in the case of cattle) and FMD (a highly contagious animal disease), cattle, sheep and pigs are subject to outbreaks of other diseases affecting such livestock. An actual outbreak of BSE, FMD or any other diseases, or the perception by the public that such an outbreak has occurred, could result in restrictions on domestic and export sales of our products (even if our products are not actually affected by any disease), cancellations of orders by our customers and adverse publicity. In addition, if the products of our competitors become contaminated, the adverse publicity associated with such an event may lower consumer demand for our products. Any of these events could have a material adverse effect on us.

Any perceived or real health risks related to the food industry could adversely affect our ability to sell our products. If our products become contaminated, we may be subject to product liability claims and product recalls.

We are subject to risks affecting the food industry generally, including risks posed by the following:

•

food spoilage or food contamination,

•

evolving consumer preferences and nutritional and health-related concerns,

•

consumer product liability claims,

•

product tampering,

•

the possible unavailability and expense of product liability insurance, and

•

the potential cost and disruption of a product recall.

Our beef products and our pork products in the United States have in the past been, and may in the future be, exposed to contamination by organisms that may produce foodborne illnesses, such as E. coli, Listeria monocytogenes and Salmonella. These organisms are generally found in the environment and, as a result, there is a risk that they could be present in our products. These pathogens can also be introduced to our products through tampering or as a result of improper handling at the further processing, food service or consumer level. Once contaminated products have been shipped for distribution, illness or death may result if the products are not properly prepared prior to consumption or if the pathogens are not eliminated in further processing.

Although we have systems in place designed to monitor food safety risks throughout all stages of our processes, such systems, even when working effectively, may not eliminate the risks related to food safety. As a result, we may voluntarily recall, or be required to recall, our products if they are or may be contaminated, spoiled or inappropriately labeled. For example, on June 25, 2009, we voluntarily recalled 41,280 pounds of beef products that may have been contaminated with E. coli. Following further investigations, on June 28, 2009, we voluntarily expanded this recall to include an additional 380,000 pounds of assorted beef products. The recalled beef products were produced on April 21 and April 22, 2009 at our Greeley, Colorado facility and were shipped to distributors and retailers in multiple states and internationally. While we are unable to ascertain the exact cost we will incur relating to these voluntary recalls, we anticipate the total cost of these recalls to be less than $4 million. Although no direct link has been confirmed, the Centers for Disease Control and Prevention has stated that cases of E. coli illnesses may be associated with the consumption of these beef products.

We may be subject to significant liability in the jurisdictions in which our products are sold if the consumption of any of our products causes injury, illness or death and such liability may be in excess of applicable liability insurance policy limits. Adverse publicity concerning any perceived or real health risk associated with our products could also cause customers to lose confidence in the safety and quality of our food products, which could adversely affect our ability to sell our products. We could also be adversely affected by perceived or real health risks associated with similar products produced by others to the extent such risks cause customers to lose confidence in the safety and quality of such products generally. Any of these events may have a material adverse effect on us.

Our pork business could be negatively affected by concerns about A(H1N1) influenza.

In 2009, A(H1N1) influenza spread to several countries. More than 94,000 cases and over 400 deaths worldwide have been recorded since the outbreak of A(H1N1) influenza in Mexico, and

on June 11, 2009, the World Health Organization, or WHO, declared a flu alert level six, signaling a “global pandemic.” Although the WHO has stated that there is no relation between those infected with Influenza A(H1N1) and contact with persons living near swine or the consumption of pork, several countries, including Russia, Thailand, Ukraine, China and the Philippines, have stopped importing some or all pork produced in the affected states in the United States and certain other affected regions in the world.

Any further outbreaks of the disease could have a negative impact on the consumption of pork in our markets, and a significant outbreak could negatively affect our Pork net sales and overall financial performance. Any further outbreak of A(H1N1) influenza could lead to the imposition of costly preventive controls on pork imports in our international markets. Accordingly, any spread of A(H1N1) influenza, or increasing concerns about this disease could negatively impact our Pork results of operations and our ability to sell pork in existing and new markets.

Our results of operations may be negatively impacted by fluctuations in the prevailing market prices for livestock.

We are dependent on the cost and supply of livestock and the selling price of our products and competing protein products, all of which can vary significantly over a relatively short period of time. Livestock prices demonstrate a cyclical nature both seasonally and over periods of years, reflecting the supply of and demand for livestock on the market and the market for other protein products such as livestock and fish. These costs are determined by constantly changing market forces of supply and demand as well as other factors over which we have little or no control. These other factors include:

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environmental and conservation regulations,

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import and export restrictions,

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economic conditions,

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livestock diseases, and

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declining cattle inventory levels in the United States and/or Australia.

We do not generally enter into long-term sales arrangements with our customers with fixed price contracts, and, as a result, the prices at which we sell our products are determined in large part by market conditions. A majority of our livestock is purchased from independent producers who sell livestock to us under marketing contracts or on the open market. A significant decrease in beef or pork prices for a sustained period of time could have a material adverse effect on our net sales revenue and, unless our raw material costs and other costs correspondingly decrease, on our operating margins.

We attempt to manage certain of these risks through the use of risk management and hedging programs, which include forward purchase and sale agreements and futures and options, but these strategies cannot and do not fully eliminate these risks. Furthermore, these programs may also limit our ability to participate in gains from favorable commodity price fluctuations. Also, a portion of our forward purchase and sale contracts are marked-to-market such that the related unrealized gains and losses are reported in earnings on a quarterly basis. Therefore, losses on those contracts would adversely affect our earnings and may cause significant volatility in our quarterly earnings. See “Management’s discussion and analysis of financial condition and results of operations—Quantitative and qualitative disclosure about market risk.”

Accordingly, we may be unable to pass on all or part of any increased costs we experience from time to time to consumers of our products directly, in a timely manner or at all. Additionally, if

we do not attract and maintain contracts or marketing relationships with independent producers and growers, our production operations could be disrupted.

Our businesses are subject to government policies and extensive regulations affecting the cattle, hog, beef and pork industries.

Livestock production and trade flows are significantly affected by government policies and regulations. Governmental policies affecting the livestock industry, such as taxes, tariffs, duties, subsidies and import and export restrictions on livestock products, can influence industry profitability, the use of land resources, the location and size of livestock production, whether unprocessed or processed commodity products are traded, and the volume and types of imports and exports.

Our plants and our products are subject to periodic inspections by federal, state and municipal authorities and to comprehensive food regulation, including controls over processed food. Our operations are subject to extensive regulation and oversight by state, local and foreign authorities regarding the processing, packaging, storage, distribution, advertising and labeling of our products, including food safety standards. Our exported products are often inspected by foreign food safety authorities, and any violation discovered during these inspections may result in a partial or total return of a shipment, partial or total destruction of the shipment and costs due to delays in product deliveries to our customers.

Our operations in the United States are subject to extensive regulation and oversight by the USDA, the U.S. Environmental Protection Agency, or the EPA, and other state, local and foreign authorities regarding the processing, packaging, labeling, storage, distribution and advertising of our products. Recently, the food safety practices and procedures of the meat processing industry have been subject to more intense scrutiny and oversight by the USDA. Food safety standards, processes and procedures are subject to the USDA Hazard Analysis Critical Control Point program, which includes compliance with the Public Health Security and Bioterrorism Preparedness and Response Act of 2002. Wastewater, storm water and air discharges from our operations are subject to extensive regulations by the EPA and other state and local authorities. Our facilities for processing beef, pork and lamb are subject to a variety of federal, state and local laws relating to the health and safety of our employees including those administered by the U.S. Occupational Safety and Health Administration, or OSHA. Our Australian operations also are subject to extensive regulation by the Australian Quarantine Inspection Service, or AQIS, and other state, local and foreign authorities. Additionally, we are routinely affected by new or amended laws, regulations and accounting standards. Our failure to comply with applicable laws and regulations or failure to obtain necessary permits and registrations could delay or prevent us from meeting current product demand or acquiring new businesses, as well as possibly subjecting us to administrative penalties, damages, injunctive relief, fines, injunctions, recalls of our products or seizure of our properties as well as potential criminal sanctions, any of which could materially adversely affect our financial results.

Government policies in the United States, Australia and other jurisdictions may adversely affect the supply, demand for and prices of livestock products, restrict our ability to do business in existing and target domestic and export markets and could adversely affect our results of operations. For example, the European Union has banned the importation of beef raised using hormones. Our facilities in the U.S. and, to a limited extent, our facilities in Australia process cattle that have been raised with hormones and therefore, we are prohibited from exporting our products from these facilities to the European Union. In addition, the Obama administration

announced recently that it would seek to ban many routine uses of antibiotics, which are fed to farm animals to encourage rapid growth, in hopes of reducing the spread of dangerous bacteria in humans.

In addition, if we are required to comply with future material changes in food safety regulations, we could be subject to material increases in operating costs and we could be required to implement regulatory changes on schedules that cannot be met without interruptions in our operations.

Compliance with environmental requirements may result in significant costs, and failure to comply may result in civil liabilities for damages as well as criminal and administrative sanctions and liability for damages.

Our operations are subject to extensive and increasingly stringent federal, state, local and foreign laws and regulations pertaining to the protection of the environment, including those relating to the discharge of materials into the environment, the handling, treatment and disposition of wastes and remediation of soil and ground water contamination. Failure to comply with these requirements can have serious consequences for us, including criminal as well as civil and administrative penalties, claims for property damage, personal injury and damage to natural resources and negative publicity. We have incurred significant capital and operating expenditures and we expect to incur approximately $30 million in additional capital expenditures between 2009 and 2012, including for the upgrade our wastewater treatment facilities and remediation of previous contamination from the release of wastewater from certain of our plants under predecessor ownership as described in “Business—Wastewater issues.” Additional environmental requirements imposed in the future and/or stricter enforcement of existing requirements could require currently unanticipated investigations, assessments or expenditures and may require us to incur significant additional costs. As the nature of these potential future charges is unknown, we are not able to estimate the magnitude of any future costs, and we have not accrued any reserve for any potential future costs.

Some of our facilities have been in operation for many years. During that time, we and previous owners and operators of these facilities have generated and disposed of wastes that are or may be considered hazardous or may have polluted the soil, surface water or groundwater at our facilities and adjacent properties. Some environmental laws impose strict and, in certain circumstances, joint and several liability for costs of investigation and remediation of contaminated sites on current and former owners and operators of the sites, and on persons who arranged for disposal of wastes at such sites. Discovery of previously unknown contamination of property underlying or in the vicinity of our or our predecessor’s present or former properties or manufacturing facilities and/or waste disposal sites could require us to incur material unforeseen expenses. Occurrences of any of these events may have a material adverse effect on our business, financial condition, results of operations and cash flows.

In addition, increasing efforts to control emissions of greenhouse gases, or GHG, are likely to impact us. In the United States, the EPA recently proposed a mandatory GHG reporting system for certain activities, including manure management systems, which exceed specified emission thresholds. The EPA has also announced a proposed finding relating to GHG emissions that may result in promulgation of GHG air quality standards. The U.S. Congress is considering various options, including a cap and trade system which would impose a limit and a price on GHG emissions and establish a market for trading GHG credits. The House of Representatives recently passed a bill contemplating such a cap and trade system, and the bill is now before the Senate.

Certain states have taken steps to regulate GHG emissions that may be more stringent than federal regulations. In Australia, the federal government has proposed a GHG cap and trade system that would cover agricultural operations, including certain of our feedlots, and at least two of our processing plants. Certain states in Australia could also adopt regulations of GHG emissions which are stricter than Australian federal regulations. While it is not possible to estimate the specific impact final GHG regulations will have on our operations, there can be no guarantee that these measures will not have significant additional impact on us.

Our export and international operations expose us to political and economic risks in foreign countries, as well as to risks related to currency fluctuations.

Sales outside the United States, primarily to Russia, Japan, Mexico, South Korea, Canada, Taiwan and China, accounted for approximately 21% of our total net sales for the fiscal quarter ended March 29, 2009. Our international activities expose us to risks not faced by companies that limit themselves to the United States. One significant risk is that the international operations may be affected by import restrictions and tariffs, other trade protection measures, and import or export licensing requirements. For example, in 2008, exports to Japan from our processing plant in Wisconsin were suspended, as were exports to South Korea from our Colorado plant and to Russia from one of our pork production plants. In April 2009, Russia halted imports from our pork facility in Louisville, Kentucky. Our future financial performance will depend significantly on economic, political and social conditions in our and JBS S.A.’s principal export markets (the European Union, Russia, the United States, Japan, Mexico, Canada, Taiwan, China and the Middle East). Other risks associated with our international activities include:

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changes in foreign currency exchange rates and inflation in the foreign countries in which we operate;

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exchange controls;

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changes in a specific country’s or region’s political or economic conditions, particularly in emerging markets;

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potentially negative consequences from changes in regulatory requirements;

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difficulties and costs associated with complying with, and enforcing remedies under, a wide variety of complex international laws, treaties, and regulations, including, without limitation, the Foreign Corrupt Practices Act;

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tax rates that may exceed those in the United States and earnings that may be subject to withholding requirements and incremental taxes upon repatriation;

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potentially negative consequences from changes in tax laws; and

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distribution costs, disruptions in shipping or reduced availability of freight transportation.

While we attempt to manage certain of these risks through the use of risk management and hedging programs, which include futures and options, these strategies cannot and do not fully eliminate these risks. An occurrence of any of these events could negatively impact our results of operations and our ability to transact business in existing or developing markets.

Deterioration of economic conditions could negatively impact our business.

Our business may be adversely affected by changes in national or global economic conditions, including inflation, interest rates, availability of capital markets, consumer spending rates, energy

availability and costs (including fuel surcharges) and the effects of governmental initiatives to manage economic conditions. Any such changes could adversely affect the demand for our products both in domestic and export markets, or the cost and availability of our needed raw materials, cooking ingredients and packaging materials, thereby negatively affecting our financial results.

The recent disruptions in credit and other financial markets and deterioration of national and global economic conditions, could, among other things:

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negatively impact global demand for protein products, which could result in a reduction of sales, operating income and cash flows;

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cause our customers or end consumers of our products to “trade down” to other protein sources such as chicken or fish, or to cuts of beef or pork that are less profitable, putting pressure on our profit margins;

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make it more difficult or costly for us to obtain financing for our operations or investments or to refinance our debt in the future;

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cause our lenders to depart from prior credit industry practice and make more difficult or expensive the granting of any technical or other waivers under our debt agreements to the extent we may seek them in the future;

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impair the financial condition of some of our customers, suppliers or counterparties to our derivative instruments, thereby increasing customer bad debts or non-performance by suppliers or counterparties;

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decrease the value of our investments; and

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impair the financial viability of our insurers.

Failure to successfully implement our business strategies may affect our plans to increase our revenue and cash flow.

Our growth and financial performance depends, in part, on our success in implementing numerous elements of our strategies that are dependent on factors that are beyond our control.

We may be unable to fully or successfully implement our strategies. The beef and pork industries and the food distribution industry are particularly influenced by changes in customer preferences, governmental regulations, regional and national economic conditions, demographic trends and sales practices by retailers, among other factors. Some aspects of our strategy require an increase in our operating costs and a significant increase in capital expenditures that may not be offset by a corresponding increase in revenue, resulting in a decrease in our operating margins.

For example, we are pursuing a global direct distribution strategy as we seek to enhance our operating margins. The implementation of this strategy will require us to make substantial investments in order to build a distribution center network, as well as related operating expenses. There can be no assurance that the increased sales levels and enhanced margins that we anticipate will result from this strategic initiative, or that we will achieve an adequate return on the required investment. In addition, this strategy may expose us to direct competition with our existing third party distribution customers in some segments, which could affect our relationship with these customers.

Our business strategies require substantial capital and long-term investments, which we may be unable to fund.

Our business strategies will require substantial additional capital investment following this offering, including, for example, our strategy of creating a global direct distribution network. To the extent that the net proceeds from this offering and cash generated internally and cash available under our revolving credit facility are not sufficient to fund our capital requirements, we will require additional debt and/or equity financing. However, this type of financing may not be available or, if available, may not be available on satisfactory terms, including as a result of adverse macroeconomic conditions. Our parent company, JBS S.A., has invested over $1.4 billion in equity capital in us since the Swift Acquisition in 2007. In addition, since July 11, 2007, we have invested $187.0 million in our U.S. and Australian manufacturing operations, excluding the JBS Packerland and Tasman Acquisitions. Our parent company may not agree to provide us with additional financing in the future. Our parent company is a public company in Brazil and may in the future have interests that conflict or compete with ours. In addition, we are limited in our ability to incur indebtedness in certain circumstances under the terms of our outstanding indebtedness under our revolving credit facility, the indenture governing our 11.625% senior unsecured notes issued by us earlier this year and the indentures governing the 10.50% notes due 2016 in an aggregate principal amount of $300.0 million issued by JBS S.A. in 2006.

We may be unable to obtain sufficient additional capital in the future to fund our capital requirements and our business strategy at acceptable costs. If we are unable to access additional capital on terms acceptable to us, we may not be able to fully implement our business strategy, which may limit the future growth and development of our business. In addition, equity financings could result in dilution to our stockholders, and equity or debt securities issued in future financings may have rights, preferences and privileges that are senior to those of our common stock. If our need for capital arises because of significant losses, the occurrence of these losses may make it more difficult for us to raise the necessary capital.

Implementation of any of our strategies depends on factors that are beyond our control, such as changes in the conditions of the markets in which we operate, actions taken by our competitors, or existing laws and regulations at any time by U.S. federal government or by any other state, local or national government. Our failure to successfully implement any part of our strategy may materially adversely impact our business, financial condition and results of operations.

We may not be able to successfully integrate any growth opportunities we may undertake in the future.

We intend to pursue selected growth opportunities in the future as they arise. These types of opportunities may expose us to successor liability relating to actions involving any acquired entities, their respective management or contingent liabilities incurred prior to our involvement. A material liability associated with these types of opportunities, or our failure to successfully integrate any acquired entities into our business, could adversely affect our reputation and have a material adverse effect on us.

We may not be able to successfully integrate any growth opportunities we may undertake in the future or successfully implement appropriate operational, financial and administrative systems and controls to achieve the benefits that we expect to result therefrom. These risks include: (1) failure of the acquired entities to achieve expected results, (2) possible inability to retain or hire key personnel of the acquired entities and (3) possible inability to achieve expected synergies and/or economies of scale. In addition, the process of integrating businesses could cause interruption of, or loss of momentum in, the activities of our existing business. The diversion of

our management’s attention and any delays or difficulties encountered in connection with the integration of these businesses could negatively impact our business and results of operations.

We face competition in our business, which may adversely affect our market share and profitability.

The beef and pork industries are highly competitive. Competition exists both in the purchase of live cattle and hogs and in the sale of beef and pork products. In addition, our beef and pork products compete with a number of other protein sources, including poultry and fish. We compete with numerous beef producers, including companies based in the United States (Tyson Foods Inc., National Beef Packing Company, LLC and Cargill Inc.) and in Australia (Teys Bros Pty Ltd. and Nippon Meat Packers Ltd.), as well as pork producers (Smithfield Foods, Inc., Tyson Foods Inc. and Cargill Inc.). The principal competitive factors in the beef and pork processing industries are operating efficiency and the availability, quality and cost of raw materials and labor, price, quality, food safety, product distribution, technological innovations and brand loyalty. Our ability to be an effective competitor depends on our ability to compete on the basis of these characteristics. Some of our competitors have greater financial and other resources and enjoy wider recognition for their consumer branded products. We may be unable to compete effectively with these companies, and if we are unable to remain competitive with these beef and pork producers in the future, our market share may be adversely affected.

Changes in consumer preferences could adversely affect our business.

The food industry, in general, is subject to changing consumer trends, demands and preferences. Our products compete with other protein sources, including poultry and fish. Trends within the food industry frequently change, and our failure to anticipate, identify or react to changes in these trends could lead to reduced demand and prices for our products, among other concerns, and could have a material adverse effect on our business, financial condition, results of operations and market price of our common stock.

Our business could be materially adversely affected as a result of adverse weather conditions or other unanticipated extreme events in our areas of operations.

Changes in the historical climate in the areas in which we operate could have a material adverse effect on our business. For instance, the timing of delivery to market and availability of livestock for our grass fed division in Australia is dependent on access to range lands and paddocks which can be negatively impacted by periods of extended drought. In addition, our cattle feeding operations in Australia and meat packing facilities in the U.S. and Australia rely on large volumes of potable water for the raising of healthy livestock and the fabrication of our meat products. Potable water is generally available from municipal supplies and/or naturally replenished aquifers, the access to which and availability of which could be affected in the event rainfall patterns change, aquifers become depleted or contaminated and municipal supplies are not maintained. While we own substantial water rights, occurrences of any of these events, or inability to enforce existing or secure additional water rights in the future, could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Natural disasters, fire, bioterrorism, pandemics or extreme weather, including floods, excessive cold or heat, hurricanes or other storms, could impair the health or growth of livestock or interfere with our operations due to power outages, fuel shortages, damage to our production and processing facilities or disruption of transportation channels, among other things. Any of

these factors, as well as disruptions in our information systems, could have an adverse effect on our financial results.

Our performance depends on favorable labor relations with our employees and our compliance with labor laws. Any deterioration of those relations or increase in labor costs due to our compliance with labor laws could adversely affect our business.

As of March 29, 2009 we had a total of approximately 31,900 employees worldwide. A majority of these employees are represented by labor organizations, and our relationships with these employees are governed by collective bargaining agreements. In the U.S., we have 11 collective bargaining or other labor agreements expiring in 2009 and 2010, covering approximately 24,300 employees. In Australia, we have 20 collective bargaining or other collective labor agreements, 14 of which expire between 2010 and 2014. Upon the expiration of existing collective bargaining agreements or other collective labor agreements, we may not reach new agreements without union action and any such new agreements may not be on terms satisfactory to us. In addition, any new agreements may be for shorter durations than those of our historical agreements. Moreover, additional groups of currently non-unionized employees may seek union representation in the future. If we are unable to negotiate acceptable collective bargaining agreements, we may become subject to union-initiated work stoppages, including strikes.

Additionally, it is expected that the Employee Free Choice Act, which was passed in the U.S. House of Representatives in 2007, will be reintroduced in the new U.S. Congress. If reintroduced and enacted in its most recent form, the Employee Free Choice Act could make it significantly easier for union organizing drives to be successful. The Employee Free Choice Act could also give third-party arbitrators the ability to impose terms, which may be harmful to us, of collective bargaining agreements if the relevant company and union are unable to agree to the terms of a collective bargaining agreement. This legislation could increase the penalties we may incur if we engage in labor practices in violation of the National Labor Relations Act. Any significant increase in labor costs, deterioration of employee relations, slowdowns or work stoppages at any of our locations, whether due to union activities, employee turnover or otherwise, could have a material adverse effect on our business, financial condition, results of operations and cash flows.

On December 12, 2006, at which time we were under our previous private equity ownership, agents from the U.S. Department of Homeland Security’s Immigration and Customs Enforcement division, or ICE, and other law enforcement agencies conducted on-site employee interviews at all of our production facilities except with respect to our production facilities located in Louisville, Kentucky and Santa Fe Springs, California, in connection with an investigation of the immigration status of an unspecified number of our workers. Approximately 1,300 individuals were detained by ICE and removed from our U.S. domestic labor force. To date, no civil or criminal charges have been filed by the U.S. government against us or any of our current or former management employees. On December 12, 2006, after a six- to seven-hour suspension of operations due to the employee interview process, we resumed production at all facilities in the United States, but at reduced output levels. We refer to this event in this prospectus as either the ICE incident or the ICE event. We estimate that the ICE event resulted in additional costs of approximately $82 million, as well as reduced revenues at the affected facilities, as lower levels of experienced staffing resulted in lower volumes of beef that met processing specifications. We resumed normal production at our pork processing facilities in March 2007 and reported in May 2007 that we had returned to standard staffing levels at all of our beef processing facilities. We have enhanced our previous hiring and legal compliance practices to mitigate this risk; however, we may face similar disruptions in the future at our U.S. facilities, our enhanced hiring practices

may expose us to an increased risk of lawsuits related to such practices, and our labor costs may be negatively affected as a result.

The consolidation of our customers could negatively impact our business.

Our customers, such as supermarkets, warehouse clubs and food distributors, have consolidated in recent years, and consolidation is expected to continue throughout the United States and in other major markets. These consolidations have produced large, sophisticated customers with increased buying power who are more capable of operating with reduced inventories, opposing price increases, and demanding lower pricing, increased promotional programs and specifically tailored products. These customers also may use shelf space currently used for our products for their own private label products. If we fail to respond to these trends, our volume growth could slow or we may need to lower prices or increase promotional spending for our products, any of which would adversely affect our financial results.

We are dependent on certain key members of our management.

Our operations, particularly in connection with the implementation of our strategies and the development of our operations, depend on certain key members of our management. If any of these key management personnel leaves us, our results of operations and our financial condition may be adversely affected.

Our debt could adversely affect our business.

On April 27, 2009, our wholly owned subsidiaries JBS USA, LLC and JBS USA Finance, Inc. issued $700.0 million in senior unsecured notes due May 2014 bearing interest at 11.625%. As of March 29, 2009, after giving effect to our issuance and sale of our 11.625% senior unsecured notes due 2014 and the application of the proceeds therefrom, we have total outstanding consolidated debt on our balance sheet of approximately $1.0 billion.

While our level of indebtedness is lower than certain of our competitors, our consolidated debt could:

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make it difficult for us to satisfy our respective obligations;

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limit our ability to obtain additional financing to operate our business;

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require us to dedicate a substantial portion of our cash flow to payments on our debt, reducing our ability to use our cash flow to fund working capital, capital expenditures and other general corporate requirements;

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limit our flexibility to plan for and react to changes in our business and the industry in which we operate;

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place us at a competitive disadvantage relative to some of our competitors that have less debt than us; and

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increase our vulnerability to general adverse economic and industry conditions, including changes in interest rates, lower cattle and hog prices or a downturn in our business or the economy.

In addition to our existing debt, we are not prohibited from incurring significantly more debt, which could intensify the risks described above. The terms of the indenture governing our

11.625% senior unsecured notes due 2014 permit us to incur significant additional indebtedness in the future, including secured debt. We may borrow additional funds to fund our capital expenditures, working capital needs or other purposes, including future acquisitions.

Risks related to our common stock and this offering

We are controlled by JBS S.A., which is a publicly traded company in Brazil, whose interest in our business may be different than yours.

We are a wholly owned indirect subsidiary of JBS S.A., a publicly traded company in Brazil. JBS S.A. will indirectly own approximately % of our outstanding common stock after the consummation of this offering (or % if the international underwriters exercise their over-allotment in full). The Batista family indirectly owns and controls approximately 50.1% of the voting equity capital of JBS S.A. Prior to this offering, all of our directors and our president and chief executive officer were members of the Batista family. Members of the Batista family are also officers of JBS S.A. Accordingly, JBS S.A. is, and will continue to be, able to exercise significant influence over our business policies and affairs, including the composition of our board of directors, which has the authority to direct our business and appoint and remove our officers, and over any action requiring the approval of our stockholders, including the adoption of amendments to our certificate of incorporation and bylaws, which govern the rights attached to our shares of common stock, and the approval of mergers or sales of substantially all of our assets.

JBS S.A. and its subsidiaries comprise the largest exporter of canned beef in the world. With respect to business opportunities relating to customers or markets which would otherwise be available to both us and JBS S.A.’s other subsidiaries, JBS S.A. may not permit us to pursue those opportunities or JBS S.A.’s other subsidiaries may directly compete with us for those opportunities. For example, in January 2007, JBS S.A. acquired SB Holdings and its subsidiaries, which comprise one of the largest distributors of processed beef in the United States. This acquisition provided JBS S.A. (and not us) with access to the processed beef market in the United States through two distribution centers located in Fort Lauderdale, Florida and Newport Beach, California. JBS S.A. is a public company in Brazil, and therefore, its directors have their own independent fiduciary duties and their interests may conflict or compete with those of our company.

The concentration of ownership of our shares may also delay, defer or even prevent an acquisition by a third party or other change of control of our company in a transaction that might otherwise give you the opportunity to realize a premium over the then-prevailing market price of our common stock, even if you perceive such transaction to be in the best interests of minority stockholders. This concentration of ownership may also adversely affect our stock price. For additional information regarding the share ownership of, and our relationship with, JBS S.A., you should read the information under the headings “Business—Description of business segments—Beef segment—Global exports,” “Principal and selling stockholder” and “Certain relationships and related party transactions.”

Our directors who have relationships with our controlling stockholder may have conflicts of interest with respect to matters involving our company.

Upon completion of this offering, the majority of our directors will be affiliated with JBS S.A. These persons will have fiduciary duties to both us and JBS S.A. As a result, they may have real or apparent conflicts of interest on matters affecting both us and JBS S.A., which in some

circumstances may have interests adverse to ours. It may also limit the ability of these directors to participate in consideration of certain matters. In addition, as a result of JBS S.A.’s ownership interest, conflicts of interest could arise with respect to transactions involving business dealings between us and JBS S.A. including, but not limited to, potential acquisitions of businesses or properties, the issuance of additional securities, the payment of dividends by us and other matters.

We will be a “controlled company” within the meaning of the NYSE rules, and, as a result, will rely on exemptions from certain corporate governance requirements that provide protection to stockholders of other companies.

Upon completion of this offering, JBS S.A. will own more than 50% of the total voting power of our common shares and we will be a “controlled company” under the New York Stock Exchange, or NYSE, corporate governance standards. As a controlled company, exemptions under the NYSE standards will free us from the obligation to comply with certain NYSE corporate governance requirements, including the requirements:

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that a majority of our board of directors consists of “independent directors,” as defined under the rules of the NYSE;

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that we have a corporate governance and nominating committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities;

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that we have a compensation committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; and

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for an annual performance evaluation of the nominating and governance committee and compensation committee.

Accordingly, for so long as we are a “controlled company,” you will not have the same protections afforded to stockholders of companies that are subject to all of the NYSE corporate governance requirements.

There has been no prior public market for our common stock and the trading price of our common stock may be adversely affected if an active trading market in our common stock does not develop.

Prior to this offering, there has been no public market for our common stock, and an active trading market may not develop or be sustained upon the completion of this offering. We cannot predict the extent to which investor interest will lead to the development of an active trading market in shares of our common stock or whether such a market will be sustained. The initial public offering price of the common stock offered in this prospectus was determined through our negotiations with the underwriters and may not be indicative of the market price of the common stock after this offering. The market price of shares of our common stock may decline below the initial public offering price, and you may not be able to sell your shares of common stock at or above the initial public offering price, or at all.

Our stock price may be volatile, and you may be unable to resell your shares at or above the offering price or at all.

The market price of our common stock after this offering will be subject to significant fluctuations in response to, among other factors, variations in our operating results and market

conditions specific to our industry. The combination of the relatively limited number of locations that we operate and the significant investment associated with each new unit may cause our operating results to fluctuate significantly, which could add to the volatility of our stock price. Furthermore, the stock markets have experienced price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. These fluctuations often have been unrelated or disproportionate to the operating performance of those companies. Future market fluctuations may negatively affect the market price of our common stock.

Future sales of shares of our common stock in the public market could cause our stock price to fall significantly even if our business is profitable.

Upon the completion of this offering, we will have outstanding shares of common stock (or approximately shares if the international underwriters exercise their over-allotment option in full). Of these shares, the shares of common stock offered in this prospectus will be freely tradable without restriction in the public market, unless purchased by our affiliates. We expect that the remaining shares of common stock will become available for resale in the public market as shown in the chart below. Our officers, directors and the holders of all of our outstanding shares of common stock will sign lock-up agreements pursuant to which they have agreed not to sell, transfer or otherwise dispose of any of their shares for a period of 180 days following the date of this prospectus, subject to extension in the case of an earnings release or material news or a material event relating to us. The underwriters may, in their sole discretion and without notice, release all or any portion of the common stock subject to lock-up agreements. The underwriters are entitled to waive the underwriter lock-up provisions at their discretion prior to the expiration dates of such lock-up agreements.

Immediately following the consummation of this offering, our shares of common stock will become available for resale in the public market as follows:


Number of shares	Percentage	Date of availability for resale into the public market

	%	Upon the effectiveness of this prospectus

	%	180 days after the date of this prospectus, of which approximately shares of our common stock are subject to holding period, volume and other restrictions under Rule 144

As restrictions on resale end, the market price of our common stock could drop significantly if the holders of these restricted shares sell them or are perceived by the market as intending to sell them. These factors could also make it more difficult for us to raise additional funds through future offerings of our common stock or other securities. Following the completion of this offering, we intend to file a registration statement on Form S-8 to register the total number of common stock reserved for issuance under our stock option plan.

Actual dividends paid on our shares may not be consistent with the dividend policy adopted by our board of directors.

company, JBS S.A., is required to pay dividends equal to 25% of its net income (as calculated under generally accepted accounting principles in Brazil, subject to certain adjustments mandated by Brazilian corporate law and other exceptions). However, our board of directors may, in its discretion and for any reason, amend or repeal this dividend policy. Our board of directors may increase or decrease the level of dividends provided for in our dividend policy or entirely discontinue the payment of dividends. Future dividends with respect to our common shares, if any, will depend on, among other things, our results of operations, cash requirements, financial condition, distribution of dividends made by our subsidiaries, contractual restrictions, business opportunities, provisions of applicable law and other factors that our board of directors may deem relevant. For the foregoing reasons, you will not be able to rely on dividends to receive a return on your investment. In addition, to the extent that we pay dividends, the amounts distributed to our shareholders may not be available to us to fund future growth and may affect our other liquidity needs.

You will incur immediate and substantial dilution.

The initial public offering price of our common stock is substantially higher than the net tangible book values per share of outstanding common stock prior to completion of the offering. Based on our net tangible book value as of March 29, 2009 and upon the issuance and sale of shares of common stock by us at an assumed initial public offering price of $ per share (the midpoint of the initial public offering price range indicated on the cover of this prospectus), if you purchase our common stock in this offering, you will pay more for your shares than the amounts paid by our existing stockholders for their shares and you will suffer immediate dilution of approximately $ per share in net tangible book value. We also intend to implement a stock option plan that will grant options to our executive officers to purchase common stock with exercise prices that may be below the estimated initial public offering price of our common stock. To the extent that these options are granted and exercised, you will experience further dilution.

We will have broad discretion in applying the net proceeds of this offering and we may not use those proceeds in ways that will ultimately enhance the market value of our common stock.

We have broad discretion in applying any net proceeds we will receive in this offering. As part of your investment decision, you will not be able to assess or direct how we apply these net proceeds. If we do not apply these funds effectively, we may lose significant business opportunities. Furthermore, our stock price could decline if the market does not view our use of the net proceeds from this offering favorably. A significant portion of the offering is by selling stockholders, and we will not receive proceeds from the sale of the shares offered by them.

Provisions in our amended and restated certificate of incorporation and amended and restated bylaws and Delaware law may discourage, delay or prevent a change of control of our company or changes in our management.

Our amended and restated certificate of incorporation and amended and restated bylaws and Delaware law will contain provisions that could act to discourage, delay or prevent a change of control of our company or changes in our management. These provisions:

•

authorize the issuance of “blank check” preferred stock that our board of directors could issue to increase the number of outstanding shares to discourage a takeover attempt;

•

provide for a classified board of directors (three classes);

•

provide that stockholders may only remove directors for cause;

•

provide that any vacancy on our board of directors, including a vacancy resulting from an increase in the size of the board, may only be filled by the affirmative vote of a majority of our directors then in office, even if less than a quorum;

•

provide that a special meeting of stockholders may only be called by our board of directors or by the chairman of the board of directors;

•

provide that action by written consent of the stockholders may be taken only if JBS S.A. and any of its subsidiaries own at least 50% of our outstanding shares of common stock;

•

limit the liability of, and provide indemnification to, our directors and officers;

•

limit the ability of our stockholders to call and bring business before special meetings and to take action by written consent in lieu of a meeting; and

•

provide that the board of directors is expressly authorized to make, alter or repeal our bylaws.

Additionally, we are subject to Section 203 of the Delaware General Corporation Law, which generally prohibits a Delaware corporation from engaging in any of a broad range of business combinations with any “interested” stockholder for a period of three years following the date on which the stockholder became an “interested” stockholder.

These provisions may act to prevent a change of control, a change in our management or other actions, including actions that our stockholders may deem advantageous. These provisions may also have a negative effect on the trading price of our stock.

Special note regarding forward-looking statements and industry data

All statements included in this prospectus, other than statements of historical fact, that address, activities, events or developments that we or our management expect, believe or anticipate will or may occur in the future are forward-looking statements. These statements represent our reasonable judgment on the future based on various factors and using numerous assumptions and are subject to known and unknown risks, uncertainties and other factors that could cause our actual results and financial position to differ materially from those contemplated by the statements. You can identify these statements by the fact that they do not relate strictly to historical or current facts. They use words such as “anticipate,” “estimate,” “project,” “forecast,” “plan,” “may,” “will,” “should,” “could,” “expect” and other words of similar meaning. In particular, these include, but are not limited to, statements of our current views and estimates of future economic circumstances, industry conditions in domestic and international markets and our performance and financial results. These forward-looking statements are subject to a number of factors and uncertainties that could cause the actual results and experiences of us to differ materially from the anticipated results and expectations expressed in such forward-looking statements. We caution readers not to place undue reliance on any forward-looking statements, which speak only as of the date made. Except as required by law, we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

Among the factors that may cause actual results and experiences to differ from the anticipated results and expectations expressed in such forward-looking statements are the following:

•

outbreaks of livestock disease, or product contamination or recall concerns;

•

fluctuations in live cattle and hog prices;

•

fluctuations in the selling prices of beef and pork products;

•

developments in, or changes to, the laws, regulations and governmental policies governing our business and products or failure to comply with them, including environmental and sanitary liabilities;

•

currency exchange rate fluctuations, trade barriers, exchange controls, political risk and other risks associated with export and foreign operations;

•

deterioration of economic conditions;

•

our strategic direction and future operation;

•

our ability to implement our business plan, including our ability to arrange financing when required and on reasonable terms and the implementation of our financing strategy and capital expenditure plan;

•

our acquisitions, joint ventures, strategic alliances or divestiture plans;

•

the competitive nature of the industry in which we operate and the consolidation of our customers;

•

customer demands and preferences;

•

adverse weather conditions in our areas of operations;

•

continued access to a stable workforce and favorable labor relations with employees;

•

consolidation of our customers;

•

our dependence on key members of our management;

•

interests of our controlling shareholders;

•

the declaration or payment of dividends or interest attributable to shareholders’ equity;

•

the risk factors discussed under the heading “Risk factors”;

•

other factors or trends affecting our financial conditions or results of operations; and

•

other statements contained in this prospectus regarding matters that are not historical facts.

Any or all of our forward-looking statements may turn out to be wrong. They can be affected by inaccurate assumptions or by known or unknown risks, uncertainties and other factors, many of which are beyond our control, including those set forth under “Risk factors.”

In addition, there may be other factors that could cause our actual results to be materially different from the results referenced in the forward-looking statements. Many of these factors will be important in determining our actual future results. Consequently, no forward-looking statement can be guaranteed. Our actual future results may vary materially from those expressed or implied in any forward-looking statements.

All forward-looking statements contained in this prospectus are qualified in their entirety by this cautionary statement. Forward-looking statements speak only as of the date they are made.

Basis of presentation

Industry data

Certain market and industry data included in this prospectus have been obtained from third-party sources that we believe to be reliable, such as the United States Department of Agriculture, or USDA, Meat and Livestock Australia Limited, and the U.S. Meat Export Federation. We have not independently verified such third-party information and cannot assure you of its accuracy or completeness. While we are not aware of any misstatements regarding any market, industry or similar data presented herein, such data involves risks and uncertainties and is subject to change based on various factors, including those discussed above and in “Risk factors.”

Certain definitions

References in this prospectus to “$” or “U.S.$” are to U.S. dollars. References in this prospectus to “A$” are to Australian dollars.

Brands

Swift, Swift Premium, Swift Angus Select, Swift Premium Black Angus, Miller Blue Ribbon Beef and G.F. Swift 1855 are brands that belong to us. This prospectus also includes trademarks, trade names and trade dress of other companies. Use or display by us of other parties’ trademarks, trade names or trade dress or products is not intended to and does not imply a relationship with, or endorsement or sponsorship of us by, the trademark, trade name or trade dress owners. Solely for the convenience of the reader, in some cases we refer to our brands in this prospectus without the ^® symbol, but these references are not intended to indicate in any way that we will not assert our rights to these brands to the fullest extent permitted by law.

Rounding

Certain figures included in this prospectus have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them.

Use of proceeds

We estimate that the net proceeds from our sale of shares of common stock in this offering at an assumed initial public offering price of $ per share, the midpoint of the price range set forth on the front cover of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses, will be approximately $ million. A $1.00 increase (decrease) in the assumed initial public offering price would increase (decrease) the net proceeds to us from this offering by $ million, assuming the number of shares offered by us, as set forth on the front cover of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions.

We intend to use a portion of our net proceeds from this offering to selectively pursue additional value-enhancing growth opportunities as they arise. For example, during the next five years, we intend to make substantial investments in order to significantly expand our direct distribution network. We also intend to use a portion of our net proceeds from this offering for working capital and general corporate purposes. However, our management will have broad discretion in the application of these proceeds and investors will be relying on the judgment of our management regarding their application. Pending their use, we plan to invest our net proceeds from this offering in short-term, interest-bearing obligations, investment-grade instruments, certificates of deposit or direct or guaranteed obligations of the U.S. government.

We will not receive any proceeds from the sale of our common stock by the selling stockholder, including any proceeds resulting from the underwriters’ exercise of their option to purchase additional shares from the selling stockholder.

Dividend policy

Our board of directors will adopt a dividend policy pursuant to which any future determination relating to dividend policy will be made at its discretion and will depend on a number of factors, including our business and financial condition, and any covenants under our debt agreements and our parent company’s legal obligation to distribute dividends described below. However, our board of directors may, in its discretion and for any reason, amend or repeal this dividend policy. Our board of directors may increase or decrease the level of dividends provided for in our dividend policy or entirely discontinue the payment of dividends. Future dividends with respect to our common shares, if any, will depend on, among other things, our results of operations, cash requirements, financial condition, distribution of dividends made by our subsidiaries, contractual restrictions, business opportunities, provisions of applicable law and other factors that our board of directors may deem relevant.

Capitalization

The following table sets forth our consolidated cash and cash equivalents and capitalization as of March 29, 2009 on:

•

an actual basis;

•

a pro forma basis to give effect to the offering and sale of our 11.625% senior unsecured notes due 2014 and the application of the proceeds therefrom as if it had occurred on March 29, 2009; and

•

a pro forma as adjusted basis to give effect to

(1)

the issuance and sale of shares of our common stock sold by us in this offering and our receipt of approximately $ million in net proceeds from such sale, based on an assumed public offering price of $ per share, the midpoint of the range set forth on the cover page of this prospectus, after deducting the underwriting discount and estimated offering expenses payable by us, and

(2)

a -for-one stock split to take place immediately prior to completion of this offering.

The information below is illustrative only, and our capitalization following the completion of this offering will be adjusted based on the actual initial public offering price and other terms of this offering determined at pricing. You should read this table together with “Management’s discussion and analysis of financial condition and results of operations” and our consolidated financial statements and the related notes appearing elsewhere in this prospectus.


(in thousands, except shares data)	As of March 29, 2009
(in thousands, except shares data)	Actual			Pro forma			Pro forma as adjusted

Cash and cash equivalents	$	156,737		$	154,322		$

Indebtedness:

Short-term:
Secured credit facility	$	36,828		$	36,828		$	36,828
Unsecured credit facility		34,600			34,600			34,600

Total short-term debt:		71,428			71,428			71,428

Current portion of long-term debt:
Installment note payable		1,008			1,008			1,008
Capital lease obligations		3,095			3,095			3,095

Total current portion of long-term debt:		4,103			4,103			4,103


Long-term:
Intercompany loans		658,597			139,000			139,000
Senior secured revolving credit facility		210,187			110,187			110,187
Capital lease obligations		22,940			22,940			22,940
11.625% senior unsecured notes due 2014		—			651,322			651,322
Installment note payable		9,793			9,793			9,793

Total long-term debt:		901,517			933,242			933,242

Total debt:	$	977,048		$	1,008,773		$	1,008,773

Stockholders’ equity:
Common stock, $0.01 par value per share (actual, authorized 500,000,000 shares, 100 shares issued and outstanding; pro forma, authorized 500,000,000 shares, 100 shares issued and outstanding; pro forma as adjusted, authorized shares, shares issued and outstanding)	$	—		$	—		$
Paid-in capital		1,400,159			1,400,159
Accumulated comprehensive income (loss)		(56,984	)		(56,984	)
Retained earnings		51,764			51,764
Total stockholders’ equity		1,394,939			1,394,939

Total capitalization (long-term debt plus stockholders’ equity)	$	2,296,456		$	2,328,181		$

A $1.00 decrease or increase in the initial public offering price would result in an approximately $ million decrease or increase in each of pro forma as adjusted total stockholders’ equity and total capitalization. The above table does not reflect shares of common stock reserved for future issuance under our stock option plan.

Dilution

If you invest in our common stock, you will be diluted to the extent the initial public offering price per share of our common stock exceeds the net tangible book value per share of our common stock immediately after this offering.

Our net tangible book value as of March 29, 2009 was approximately $ million, or $ per share of common stock. Net tangible book value per share presented below represents the amount of our tangible net worth, or total tangible assets less total liabilities as of March 29, 2009, divided by the number of shares of our common stock outstanding immediately prior to completion of this offering after giving effect to a -for-one stock split of our common stock that will occur immediately prior to consummation of this offering.

After giving effect to the issuance and sale of shares of our common stock sold by us in this offering and our receipt of approximately $ million in net proceeds from such sale, based on an assumed public offering price of $ per share, the midpoint of the range set forth on the cover page of this prospectus, after deducting the underwriting discount and estimated offering expenses payable by us, our as adjusted net tangible book value per share as of March 29, 2009 would have been approximately $ million, or $ per share. This amount represents an immediate increase in net tangible book value of $ to existing stockholders and an immediate dilution in net tangible book value of $ per share to new investors purchasing shares of our common stock in this offering. Dilution per share is determined by subtracting the net tangible book value per share as adjusted for this offering from the amount of cash paid by a new investor for a share of our common stock. Net tangible book value is not affected by the sale of shares of our common stock offered by the selling stockholder.

The following table illustrates the per share dilution:


		Per share


Assumed initial public offering price per share		$

Net tangible book value per share as of March 29, 2009	$

Increase in net tangible book value per share attributable to existing investors	$

Adjusted net tangible book value per share after this offering		$

Dilution per share to new investors		$

A $1.00 increase (decrease) in the assumed initial public offering price of $ per share would increase (decrease) our net tangible book value by $ , the net tangible book value per share after this offering by $ and the dilution per share to new investors by $ , assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

The foregoing discussion and table do not give effect to shares of common stock that we will issue if the international underwriters exercise their over-allotment option in full. If the underwriters exercise their option to purchase additional shares of common stock in full, the as adjusted net tangible book value per share as of March 29, 2009 would be approximately $ per share and the dilution per share to new investors would be $ per share.

The following table summarizes, as of March 29, 2009, the number of shares of our common stock we issued and sold, the total consideration we received and the average price per share paid to us by existing stockholders prior to this offering, and by new investors purchasing shares of common stock in this offering. The table assumes an initial public offering price of $ per share (the midpoint of the price range set forth on the cover page of this prospectus):


	Shares purchased		Total consideration		Average price per share
	Number	Percent	Number	Percent	Average price per share

Existing stockholders		%		%	$
New investors in this offering		%		%	$

Total		100.0%		100.0%	$

The number of shares of our common stock held by new investors will increase to , or approximately % of the total number of shares of our common stock outstanding after this offering, and the number of shares held by the selling stockholder, will decrease to shares, or approximately % of the total number of shares of our common stock outstanding after this offering. If the international underwriters exercise their over-allotment option to purchase additional shares of common stock in full, the number of shares of our common stock held by new investors will increase to , or approximately $ per share and the dilution per share to new investors would be $ per share.

In addition, we may choose to raise additional capital due to market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. To the extent that additional capital is raised through the sale of equity or convertible debt securities, the issuance of such securities could result in further dilution to our stockholders.

Selected historical consolidated financial data

The following tables set forth our selected historical consolidated financial data at the dates and for the periods indicated. Our selected historical consolidated financial information contained in this prospectus is derived from

(1)

our predecessor’s unaudited historical consolidated financial statements as of and for the fiscal years ended May 30, 2004, May 29, 2005 and May 28, 2006,

(2)

our predecessor’s audited historical consolidated financial statements as of and for

(a)

the fiscal year ended December 24, 2006, and

(b)

the 198 days from December 25, 2006 through July 10, 2007 (the date immediately preceding the Swift Acquisition),

(3)

our audited historical consolidated financial statements as of and for

(a)

the 173 days from July 11, 2007 through December 30, 2007, and

(b)

the fiscal year ended December 28, 2008,

(4)

our unaudited historical consolidated financial statement for the fiscal quarter ended March 30, 2008, and

(5)

our unaudited historical financial statements as of and for the fiscal quarter ended March 29, 2009.

The financial statements in (1) and (4) were reviewed by Grant Thornton LLP, and the financial statements in (2)(a) and (b) and (3)(a) were audited by Grant Thornton LLP. The financial statements in (3)(b) were audited by BDO Seidman, LLP. The financial statements in (5) were reviewed by BDO Seidman, LLP.

The financial statements in (2), (3) and (5) above are included elsewhere in this prospectus and have been prepared in accordance with generally accepted accounting principles in the United States. Our current fiscal year is based on the 52- or 53-week period ending on the last Sunday in December. Our predecessor company’s fiscal year was based on the 52- or 53-week period ending on the last Sunday in May. The Swift Acquisition closed on July 11, 2007, and the financial statements for the 198 days from December 25, 2006 to July 10, 2007 represent the period between the end of the fiscal year ended December 24, 2006 and the day prior to the closing of the Swift Acquisition. The periods ended prior to July 11, 2007 are referred to as the “predecessor” periods. The financial statements for the 173-day period from July 11, 2007 through December 30, 2007 represent the period from the date of the Swift Acquisition through December 30, 2007. The periods ended subsequent to July 10, 2007 are referred to as the “successor” periods.

The results of operations for any partial period are not necessarily indicative of the results of operations for other periods or for the full fiscal year. We have prepared our unaudited historical consolidated financial statements on the same basis as our audited financial statements and have included all adjustments, consisting of normal and recurring adjustments, that we consider necessary to present fairly our financial position and results of operations for the unaudited periods.

On May 26, 2006, we completed the sale of our non-fed cattle business, including our operating plant assets in Omaha, Nebraska and our idled Nampa, Idaho assets. Due to our significant continuing involvement with the non-fed processing facilities through a raw material supply agreement, the operating results related to these plants have been reflected in our continuing operations through the fiscal year ended December 24, 2006.

Our consolidated results of operations for the 198-day period ended July 10, 2007 and the 173-day period ended December 30, 2007 are not fully comparable to our results for the fiscal year ended December 24, 2006 due to the change in cost basis and recapitalization that occurred on July 11, 2007.

Our consolidated results of operations for the fiscal year ended December 28, 2008 are not fully comparable to our results of operations for the combined 198-day period ended July 10, 2007 and the 173-day period ended December 30, 2007 due to the (1) change in cost basis and recapitalization that occurred on July 11, 2007, (2) Tasman Acquisition that closed on May 2, 2008 and (3) JBS Packerland Acquisition that closed on October 23, 2008.

Our consolidated results of operations for the fiscal quarter ended March 29, 2009 are not fully comparable to our results of operations for the fiscal quarter ended March 30, 2008 due to the (1) Tasman Acquisition that closed on May 2, 2008 and (2) JBS Packerland Acquisition that closed on October 23, 2008.

You should read the selected historical consolidated financial data set forth below in conjunction with, and the data is qualified by reference to, “Unaudited pro forma combined financial statements,” “Management’s discussion and analysis of financial condition and results of operations” and the consolidated financial statements and accompanying notes thereto included elsewhere in this prospectus (other than our predecessor’s unaudited historical consolidated financial statements as of and for the fiscal years ended May 30, 2004, May 29, 2005 and May 28, 2006, which are not included elsewhere in this prospectus).


	Predecessor
	Fiscal year ended
	May 30, 2004		May 29, 2005		May 28, 2006
in thousands	Unaudited		Unaudited		Unaudited

Statement of operations data:
Net sales	$9,427,235		$9,664,249		$9,348,151
Cost of goods sold	9,165,466		9,452,638		9,267,142

Gross profit	261,769		211,611		81,009
Selling, general and administrative	134,016		146,830		166,172
Goodwill impairment	—		11,869		4,488
Foreign currency transaction loss (gain)	824		(396	)	19
Other income, net	(9,776	)	(5,884	)	(3,357	)
Loss on sales of property, plant and equipment	851		1,031		662
Interest expense, net	91,802		100,237		112,264

Total expenses	217,717		253,687		280,248

Income (loss) from continuing operations before income taxes	44,052		(42,076	)	(199,239	)
Income tax expense (benefit)	14,965		(31,645	)	(57,736	)
Equity method investment earnings (losses)	(6,592	)	4,247		—
Income from discontinued operations	3,672		27,852		—

Net income (loss)	$26,167		$21,668		$(141,503	)

Balance sheet data (at period end):
Cash and cash equivalents	$136,195		$79,712		$52,291
Accounts receivable, net	329,944		373,167		366,744
Inventories	480,679		499,039		503,426
Property, plant and equipment, net	602,416		562,454		504,271
Total assets	1,784,833		1,709,481		1,604,928
Long-term debt	787,428		946,496		1,102,717
Total debt	791,667		997,978		1,104,519
Stockholder’s equity (deficit)	411,659		124,137		(20,029	)


	Predecessor				Successor
in thousands, except earnings per share	Fiscal year ended December 24, 2006		198 days from December 25, 2006 through July 10, 2007		173 days from July 11, 2007 through December 30, 2007		Fiscal year ended December 28, 2008		Fiscal quarter ended March 30, 2008		Fiscal quarter ended March 29, 2009
in thousands, except earnings per share	Audited		Audited		Audited		Audited		Unaudited		Unaudited


Statement of operations data:
Net sales	$9,691,432		$4,970,624		$4,988,984		$12,362,281		$2,461,657		$3,196,339
Cost of goods sold	9,574,715		4,920,594		5,013,084		11,917,777		2,451,413		3,123,358

Gross profit (loss)	116,717		50,030		(24,100	)	444,504		10,244		72,981
Selling, general and administrative expenses(1)	158,783		92,333		60,727		148,785		31,042		61,598
Foreign currency transaction loss (gain)(2)	(463	)	(527	)	(5,201	)	75,995		(12,614	)	(5,075	)
Other income, net	(4,937	)	(3,821	)	(3,581	)	(10,107	)	(3,782	)	(1,475	)
Loss (gain) on sales of property, plant and equipment	(666	)	(2,946	)	182		1,082		19		180
Interest expense, net	118,754		66,383		34,340		36,358		8,108		14,592

Total expenses	271,471		151,422		86,467		252,113		22,773		69,820

Income (loss) before income tax expense	(154,754	)	(101,392	)	(110,567	)	192,391		(12,529	)	3,161
Income tax expense (benefit)	(37,348	)	(18,380	)	1,025		31,287		5,613		909

Net income (loss)	$(117,406	)	$(83,012	)	$(111,592	)	$161,104		$(18,142	)	$2,252

Basic and diluted net income (loss) per share of common stock(3)	N/A		N/A		$(1,115,920.00	)	$1,611,040.00		$(181,420.00	)	$22,520.00
Basic and diluted pro forma net income (loss) per share of common stock(4)	N/A		N/A		$		$		$		$

Balance sheet data (at period end):
Cash and cash equivalents	$83,420		$44,673		$198,883		$254,785		$77,365		$156,737
Accounts receivable, net	334,341		365,642		417,375		588,985		438,515		514,160
Inventories	457,829		487,598		466,756		649,000		541,519		650,026
Property, plant and equipment, net	487,427		505,172		708,056		1,229,316		716,334		1,241,055
Total assets	1,538,597		1,578,350		2,165,815		3,315,571		2,125,696		3,308,815
Long-term debt	1,065,553		1,201,975		32,433		806,808		32,347		901,517
Total debt	1,067,503		1,203,912		810,718		878,319		395,154		977,048
Stockholder’s equity (deficit)	(40,090	)	(98,818	)	838,818		1,388,250		1,281,075		1,394,939

(1)

(2)

Foreign currency transaction loss (gain) reflects changes in the value of our U.S. dollar-denominated intercompany note payable and receivable within Australia due to changes in the exchange rate between the U.S. dollar and the Australian dollar.

(3)

(4)

In calculating shares of our common stock outstanding, we give retroactive effect to the stock split to occur immediately prior to completion of this offering.

Unaudited pro forma combined financial statements

On October 23, 2008, we acquired Smithfield Beef Group, Inc. (now known as JBS Packerland) for $563.2 million in cash (including $26.1 million of transaction related costs). This acquisition included 100% of Five Rivers, which had been previously held by Smithfield Beef Group, Inc. in a 50/50 joint venture with Continental Grain Company.

On April 27, 2009, our wholly owned subsidiaries, JBS USA, LLC and JBS USA Finance, Inc., issued 11.625% senior unsecured notes due 2014 in an aggregate principal amount of $700 million and applied the net proceeds to repay $100.0 million of borrowings under our secured revolving credit facility and to repay $550.8 million of the outstanding principal and accrued interest on intercompany loans to us from a subsidiary of JBS S.A.

The following unaudited pro forma combined statement of operations for the fiscal year ended December 28, 2008 has been prepared as if

•

the issuance and sale of $560.9 million of our 11.625% senior unsecured notes due 2014 and the application of the proceeds therefrom,

•

the JBS Packerland Acquisition, and

•

the acquisition of 50% of the equity interest in Five Rivers not previously owned had occurred at the beginning of the period presented.

The unaudited pro forma combined statement of operations for the fiscal year ended December 28, 2008 is derived from

•

our audited historical consolidated financial statements for the fiscal year ended December 28, 2008,

•

unaudited historical financial information of Smithfield Beef Group, Inc. for the period from January 1, 2008 through October 22, 2008, and

•

unaudited historical financial information of Five Rivers for the period from January 1, 2008 through October 22, 2008.

The following unaudited pro forma combined statement of operations for the fiscal quarter ended March 29, 2009 has been prepared as if the issuance and sale of $560.9 million of our 11.625% senior unsecured notes due 2014 and the application of the proceeds therefrom had occurred as of December 30, 2007, and the unaudited pro forma combined balance sheet as of March 29, 2009 has been prepared as if the sale of all of the 11.625% senior unsecured notes due 2014 had occurred on March 29, 2009. The unaudited pro forma combined financial statements as of and for the fiscal quarter ended March 29, 2009 are derived from our unaudited historical consolidated financial statements for the fiscal quarter ended March 29, 2009.

The unaudited pro forma combined financial statements set forth herein reflect certain adjustments for:

•

the 50% equity ownership in Five Rivers owned by Smithfield Beef Group, Inc. prior to October 22, 2008 to avoid double counting such equity ownership since the historical financial statements of JBS USA Holdings, Inc. reflect such ownership under the equity method of accounting, but, on a pro forma basis, we have reflected the ownership of Five Rivers on a fully consolidated basis,

•

expenses incurred by Smithfield Foods, Inc. in anticipation of the sale of the Smithfield Beef Group, Inc. to JBS USA, LLC,

•

revenue and expenses associated with Five Rivers company owned cattle during the period January 1 through October 22, 2008, since subsequent to that date, Five Rivers does not own cattle but operates solely as a hotelling operation for other entities’ cattle,

•

revenue and expenses of cattle owned by Smithfield Beef Group, Inc. during the period January 1 through October 22, 2008, since subsequent to that date, JBS Packerland does not own cattle, and

•

other assets and insignificant businesses not acquired and liabilities not assumed.

The unaudited pro forma combined financial statements reflect pro forma adjustments that are described above and in the accompanying notes and are based on available information and certain assumptions that we believe are reasonable under the circumstances, and the actual results could differ materially from these anticipated results. In our opinion, all adjustments that are necessary to present fairly the unaudited pro forma consolidated data have been made. The unaudited pro forma combined financial statements are presented for informational purposes only and do not purport to be indicative of what would have occurred had the JBS Packerland Acquisition actually been consummated at the beginning of the period presented, nor are they necessarily indicative of our future consolidated operating results.

You should read the following unaudited pro forma combined financial statements in conjunction with, and the data is qualified by reference to, “Management’s discussion and analysis of financial condition and results of operations” and the financial statements and accompanying notes included elsewhere in this prospectus.

Unaudited pro forma combined statement of operations for the fiscal year ended December 28, 2008


	JBS USA Holdings, Inc.		JBS Packerland		JBS Packerland		JBS Packerland		Five Rivers		Five Rivers		Adjustment for transaction			JBS USA Holdings, Inc.
	Fiscal year ended December 28, 2008		December 31, 2007 through October 22, 2008 (a)(i)		Adjustment for 50% equity interest in Five Rivers (b)		Adjustment for assets not acquired (c)(i)		December 31, 2007 through October 22, 2008 (a)(ii)		Adjustment for assets not acquired (c)(ii)		Adjustment for transaction			Fiscal year ended December 28, 2008
	Historical		Historical						Historical						Notes	Pro forma

in thousands, except earnings per share	(+)		(+)		(-)		(-)		(+)		(-)		(+)

Net sales	$12,362,281		$2,548,224		—		$4,923		$1,461,140		$912,920		$(8,011	)	(d)	$15,445,791
Cost of goods sold	11,917,777		2,397,551		—		4,949		1,511,462		988,814		4,724		(d),(e)	14,837,751

Gross profit (loss)	444,504		150,673		—		(26	)	(50,322	)	(75,894	)	(12,735	)		608,040
Selling, general and administrative expenses	148,785		78,793		—		24,017		11,093		9		4,052		(e)	218,697
Foreign currency transaction losses	75,995		—		—		—		—		—		—			75,995
Other (income) expense	(10,107	)	44,465		39,139		5,555		(208	)	(74	)	—			(10,470	)
Loss on sales of property, plant and equipment	1,082		107		—		—		131		224		—			1,096
Interest expense, net	36,358		30,837		—		31,005		16,940		16,940		46,431		(f)	82,621

Total expenses, net	252,113		154,202		39,139		60,577		27,956		17,099		50,483			367,939

Income (loss) from continuing operations before	192,391		(3,529	)	(39,139	)	(60,603	)	(78,278	)	(92,993	)	(63,218	)		240,101
Income tax expense	31,287		2,222		—		2,222		—		—		16,699		(g)	47,986

Net income (loss)	$161,104		$(5,751	)	$(39,139	)	$(62,825	)	$(78,278	)	$(92,993	)	$(79,917	)		$192,115

Basic and diluted net income (loss) per share of common stock	$1,611,040.00															$1,921,150.00

(a)

Represents the historical results of

(i)

JBS Packerland, and

(ii)

Five Rivers

for the period from December 31, 2007 through October 22, 2008.

(b)

Represents the elimination of the 50% equity interest in Five Rivers from the historical results of JBS Packerland for the period December 31, 2007 through October 22, 2008. On a pro forma basis, the results of Five Rivers are reflected on a fully consolidated basis as part of the JBS Packerland Acquisition.

(c)

Reflects the elimination of assets not acquired for

(i)

JBS Packerland and

(ii)

Five Rivers.

The adjustment for assets not acquired includes (1) revenue and expenses associated with cattle owned by Smithfield Beef Group, Inc. that were retained by Smithfield Foods, Inc., (2) revenue and expenses associated with cattle owned by Five Rivers that were retained by Smithfield Foods, Inc., (3) the elimination of corporate overhead charge by Smithfield Foods, Inc. and (4) other assets and insignificant businesses not acquired and liabilities not assumed.

(d)

Reflects the elimination of $8.0 million of intercompany sales and $8.0 million of cost of goods sold between JBS Packerland and the legacy Swift Beef segment for the period from December 31, 2007 through October 22, 2008.

(e)

Represents the adjustment of $12.7 million to historical cost of goods sold and to selling, general and administrative expenses of $4.1 million to reflect depreciation and amortization expense based on the estimated fair values and useful lives of identified tangible and intangible assets for JBS Packerland and Five Rivers based on a preliminary third-party valuation report. The purchase price allocation is preliminary pending completion of independent valuations of identified tangible and intangible assets acquired and certain liabilities acquired, including, but not limited to deferred taxes. The allocation of the purchase price presented below is preliminary and subject to change. The allocation presented below reflects the estimated fair value of the individual assets and liabilities as of October 23, 2008 (in thousands), and the following table details the purchase price components:



Purchase price allocation:
Purchase price paid to previous shareholders	$537,068
Fees and direct expenses	26,134

Total purchase price	$563,202


Preliminary purchase price allocation:
Current assets and liabilities	$ 43,052
Property, plant and equipment(i)	423,955
Deferred tax liabilities	(142,997	)
Goodwill	95,998
Intangible assets(ii)	138,023
Other noncurrent assets and liabilities, net	5,171

Total purchase price allocation	$563,202

(i)

Property, plant and equipment was recorded at fair value at the date of the JBS Packerland Acquisition. Depreciation and amortization is recorded using the straight-line method over the estimated useful lives of the assets as follows:



Furniture, fixtures, office equipment and other		5 to 7 years
Machinery and equipment		5 to 15 years
Buildings and improvements		15 to 40 years
Leasehold improvements		shorter of useful life or the lease term

(ii)

Intangible assets include customer relationships and customer contracts resulting from the JBS Packerland Acquisition that are being amortized on an accelerated basis over 21 and 10 years, respectively. These represent management’s estimates of the period of expected economic benefit and annual customer profitability.

(f)

Reflects the following adjustments to interest expense, net relating to the transactions:



Debt issuance amortization, 11.625% senior unsecured notes due 2014(i)	$ 467
Debt discount accretion, 11.625% senior unsecured notes due 2014(ii)	7,802
Interest expense, 11.625% senior unsecured notes due 2014(iii)	65,209
Interest expense, intercompany debt(iv)	(27,047	)

Total Interest expense, net(v)	$46,431

(i)

Includes pro forma interest expense for the amortization of debt issuance costs on $560.9 million of our 11.625% senior unsecured notes due 2014 for the period from December 31, 2007 through December 28, 2008, calculated on a straight-line basis.

(ii)

Includes pro forma interest expense for the accretion of the bond discount on $560.9 million of our 11.625% senior unsecured notes due 2014 for the period from December 31, 2007 through December 28, 2008, calculated on a straight-line basis.

(iii)

Includes pro forma interest expense on $560.9 million ($519.6 million of proceeds plus $39.0 million of bond discount and $2.3 million of debt issuance cost) of our 11.625% senior unsecured notes due 2014 for the period from December 31, 2007 through December 28, 2008.

(iv)

Includes the reduction of pro forma interest expense for the period from December 31, 2007 through December 28, 2008 on our consolidated intercompany loans from JBS S.A. due to a $519.6 million reduction in the aggregate principal amount of those intercompany loans using a portion of the net proceeds of our 11.625% senior unsecured notes due 2014.

(v)

We have applied the adjustments in clauses (i), (ii) and (iii) above to $560.9 million in proceeds, bond discount and debt issuance costs of our 11.625% senior unsecured notes due 2014 because that is the amount of debt we would have to have issued to repay the portion of our intercompany loans from JBS S.A. described in clause (iv) above. The total principal amount of our 11.625% senior secured notes due 2014 is $700.0 million, and our pro forma interest expense accordingly does not purport to be indicative of what our interest expense will be in the future.

(g)

Reflects the tax effect of the pro forma adjustments at an estimated 35% effective tax rate.

Unaudited pro forma combined statement of operations for the fiscal quarter ended March 29, 2009


	JBS USA Holdings, Inc.							JBS USA Holdings, Inc.
	March 29, 2009			Adjustments				March 29, 2009
in thousands, except earnings per share	Historical			(+)			Notes	Pro forma

Net sales	$	3,196,339		$	—			$	3,196,339
Cost of goods sold		3,123,358			—				3,123,358

Gross profit		72,981			—				72,981
Selling, general and administrative expenses		61,598			—				61,598
Foreign currency transaction gains		(5,075	)		—				(5,075	)
Other income, net		(1,475	)		—				(1,475	)
Loss on sales of property, plant and equipment		180			—				180
Interest expense, net		14,592			10,024		(a)		24,616

Total expenses		69,820			10,024				79,844

Income (loss) from continuing operations before income tax		3,161			(10,024	)			(6,863	)
Income tax expense (benefit)		909			(3,509	)	(b)		(2,600	)

Net income (loss)	$	2,252		$	(6,515	)		$	(4,263	)

Basic and diluted net income (loss) per share of common stock	$	22,250.00						$	(42,630.00	)

(a)

Reflects the following adjustments to interest expense, net relating to the transactions:


Debt issuance amortization, 11.625% senior unsecured notes due 2014(i)	$	117
Debt discount accretion, 11.625% senior unsecured notes due 2014(ii)		1,950
Interest expense, 11.625% senior unsecured notes due 2014(iii)		16,302
Interest expense, intercompany debt(iv)		(8,345	)

Total interest expense, net(v)	$	10,024

(i)

Includes pro forma interest expense for the amortization of debt issuance costs on $560.9 million of our 11.625% senior unsecured notes due 2014 for the period from December 29, 2008 through March 29, 2009, calculated on a straight-line basis.

(ii)

Includes pro forma interest expense for the accretion of the bond discount on $560.9 million of our 11.625% senior unsecured notes due 2014 for the period December 29, 2008 through March 29, 2009, calculated on a straight-line basis.

(iii)

Includes pro forma interest expense for the period December 29, 2008 through March 29, 2009 on $560.9 million ($519.6 million of proceeds plus $39.0 million of bond discount and $2.3 million of debt issuance cost) of our 11.625% senior unsecured notes due 2014.

(iv)

Includes the reduction of pro forma interest expense on our intercompany loans from JBS S.A. due to the $519.6 million reduction in the aggregate principal amount of those intercompany loans using a portion of the net proceeds of our 11.625% senior unsecured notes due 2014.

(v)

(b)

Reflects the tax effect of the pro forma adjustments at an estimated 35% effective tax rate.

Unaudited pro forma combined balance sheet as of March 29, 2009


in thousands	JBS USA Holdings, Inc.
in thousands	Historical			Adjustments			Notes	Pro forma

Assets
Current assets:
Cash and cash equivalents	$	156,737		$	(2,415	)	(a)	$	154,322
Trade accounts receivable, net of allowance for doubtful accounts of $4,142		514,160			—				514,160
Inventories		650,026			—				650,026
Other current assets		77,555			—				77,555

Total current assets		1,398,478			(2,415	)			1,396,063
Property, plant, and equipment, net		1,241,055			—				1,241,055
Goodwill		149,093			—				149,093
Other intangibles, net		299,097			—				299,097
Other assets		221,092			2,915		(b)		224,007

Total assets	$	3,308,815		$	500			$	3,309,315

Liabilities and stockholder’s equity
Current liabilities:
Short-term debt	$	71,428			—			$	71,428
Current portion of long-term debt		4,103			—				4,103
Accounts payable, including book overdrafts		273,547			—				273,547
Accrued liabilities		303,691			(31,225	)	(c)		272,466

Total current liabilities		652,769			(31,225	)			621,544
Long-term debt, less current portion		901,517			31,725		(d)		933,242
Other non-current liabilities		359,590							359,590

Total liabilities		1,913,876			500				1,914,376


Stockholder’s equity:
Common stock, 500,000,000 shares authorized, 100 issued and outstanding		—			—				—
Additional paid-in capital		1,400,159			—				1,400,159
Retained earnings		51,764			—				51,764
Accumulated other comprehensive (loss)		(56,984	)		—				(56,984	)

Total stockholder’s equity		1,394,939			—				1,394,939

Total liabilities and stockholder’s equity	$	3,308,815		$	500			$	3,309,315

(a)

Reflects the pro forma use of cash which was used to pay a portion of the debt issuance costs which were not paid from the proceeds of the issuance of our 11.625% senior unsecured notes due 2014.

(b)

Reflects debt issuance costs of $2.9 million related to the issuance of our 11.625% senior unsecured notes due 2014. These debt issuance costs will be capitalized and amortized on a straight-line basis over a period of five years.

(c)

Reflects the reduction of accrued interest on our intercompany loans, a portion of which were repaid using the net proceeds of our 11.625% senior unsecured notes due 2014.

(d)

Reflects the principal amount of our 11.625% senior unsecured notes due 2014 reduced by (1) original issue discount on our 11.625% senior unsecured notes due 2014 of $48.7 million, (2) a $100.0 million reduction in outstanding borrowings under our senior secured revolving credit facility using a portion of the net proceeds of our 11.625% senior unsecured notes due 2014, and (3) a $519.6 million reduction in the aggregate principal amount of our intercompany loans using a portion of the net proceeds of our 11.625% senior unsecured notes due 2014.

Management’s discussion and analysis of financial condition and results of operations

Overview

JBS USA Holdings, Inc.

Our business operations are organized into two segments:

•

our Pork segment, through which we conduct our domestic pork and lamb processing business.

We also present “Corporate and other” in our financial statements, which include certain revenues and expenses not directly attributable to the primary segments, as well as eliminations resulting from the consolidation process.

•

on July 11, 2007, JBS S.A. acquired Swift Foods Company (our predecessor company, which was subsequently renamed JBS USA Holdings, Inc.), which we refer to as the Swift Acquisition;

•

on May 2, 2008, we acquired substantially all of the assets of the Tasman Group Services, Pty. Ltd., or the Tasman Group, which we refer to as the Tasman Acquisition; and

•

Critical accounting policies and estimates

The preparation of consolidated financial statements requires us to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of certain accounting estimates we consider critical. See Note 5, “Basis of presentation and accounting policies,” to our audited combined financial statements included elsewhere in this prospectus for a detailed discussion of these and other accounting policies.

Contingent liabilities

From time to time we are subject to lawsuits, investigations and other claims related to wage and hour/labor, livestock procurement, securities, environmental, product, taxes and other matters, and are required to assess the likelihood of any adverse judgments or outcomes to these matters, as well as potential ranges of probable losses. A determination of the amount of reserves and disclosures required, if any, for these contingencies is made after considerable analysis of each individual issue. We accrue for contingent liabilities when an assessment of the risk of loss is probable and can be reasonably estimated. We disclose contingent liabilities when the risk of loss is reasonably possible or probable. Due to the unpredictable nature of these lawsuits, investigations, and claims, our contingent liabilities reflect uncertainties. The eventual outcome will result from future events, and determination of current reserves requires estimates and judgments related to future changes in facts and circumstances, differing interpretations of the law and assessments of the amount of damages, and the effectiveness of strategies or other factors beyond our control. We have not made any material changes in the accounting methodology used to establish our contingent liabilities during the past three fiscal years. We do not believe there is a reasonable likelihood there will be a material change in the estimates or assumptions used to calculate our contingent liabilities. However, if actual results are not consistent with our estimates or assumptions, we may be exposed to gains or losses that could be material.

Marketing and advertising costs

We incur advertising, retailer incentive and consumer incentive costs to promote products through marketing programs. These programs include cooperative advertising, volume discounts, in-store display incentives, coupons and other programs. Marketing and advertising costs are charged in the period incurred. We accrue costs based on the estimated performance, historical utilization and redemption of each program. Cash consideration given to customers is considered a reduction in the price of our products, and thus is recorded as a reduction to sales. The remainder of marketing and advertising costs is recorded as a selling, general and administrative expense. Recognition of the costs related to these programs contains uncertainties due to the judgment required to estimate the potential performance and redemption of each program. These estimates are based on many factors, including experience of similar promotional programs. We have not made any material changes in the accounting methodology used to

establish our marketing accruals during the past three fiscal years. We do not believe there is a reasonable likelihood there will be a material change in the estimates or assumptions used to calculate our marketing accruals. However, if actual results are not consistent with our estimates or assumptions, we may be exposed to gains or losses that could be material.

Accrued self-insurance

We are self-insured for employee medical and dental benefits and purchase insurance policies with deductibles for certain losses related to worker’s compensation and general liability claims. We purchase stop-loss coverage in order to limit our exposure to any significant level of certain claims. Self-insured losses are accrued based upon periodic assessments of estimated settlements for known and anticipated claims. We have not made any material changes in the accounting methodology used to establish our self-insurance liability during the past three fiscal years. We do not believe there is a reasonable likelihood there will be a material change in the estimates or assumptions used to calculate our self-insurance liability. However, if actual results are not consistent with our estimates or assumptions, we may be exposed to gains or losses that could be material. A 10% increase in our estimated self-insurance liability at March 29, 2009 would increase the amount we recorded for our self-insurance liability by approximately $15.4 million.

Impairment of long-lived assets

Long-lived assets are evaluated for impairment whenever events or changes in circumstances indicate the carrying value may not be recoverable. Examples include a significant adverse change in the extent or manner in which we use a long-lived asset or a change in its physical condition. When evaluating long-lived assets for impairment, we compare the carrying value of the asset to the asset’s estimated undiscounted future cash flows. An impairment is indicated if the estimated future cash flows are less than the carrying value of the asset. The impairment is the excess of the carrying value over the fair value of the long-lived asset. Our impairment analysis contains uncertainties due to judgment in assumptions and estimates surrounding undiscounted future cash flows of the long-lived asset, including forecasting useful lives of assets and selecting the discount rate that reflects the risk inherent in future cash flows to determine fair value. We have not made any material changes in the accounting methodology used to evaluate the impairment of long-lived assets during the last three fiscal years. We do not believe there is a reasonable likelihood there will be a material change in the estimates or assumptions used to calculate impairments of long-lived assets. However, if actual results are not consistent with our estimates and assumptions used to calculate estimated future cash flows, we may be exposed to impairment losses that could be material.

Impairment of goodwill and other non-amortizing intangible assets

Goodwill impairment is determined using a two-step process. The first step is to identify if a potential impairment exists by comparing the fair value of an operating unit, which for us is a reportable segment, with its carrying amount, including goodwill. If the fair value of a segment exceeds its carrying amount, goodwill of the segment is not considered to have a potential impairment and the second step of the impairment test is not necessary. However, if the carrying amount of a segment exceeds its fair value, a second step is performed to determine if goodwill is impaired and to measure the amount of impairment loss to recognize, if any. The second step compares the implied fair value of goodwill with the carrying amount of goodwill. If the implied

fair value of goodwill exceeds the carrying amount, then goodwill is not considered impaired. However, if the carrying amount of goodwill exceeds the implied fair value, an impairment loss is recognized in an amount equal to that excess.

The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination (i.e., the fair value of the segment is allocated to all the assets and liabilities, including any unrecognized intangible assets, as if the segment had been acquired in a business combination and the fair value of the segment was the purchase price paid to acquire the segment).

For our other non-amortizing intangible assets, if the carrying value of the intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. We have elected to make the last day of the fourth quarter the annual impairment assessment date for goodwill and other intangible assets. However, we could be required to evaluate the recoverability of goodwill and other intangible assets prior to the required annual assessment if we experience disruptions to the business, unexpected significant declines in operating results, cash flows, or upon divestiture of a significant component of the business.

We estimate the fair value of our segments using various valuation techniques, with the primary technique being a discounted cash flow analysis. A discounted cash flow analysis requires us to make various judgmental assumptions about sales, operating margins, growth rates and discount rates. Assumptions about sales, operating margins and growth rates are based on our budgets, business plans, economic projections, anticipated future cash flows and marketplace data. Assumptions are also made for varying perpetual growth rates for periods beyond the long-term business plan period.

While estimating the fair value of our Beef and Pork segments, we assumed operating margins in future years in excess of the margins realized in the most current year. The fair value estimates for these segments assume normalized operating margin assumptions and improved operating efficiencies based on long-term expectations and margins historically realized in the beef and chicken industries.

Other intangible asset fair values have been calculated for trademarks using a royalty rate method and using the present value of future cash flows for patents and in-process technology. Assumptions about royalty rates are based on the rates at which similar brands and trademarks are licensed in the marketplace. Our impairment analysis contains uncertainties due to uncontrollable events that could positively or negatively impact the anticipated future economic and operating conditions.

We have not made any material changes in the accounting methodology used to evaluate impairment of goodwill and other intangible assets during the last three years. As a result of the first step of the 2008 goodwill impairment analysis, the fair value of each segment exceeded its carrying value. The second step could have resulted in an impairment loss for goodwill.

While we believe we have made reasonable estimates and assumptions to calculate the fair value of the segments and other intangible assets, it is possible a material change could occur. If our actual results are not consistent with our estimates and assumptions used to calculate fair value, we may be required to perform the second step which could result in a material impairment of our goodwill.

Income taxes

We estimate total income tax expense based on statutory tax rates and tax planning opportunities available to us in various jurisdictions in which we earn income. Federal income taxes include an estimate for taxes on earnings of foreign subsidiaries expected to be remitted to the United States and be taxable, but not for earnings considered indefinitely invested in the foreign subsidiary. Deferred income taxes are recognized for the future tax effects of temporary differences between financial and income tax reporting using tax rates in effect for the years in which the differences are expected to reverse. Valuation allowances are recorded when it is likely a tax benefit will not be realized for a deferred tax asset. We record unrecognized tax benefit liabilities for known or anticipated tax issues based on our analysis of whether, and the extent to which, additional taxes will be due. This analysis is performed in accordance with the requirements of Financial Accounting Standards Board Interpretation No. 48, “Accounting for Uncertainty in Income Taxes,” or FIN 48, which we adopted on May 28, 2007. Changes in tax laws and rates could affect recorded deferred tax assets and liabilities in the future. Changes in projected future earnings could affect the recorded valuation allowances in the future. Our calculations related to income taxes contain uncertainties due to judgment used to calculate tax liabilities in the application of complex tax regulations across the tax jurisdictions where we operate. Our analysis of unrecognized tax benefits contain uncertainties based on judgment used to apply the more likely than not recognition and measurement thresholds of FIN 48. We do not believe there is a reasonable likelihood there will be a material change in the tax related balances or valuation allowances. However, due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from the current estimate of the tax liabilities. To the extent we prevail in matters for which FIN 48 liabilities have been established, or are required to pay amounts in excess of our recorded FIN 48 liabilities, our effective tax rate in a given financial statement period could be materially affected. Any change to our valuation allowance will impact our effective tax rate in a given financial statement period and could materially impact our tax expense. An unfavorable tax settlement would require use of our cash and result in an increase in our effective tax rate in the period of resolution. A favorable tax settlement would be recognized as a reduction in our effective tax rate in the period of resolution.

Recent accounting pronouncements

In February 2008, the FASB issued FASB Staff Position (FSP) No. 157-2, which defers the effective date of SFAS No. 157, “Fair Value Measurements,” for nonfinancial assets and nonfinancial liabilities, except for items that are recognized or disclosed at fair value in an entity’s financial statements on a recurring basis, at least annually. We will be required to adopt for these nonfinancial assets and nonfinancial liabilities as of December 29, 2008. We believe the adoption of SFAS No. 157 deferral provisions will not have a material impact on our financial position results of operations or cash flows.

In June 2009, the FASB issued SFAS No. 167, “Amendments to FASB Interpretation No. 46(R),” or SFAS No. 167. SFAS No. 167 provides for enhanced financial reporting by enterprises involved with variable interest entities and is effective for fiscal years beginning after November 15, 2009. We are currently evaluating the impact, if any, of SFAS No. 167 on our financial position, results of operations and cash flows.

Factors affecting our results of operations

Our results of operations have been influenced and will continue to be influenced by a variety of factors. Our management monitors a number of metrics and indicators that affect our operations, including the following:

•

production volume,

•

plant capacity utilization,

•

sales volume,

•

selling prices of beef and pork products,

•

customer demands and preferences (see “Risk factors—Risks relating to our business and the beef and pork industries—Changes in consumer preferences could adversely affect our business”),

•

commodity futures board prices for livestock (see “Risk factors—Risks relating to our business and the beef and pork industries—Our results of operations may be negatively impacted by fluctuations in the prevailing market prices for livestock” and Note 6, “Derivative financial instruments,” to our unaudited consolidated financial statements included in this prospectus),

•

spread between livestock prices and selling prices for finished goods,

•

utility prices and trends,

•

livestock availability,

•

production yield,

•

currency exchange rate fluctuations (in particular, between the U.S. dollar and the Australian dollar) (see “Risk factors—Risks relating to our business and the beef and pork industries—Our export and international operations expose us to political and economic risks in foreign countries, as well as to risks related to currency fluctuations”), and

•

trade barriers, exchange controls and political risk and other risks associated with export and foreign operations. See “Risk factors—Risks relating to our business and the beef and pork industries—Our export and international operations expose us to political and economic risks in foreign countries, as well as to risks related to currency fluctuations.”

Our operating results are also influenced by seasonal factors, which impact the price that we pay for livestock as well as the ultimate price at which we sell our products.

In the beef industry, the seasonal demand for beef products is highest in the summer and fall months as weather patterns permit more outdoor activities and there is typically an increased demand for higher value items that are grilled, such as steaks. Both live cattle prices and boxed beef prices tend to be at seasonal highs during the summer and fall. Because of higher consumption, more favorable growing conditions and the housing of animals in feedlots for the winter months, there are generally more cattle available in the summer and fall. In Australia, seasonal demand does not fluctuate as significantly as it does in the United States.

The pork industry has similar seasonal cycles but in different months. It takes an average of 11 months from conception for a hog to reach market weight. Generally, sows are less productive in summer months, resulting in fewer hogs available in the spring and early summer, which causes prices of hogs and boxed pork to rise, but production to fall. The highest demand for pork occurs from October to March, as hog availability and holiday occasions increase the demand for hams, tenderloins and other higher value pork products. During the quarter ended March 29, 2009, seasonal demand followed normal historical patterns.

We believe that our results of operations are not materially affected by moderate changes in the inflation rate. Inflation and changing prices did not have a material effect on our operations in fiscal years 2008, 2007 and 2006. Severe increases in inflation, however, could affect the global and U.S. economies and could have an adverse effect on our business, financial condition and results of operations.

Other factors that impact the results of our operations include outbreaks of livestock disease, product contamination or recalls, our ability to implement our business plan (including our ability to arrange financing when required and on reasonable terms), and the implementation of our financing strategy and capital expenditure plan.

RESULTS OF OPERATIONS

Our current fiscal year is based on the 52- or 53-week period ending on the last Sunday in December. Our predecessor company’s fiscal year was based on the 52- or 53-week period ending on the last Sunday in May. We present financial statements for the following periods:

•

the fiscal year ended December 24, 2006,

•

the 198 days from December 25, 2006 through July 10, 2007,

•

the 173 days from July 11, 2007 (the date of the Swift Acquisition) through December 30, 2007,

•

the fiscal year ended December 28, 2008, and

•

the fiscal quarters ended March 30, 2008 and March 29, 2009.

The Swift Acquisition closed on July 11, 2007, and the financial statements for the 198 days from December 25, 2006 to July 10, 2007 represent the period between the end of the last day of the fiscal year ended December 24, 2006 and the day prior to the closing of the Swift Acquisition. The periods ended prior to July 11, 2007 are referred to as the “predecessor” periods. The financial statements for the 173-day period from July 11, 2007 through December 30, 2007 represent the period from the date of the Swift Acquisition through December 30, 2007. The periods ended subsequent to July 10, 2007 are referred to as the “successor” periods.

Prior to the Tasman Acquisition, we had significant operations in northern Australia through our legacy Australian subsidiaries. As a result, even prior to the Tasman Acquisition, the value of the Australian dollar as compared to the U.S. dollar had an effect on our Australian operations.

Supplemental financial data

The following table presents segment results for the fiscal year ended December 24, 2006, the 198 days ended July 10, 2007, the 173 days ended December 30, 2007, the fiscal year ended December 28, 2008, and the fiscal quarters ended March 30, 2008 and March 29, 2009.


	Predecessor						Successor
in thousands	Fiscal year ended December 24, 2006			198 days ended July 10, 2007			173 days ended December 30, 2007			Fiscal year ended December 28, 2008			Fiscal quarter ended March 30, 2008			Fiscal quarter ended March 29, 2009

	(audited)			(audited)			(audited)			(audited)			(unaudited)			(unaudited)

Net sales:
Beef	$	7,576,136		$	3,757,295		$	3,942,231		$	9,975,510		$	1,935,142		$	2,680,205
Pork		2,152,583			1,234,133			1,063,644			2,438,049			535,509			526,283
Corporate and other		(37,287	)		(20,804	)		(16,891	)		(51,278	)		(8,994	)		(10,149	)


Total	$	9,691,432		$	4,970,624		$	4,988,984		$	12,362,281		$	2,461,657		$	3,196,339


Depreciation, amortization expense and goodwill impairment(1):
Beef	$	65,443		$	32,913		$	25,627		$	68,721		$	14,114		$	26,568
Pork		23,679			11,925			9,617			23,653			5,025			6,784


Total	$	89,122		$	44,838		$	35,244		$	92,374		$	19,139		$	33,352

(1)

The fiscal year ended December 24, 2006 included a $4.5 million goodwill impairment charge.

Fiscal quarter ended March 29, 2009 compared to fiscal quarter ended March 30, 2008

Net sales. Net sales is defined as gross sales (amounts invoiced to customers) less any sales returns and allowances. We grant allowances that are customary in our business. Net sales for the fiscal quarter ended March 29, 2009 totaled $3,196.3 million as compared to net sales of $2,461.7 million for the fiscal quarter ended March 30, 2008. Net sales for the fiscal quarter ended March 29, 2009 increased $734.7 million, or 29.8%, as compared to the fiscal quarter ended March 30, 2008, primarily reflecting an overall 10% increase in sales volume, which was partially offset by a 6.1% overall decrease in sales prices. Excluding the JBS Packerland and Tasman Acquisitions, net sales would have been $2,307.1 million for the fiscal quarter ended March 29, 2009, representing a decrease of $154.5 million. This sales price decrease reflected a 7.3% decrease in Beef segment prices, partially offset by a 4.6% increase in Pork segment prices. Volumes increased in our Beef segment by 49.4% driven by the JBS Packerland and Tasman Acquisitions (a 1.6% decrease excluding the JBS Packerland and Tasman Acquisitions primarily due to market conditions, including demand), and a 6.1% decrease in our Pork segment related to overall market conditions, including demand and margins. The addition of smalls in Australia for the period ended March 29, 2009 was the primary driver of the decline in per unit selling

prices. For calculation of the price changes in the period subsequent to the Tasman Acquisition, we utilized a 12 to 1 ratio of smalls to cattle equivalents based on relative weights. The value of the Australian dollar as compared to the U.S. dollar decreased 27.0% between the two periods which negatively affected net sales from our international operations included in our Beef segment.

Cost of goods sold. Cost of goods sold totaled $3,123.4 million for the fiscal quarter ended March 29, 2009 as compared to $2,451.4 million for the fiscal quarter ended March 30, 2008. Cost of goods sold increased $671.9 million, or 27.4%, for the fiscal quarter ended March 29, 2009 as compared to the fiscal quarter ended March 30, 2008. Excluding the JBS Packerland and Tasman Acquisitions, cost of goods sold would have been $2,268.7 million for fiscal quarter ended March 29, 2009, representing a decrease of $182.7 million. Cost of goods sold increased 34.6% in our Beef segment as a result of a 49.4% increase in slaughter volumes (primarily attributable to the JBS Packerland and Tasman Acquisitions), offset by a 1.6% decrease in slaughter volumes at the legacy Swift beef facilities and an 11.7% decrease in cattle prices and further offset by a 0.2% decrease in cost of goods sold in our Pork segment (which was driven by a 6.1% decrease in hog slaughter volumes, partially offset by a 7.2% increase in hog prices). Although total cost of goods sold increased quarter over quarter due to increased Beef segment production volume, we demonstrated reductions in per head cost for the following categories: freight costs, hourly wages including overtime, utilities costs (driven by lower natural gas prices), repairs and maintenance costs and storage costs.

Gross margin percentages. Gross margin percentage (gross profit as a percent of net sales) was 2.3% for the fiscal quarter ended March 29, 2009 as compared to 0.4% for the fiscal quarter ended March 30, 2008. The increase in gross margin percentage reflects a 2.7 percentage point increase in our Beef segment, partially offset by a decrease of 1.6 percentage points in our Pork segment. Margin enhancements in our Beef segment reflect cost reductions due to renegotiation of supply contracts, elimination of certain third-party service providers (including cattle hotelling, lab services and maintenance service providers) and the insourcing of these items at lower cost, operational yield enhancements which generated additional pounds to sell from each carcass and improved margins due to enhanced product mix resulting from increased volume sold to international markets where products like the special cuts described above generate a higher return. Margin declines in our Pork segment were driven by a 7.2% increase in hog prices, which could not be fully passed on through higher selling prices, especially for rendered products used for fuel for which demand and prices decreased due to lower petroleum product prices between the corresponding periods. Excluding the JBS Packerland and Tasman Acquisitions, gross margin percentage would have been 1.7% for fiscal quarter ended March 29, 2009, representing an increase of 1.3% year over year.

Selling, general and administrative expenses. Selling, general and administrative expenses were $61.6 million for the fiscal quarter ended March 29, 2009 as compared to $31.0 million for the fiscal quarter ended March 30, 2008. These expenses increased by $30.6 million, or 98.4%. Excluding the JBS Packerland and Tasman Acquisitions, selling, general and administrative expenses increased $19.4 million, or 62.4%, when compared to the same period in the prior year. During the fiscal quarter ended March 29, 2009, we reached an agreement to terminate our efforts to acquire National Beef Packing Company, LLC, or National Beef, and as a result, we paid a breakage fee to the shareholders of National Beef totaling $19.9 million, and we recorded as an expense the related incurred legal costs totaling an additional $1.0 million. These non-recurring costs of $20.9 million were recorded in selling, general and administrative

expenses in the “Corporate and other” segment. This increase was partially offset by the effect of the depreciation of 27.0% in the value of the Australian dollar as compared to the U.S. dollar between the comparative fiscal quarters.

Foreign currency transaction, net. Foreign currency transaction, net for the fiscal quarter ended March 29, 2009 was a gain of $5.1 million as compared to a gain of $12.6 million for the fiscal quarter ended March 30, 2008. This $7.5 million change related to the effects of the variation in the value of the Australian dollar as compared to the U.S. dollar on our U.S. dollar-denominated intercompany note payable and receivable within Australia. The value of the Australian dollar as compared to the U.S. dollar depreciated 24.4% between the two period ends.

Interest expense, net. Interest expense, net for the fiscal quarter ended March 29, 2009 was $14.6 million as compared to $8.1 million for the fiscal quarter ended March 30, 2008. This increase of $6.5 million related to additional borrowings under our intercompany loans and our revolving credit facility. As part of the Tasman Acquisition, we also assumed incremental debt. The additional borrowings were used to finance our working capital needs following the JBS Packerland and Tasman Acquisitions in 2008. In addition, the average interest rate applicable to these borrowings was slightly higher in the 2009 period as compared to the 2008 period. See Note 16, “Subsequent event,” to our unaudited consolidated financial statements included elsewhere in this prospectus and “—Liquidity and capital resources.”

Income tax expense, net. Income tax expense, net for the fiscal quarter ended March 29, 2009 was $0.9 million as compared to $5.6 million for the fiscal quarter ended March 30, 2008. The expense for both periods relates mainly to our Australian operations as we had established a valuation allowance in the United States. Therefore, the $4.7 million decrease related to a decrease in our international income.

Net income (loss). As a result of the factors discussed above, our net income for the fiscal quarter ended March 29, 2009 increased to income of $2.3 million from a loss of $18.1 million for the fiscal quarter ended March 30, 2008.

Beef segment

Net sales. Net sales totaled $2,680.2 million for the fiscal quarter ended March 29, 2009 as compared to $1,935.1 million for the fiscal quarter ended March 30, 2008. Net sales increased by $745.1 million, or 38.5%, as a result of an increase in production volume of 49.4%, which was partially offset by a 7.3% decrease in selling prices. For calculation of the price changes in the period subsequent to the Tasman Acquisition, we have used a 12 to 1 ratio of smalls to cattle equivalents based on relative weights. Increases in production related primarily to the JBS Packerland and Tasman Acquisitions, partially offset by a 1.6% decrease in volume from the legacy Swift beef facilities between the two quarters. Excluding the JBS Packerland and Tasman Acquisitions, net sales would have been $1,791.0 million for the fiscal quarter ended March 29, 2009, representing a decrease of $144.2 million, or 7.4%, primarily driven by the 27.0% depreciation of the Australian dollar compared to the U.S. dollar between the two quarters.

Cost of goods sold. Cost of goods sold totaled $2,619.6 million in the fiscal quarter ended March 29, 2009 as compared to $1,945.6 million in the fiscal quarter ended March 30, 2008. This increase of $673.9 million, or 34.6%, resulted from a 49.4% increase in slaughter volumes (primarily attributable to the JBS Packerland and Tasman Acquisitions, offset by a 1.6% decrease in slaughter volumes at the legacy Swift beef facilities), further offset by an 11.7% decrease in

cattle prices. Excluding the JBS Packerland and Tasman Acquisitions, cost of goods sold would have been $1,764.9 million for fiscal quarter ended March 29, 2009, representing a decrease of $180.7 million. The increase in cost of goods sold was also offset by the 27.0% percent decrease in the value of the Australian dollar as compared to the U.S. dollar. Notwithstanding the overall increase in cost of goods sold, on a cost per head basis, reductions occurred in hourly production overtime, maintenance costs, freight (driven by lower diesel fuel prices) and utilities (driven by lower natural gas prices).

Gross margin percentages. Gross margin percentage (gross profit as a percent of net sales) was 2.3% for the fiscal quarter ended March 29, 2009 as compared to (0.5)% for the fiscal quarter ended March 30, 2008. Excluding the JBS Packerland and Tasman Acquisitions, gross margin percentage would have been 1.5% for the fiscal quarter ended March 29, 2009, representing a 2.0 percentage point increase. The margin improvement in our Beef segment was driven by improvements in the product mix resulting from identification of higher value markets for certain products, coupled with manufacturing cost reductions and improved operational efficiency, as further described in the discussion of our consolidated results above.

Selling, general and administrative expenses. Selling general and administrative expenses were $28.6 million for the fiscal quarter ended March 29, 2009 as compared to $19.7 million for the fiscal quarter ended March 30, 2008. This increase of $8.9 million, or 45.4%, resulted primarily from the JBS Packerland and Tasman Acquisitions. Excluding the JBS Packerland and Tasman Acquisitions, selling, general and administrative expenses totaled $17.4 million for the fiscal quarter ended March 29, 2009, a decrease of $2.3 million from the fiscal quarter ended March 30, 2008. The decrease was partially due to the 27.0% depreciation in the value of the Australian dollar as compared to the U.S. dollar between the comparative quarters.

Depreciation and amortization expense. Depreciation and amortization expense for the fiscal quarter ended March 29, 2009 was $26.6 million as compared to $14.1 million for the fiscal quarter ended March 30, 2008. This increase of $12.5 million, or 88.2%, related to the JBS Packerland and Tasman Acquisitions. Excluding the JBS Packerland and Tasman Acquisitions, depreciation and amortization would have decreased $0.5 million, or 3.9%, resulting primarily from the depreciation recorded on assets placed in service, offset by the impact of assets fully depreciated during the period. See Note 4, “Property, plant and equipment,” to our unaudited consolidated financial statements included in this prospectus for more information about how this depreciation and amortization is reflected in our financial statements.

Pork segment

Net sales. Net sales totaled $526.3 million for the fiscal quarter ended March 29, 2009 as compared to $535.5 million for the fiscal quarter ended March 30, 2008. This decrease in of $9.2 million, or 1.7%, as compared to the fiscal quarter ended March 30, 2008, was primarily due to an overall 6.1% decrease in volume, partially offset by a 4.6% overall increase in sales prices.

Cost of goods sold. Cost of goods sold totaled $ 513.9 million for the fiscal quarter ended March 29, 2009 as compared to $514.8 million for the fiscal quarter ended March 30, 2008. This decrease of $0.8 million, or 0.2%, was primarily a result of a 6.1% decrease in our Pork segment slaughter volumes partially offset by a 7.2% increase in hog prices. The following cost categories were reduced on a per head basis: storage, freight (driven by lower diesel fuel prices) and utilities (driven by lower natural gas prices and increased alternative fuel credits).

Gross margin percentages. Gross margin percentage (gross profit as a percentage of net sales) was 2.3% for the fiscal quarter ended March 29, 2009 as compared to 3.9% for the fiscal quarter ended March 30, 2008. This decrease of 1.6 percentage points reflects lower sales margins. Gross margin percentage was impacted by a 7.2% increase in hog prices. Sales margins were also negatively impacted by lower rendered product prices driven by lower petroleum prices. The following cost categories were reduced on a per head basis: storage, freight (driven by lower diesel fuel prices) and utilities (driven by lower natural gas prices and increased alternative fuel credits), each of which helped to partially offset the increase in hog costs.

Selling, general, and administrative expenses. Selling, general, and administrative expenses were $12.0 million for the fiscal quarter ended March 29, 2009 as compared to $11.4 million for the fiscal quarter ended March 30, 2008. These expenses increased by $0.6 million, or 5.9%.

Depreciation and amortization. Depreciation and amortization expense for the fiscal quarter ended March 29, 2009 was $6.8 million as compared to $5.0 million for the fiscal quarter ended March 30, 2008. This increase of $1.8 million, or 35%, resulted primarily from the depreciation recorded on assets placed in service, partially offset by the impact of assets fully depreciated during the period. See Note 4, “Property, plant and equipment,” to our unaudited consolidated financial statements included in this prospectus for more information about how this depreciation and amortization is reflected in our financial statements.

The 173-day period from July 11, 2007 through December 30, 2007 (successor) compared to the fiscal year ended December 28, 2008 (successor)

Net sales. Net sales in the 173-day period from July 11, 2007 through December 30, 2007 (successor) were $4,989.0 million compared to $12,362.3 million for the fiscal year ended December 28, 2008 (successor). Net sales per day increased due to per day volume increases of 12.1%, partially offset by a price decline of 6.4%.

Cost of goods sold. Cost of goods sold totaled $11,917.8 million for the fiscal year ended December 28, 2008 (successor) as compared to $5,013.1 million for the 173-day period from July 11, 2007 through December 30, 2007 (successor). This increase was due to the per day volume increases of 12.1%, partially offset by a price decline of 10.7%. In addition, the increase is also attributable to the JBS Packerland and Tasman Acquisitions, coupled with the 28.3% appreciation in the Australian dollar relative to the U.S. dollar between the two periods.

Gross margin percentages. Gross margin percentage (gross profit as a percentage of net sales) in the 173-day period from July 11, 2007 through December 30, 2007 (successor) was (0.5)% compared to 3.6% for the fiscal year ended December 28, 2008 (successor). The increase in gross margin percentage in the more recent period was due principally to continuing improvements in production throughput, operating costs, efficiency and product yields as employees hired subsequent to the December 12, 2006 investigation by the U.S. Department of Homeland Security’s Immigration and Customs Enforcement division, or the ICE event, gained the ability to perform at the level of pre-ICE event production employees. See “Risk factors—Risks relating to our business and the beef and pork industries—Our performance depends on favorable labor relations with our employees and our compliance with labor laws. Any deterioration of those relations or increase in labor costs due to our compliance with labor laws could adversely affect our business.”

Selling, general and administrative expenses. Selling, general and administrative expenses in the 173-day period from July 11, 2007 through December 30, 2007 (successor) were $60.7 million compared to $148.8 million for the fiscal year ended December 28, 2008 (successor). Selling, general and administrative expenses per day increased due to the JBS Packerland and Tasman Acquisitions, more than offsetting the favorable impact of the company’s de-layering of management effective July 13, 2007 and the renegotiation of professional service contracts in the areas of audit, tax and legal services. In addition, the Australian dollar appreciated relative to the U.S. dollar by 28.3% between the two periods.

Foreign currency transaction, net. Foreign currency transaction, net was a net $5.2 million gain in the 173-day period from July 11, 2007 to December 30, 2007 as compared to a net $76.0 million loss in the fiscal year ended December 28, 2008. The foreign currency transaction loss resulted from the depreciation of the Australian dollar relative to the U.S. dollar by 22.1% between the two period ends applied against a $250 million intercompany note payable between JBS Swift Australia Pty Ltd and its U.S. parent company.

Interest expense, net. Interest expense, net for the 173-day period from July 11, 2007 through December 30, 2007 (successor) was $34.3 million compared to $36.4 million for the fiscal year ended December 28, 2008 (successor). This increase of 5.9% in the more recent period as compared to the prior period reflects the fact that borrowings decreased an average of $393.2 million due primarily to improved operating cash flows, as well as a one-time cost of $12.7 million incurred in the 2007 period associated with an unconsummated debt offering in July 2007.

Income tax expense (benefit). Income tax expense, net for the 173-day period from July 11, 2007 through December 30, 2007 (successor) was $1.0 million as compared to $31.2 million for the fiscal year ended December 28, 2008. This $30.2 million increase is related primarily to a change in our valuation allowance due to the JBS Packerland Acquisition in which we acquired additional deferred income tax liabilities.

Net income (loss). As a result of the factors discussed above, we had net income for the fiscal year ended December 28, 2008 of $161.1 million as compared to an $111.6 million net loss for the 173-day period from July 11, 2007 to December 30, 2007.

The 198-day period from December 25, 2006 to July 10, 2007 (predecessor) compared to the fiscal year ended December 24, 2006 (predecessor)

Net sales. Net sales for the 198-day period from December 25, 2006 to July 10, 2007 (predecessor) were $4,970.6 million compared to $9,691.4 million for the fiscal year ended December 24, 2006 (predecessor). Net sales per day decreased due to volume decreases of 5.2% offset by price increases of 5.6%. In addition, the value of the Australian dollar as compared to the U.S. dollar decreased 7.1% between the two periods.

Cost of goods sold. Cost of goods sold totaled $4,920.6 million for the 198-day period from December 25, 2006 to July 10, 2007 (predecessor) as compared to $9,574.7 million for the fiscal year ended December 24, 2006 (predecessor). Cost of goods sold per day decreased due to volume decreases of 5.2%, partially offset by price increases of 5.9%. In addition, the value of the Australian dollar as compared to the U.S. dollar decreased 7.1% between the two periods.

Gross margin percentages. Gross margin percentage (gross profit as a percentage of net sales) for the 198-day period from December 25, 2006 to July 10, 2007 (predecessor) was 1.0% as

compared to 1.2% for the fiscal year ended December 24, 2006 (predecessor). This decrease in gross margin percentage in the more recent period was due principally to the negative impact of the ICE event on production throughput, operating costs, efficiency and product yields as lesser-trained replacement workers were not able to perform at the level of pre-ICE event production employees. See “Risk factors—Risks relating to our business and the beef and pork industries—Our performance depends on favorable labor relations with our employees and our compliance with labor laws. Any deterioration of those relations or increase in labor costs due to our compliance with labor laws could adversely affect our business.”

Selling, general and administrative expenses. Selling, general and administrative expenses for the 198-day period from December 25, 2006 to July 10, 2007 (predecessor) were $92.3 million as compared $158.8 million for the fiscal year ended December 24, 2006 (predecessor). Selling, general and administrative expense per day increased between the two periods primarily as a result of the one-time costs of approximately $13.0 million incurred relating sell-side expenses incurred by our predecessor in connection with the Swift Acquisition, including legal costs, employee severance costs and employee retention bonuses accrued as earned in the days immediately prior to the acquisition. These costs were partially offset by a decrease of 7.1% in the value of the Australian dollar as compared to the U.S. dollar between the two periods.

Interest expense. Interest expense for the 198-day period December 25, 2006 to July 10, 2007 (predecessor) was $66.4 million as compared to $118.8 million for the fiscal year ended December 24, 2006 (predecessor). Interest expense on a per day basis increased 2.8% in the more recent period as compared to the prior fiscal year as borrowings had increased an average of $136.4 million due primarily to negative operating cash flows resulting from the ICE event impact on production volumes.

Income tax expense (benefit). Income tax benefit, net for the 198-day period from December 25, 2006 to July 10, 2007 (predecessor) was $18.4 million as compared to $37.3 million for the fiscal year ended December 24, 2006. This $18.9 million decrease related primarily to a change in our valuation allowance due to our history of losses in the United States.

Net loss. As a result of the factors described above, we recorded a net loss for the 198-day period ended July 10, 2007 of $83.0 million, as compared to a net loss incurred in the fiscal year ended December 24, 2006 of $117.4 million.

Pro forma results of operations

Our consolidated results of operations for the fiscal quarter ended March 29, 2009 are not fully comparable to our results of operations for the fiscal quarter ended March 30, 2008 due to (1) the Tasman Acquisition that closed on May 2, 2008 and (2) the JBS Packerland Acquisition that closed on October 23, 2008.

In addition, our consolidated results of operations for the fiscal year ended December 28, 2008 are not fully comparable to our results of operations for the fiscal year ended December 30, 2007 due to (1) the change in cost basis and recapitalization that occurred on July 11, 2007 in connection with the Swift Acquisition, (2) the Tasman Acquisition that closed on May 2, 2008 and (3) the JBS Packerland Acquisition that closed on October 23, 2008.

In light of these transactions, as well as the offering and sale of our 11.625% senior unsecured notes due 2014 that occurred in April 2009, and in order to facilitate an analysis of our financial

information, we are presenting pro forma statements of operations for the fiscal quarter ended March 29, 2009 and for the fiscal year ended December 28, 2008. See “Unaudited pro forma financial statements.”

We are also presenting supplementary pro forma statements of operations for the following periods for comparative purposes:

•

the fiscal quarter ended March 30, 2008 as if (a) our offering of our 11.625% senior unsecured notes due 2014 and the application of proceeds therefrom, and (b) the JBS Packerland Acquisition, in each case, had occurred at the beginning of the period presented; and

•

the fiscal year ended December 30, 2007 as if (a) the change in cost basis and recapitalization that occurred on July 11, 2007 in connection with the Swift Acquisition and (b) the JBS Packerland Acquisition, in each case, had occurred at the beginning of the period presented.

The following unaudited pro forma statements of operations tables reflect pro forma adjustments that are described in the accompanying notes and are based on available information and certain assumptions that we believe are reasonable under the circumstances, and the actual results could differ materially from these anticipated results. In our opinion, all adjustments that are necessary to present fairly the unaudited pro forma consolidated data have been made. The following unaudited pro forma statements of operations tables are presented for informational purposes only and do not purport to be indicative of what would have occurred had the JBS Packerland Acquisition, Tasman Acquisition, Swift Acquisition or the offering of our 11.625% senior unsecured notes due 2014 and the application of the proceeds therefrom actually been consummated at the beginning of the period presented, nor are they necessarily indicative of our future consolidated operating results.

Unaudited pro forma combined statement of operations

for the fiscal quarter ended March 29, 2009


	JBS USA Holdings, Inc.							JBS USA Holdings, Inc.
in thousands, except for earnings per share	March 29, 2009			Adjustments				March 29, 2009
in thousands, except for earnings per share	Historical			(+)			Notes	Pro forma

Net sales	$	3,196,339		$	—			$	3,196,339
Cost of goods sold		3,123,358			—				3,123,358

Gross profit		72,981			—				72,981
Selling, general and administrative expenses		61,598			—				61,598
Foreign currency transaction gains		(5,075	)		—				(5,075	)
Other income		(1,475	)		—				(1,475	)
Loss on sales of property, plant and equipment		180			—				180
Interest expense, net		14,592			10,024		(a)		24,616

Total expenses		69,820			10,024				79,844

Income (loss) from continuing operations before income tax		3,161			(10,024	)			(6,863	)
Income tax expense (benefit)		909			(3,509	)	(b)		(2,600	)

Net income (loss)	$	2,252		$	(6,515	)		$	(4,263	)

Basic and diluted net income (loss) per share	$	22,520.00						$	(42,630.00	)

(a)

Reflects the following adjustments to interest expense, net relating to the transactions:


Debt issuance amortization, 11.625% senior unsecured notes due 2014(i)	$	117
Debt discount accretion, 11.625% senior unsecured notes due 2014(ii)		1,950
Interest expense, 11.625% senior unsecured notes due 2014(iii)		16,302
Interest expense, intercompany debt(iv)		(8,345	)

Total interest expense, net(v)	$	10,024

(i)

(ii)

Includes pro forma interest expense for the accretion of the bond discount on $560.9 million of our 11.625% senior unsecured notes due 2014 for the period from December 29, 2008 through March 29, 2009, calculated on a straight-line basis.

(iii)

Includes pro forma interest expense for the period from December 29, 2008 through March 29, 2009 on $560.9 million ($519.6 million of proceeds plus $39.0 million of bond discount and $2.3 million of debt issuance cost) of our 11.625% senior unsecured notes due 2014.

(iv)

Includes the reduction of pro forma interest expense for our intercompany loans due to the $519.6 million reduction in the aggregate principal amount of those intercompany loans using a portion of the net proceeds of our 11.625% senior unsecured notes due 2014.

(v)

(b)

Reflects the tax effect of the pro forma adjustments at an estimated 35% effective tax rate.

Unaudited pro forma combined statement of operations for the fiscal quarter ended March 30, 2008


	JBS USA Holdings, Inc.			JBS Packerland			JBS Packerland			JBS Packerland			Five Rivers			Five Rivers							JBS USA Holdings, Inc.
	December 31, 2007 through March 30, 2008			December 31, 2007 through March 30, 2008 (a)(i)			Adjustment for 50% equity interest in Five Rivers (b)			Adjustment for assets not acquired (c)(i)			December 31, 2007 through March 30, 2008 (a)(ii)			Adjustment for assets not acquired (c)(ii)			Adjustment for transaction				December 31, 2007 through March 30, 2008
	Historical			Historical									Historical									Notes	Pro forma

in thousands, except earnings per share	(+)			(+)			(-)			(-)			(+)			(-)			(+)


Net sales	$	2,461,657		$	729,130		$	—		$	775		$	480,701		$	325,614		$	(960	)	(d)	$	3,344,139
Cost of goods sold		2,451,413			696,897			—			(3,389	)		473,618			329,215			2,705		(d),(e)		3,298,807

Gross profit		10,244			32,233			—			4,164			7,083			(3,601	)		(3,665	)			45,332
Selling, general and administrative expenses		31,042			22,168			—			6,319			3,473			—			1,202		(e)		51,566
Foreign currency transaction gains		(12,614	)		—			—			—			—			—			—				(12,614	)
Other income (expense)		(3,782	)		2,136			884			1,290			(78	)		42			—				(3,940	)
Loss on sales of property, plant and equipment		19			1			—			—			2			—			—				22
Interest expense, net		8,108			10,352			—			10,402			5,453			5,453			12,172		(f)		20,230

Total expenses		22,773			34,657			884			18,011			8,850			5,495			13,374				55,264

Loss from continuing operations before income tax		(12,529	)		(2,424	)		(884	)		(13,847	)		(1,767	)		(9,096	)		(17,037	)			(9,932	)
Income tax expense (benefit)		5,613			558			—			558			—			—			907		(g)		6,520

Net income (loss)	$	(18,142	)	$	(2,982	)	$	(884	)	$	(14,405	)	$	(1,767	)	$	(9,096	)	$	(17,946	)		$	(16,452	)

Basic and diluted net income (loss) per share	$	(181,420.00	)																				$	(164,520.00	)

(a)

Represents the historical results of

(i)

JBS Packerland, and

(ii)

Five Rivers

for the period from December 31, 2007 through March 30, 2008.

(b)

Represents the elimination of the 50% equity interest in Five Rivers from the historical results of JBS Packerland for the period December 31, 2007 through March 30, 2008. On a pro forma basis, the results of Five Rivers are reflected on a fully consolidated basis as part of the JBS Packerland Acquisition.

(c)

Reflects the elimination of assets not acquired for

(i)

JBS Packerland, and

(ii)

Five Rivers.

(d)

Reflects the elimination of $0.9 million of intercompany sales and $0.9 million of cost of goods sold between JBS Packerland and our legacy Swift Beef segment for the period from December 31, 2007 through March 30, 2008.

(e)

Represents the adjustment of $3.6 million to historical cost of goods sold and $1.2 million for selling, general and administrative expense to reflect depreciation and amortization expense based on the estimated fair values and useful lives of identified tangible and intangible assets for JBS Packerland and Five Rivers based on a preliminary third-party valuation report. The purchase price allocation is preliminary pending completion of independent valuations of identified tangible and intangible assets acquired and certain liabilities acquired, including, but not limited to deferred taxes. The allocation of the purchase price presented below is preliminary and subject to change. The allocation presented below reflects the estimated fair value of the individual assets and liabilities as of October 23, 2008 (in thousands), and the following table details the purchase price components:


Purchase price allocation:
Purchase price paid to previous shareholders	$537,068
Fees and direct expenses	26,134

Total purchase price	$563,202


Preliminary purchase price allocation:
Current assets and liabilities	$43,052
Property, plant and equipment(i)	423,955
Deferred tax liabilities	(142,997	)
Goodwill	95,998
Intangible assets(ii)	138,023
Other noncurrent assets and liabilities, net	5,171

Total purchase price allocation	$563,202

(i)


Furniture, fixtures, office equipment and other		5 to 7 years
Machinery and equipment		5 to 15 years
Buildings and improvements		15 to 40 years
Leasehold improvements		shorter of useful life or the lease term

(ii)

(f)

Reflects the following adjustments to interest expense, net relating to the transactions:


Debt issuance amortization, 11.625% senior unsecured notes due 2014(i)	$117
Debt discount accretion, 11.625% senior unsecured notes due 2014(ii)	1,950
Interest expense, 11.625% senior unsecured notes due 2014(iii)	16,302
Interest expense, other debt(iv)	(6,197	)

Total Interest expense, net(v)	$12,172

(i)

Includes pro forma interest expense for the amortization of debt issuance costs on $560.9 million of our 11.625% senior unsecured notes due 2014 for the period from December 31, 2007 through March 30, 2008, calculated on a straight-line basis.

(ii)

Includes pro forma interest expense for the accretion of the bond discount on $560.9 million of our 11.625% senior unsecured notes due 2014 for the period from December 31, 2007 through March 30, 2008, calculated on a straight-line basis.

(iii)

(iv)

Includes the reduction of pro forma interest expense for the period from December 31, 2007 through March 30, 2008 on our outstanding bank debt and intercompany loans from JBS S.A. due to a $519.6 million reduction in the aggregate principal amount of those intercompany loans using a portion of the net proceeds of our 11.625% senior unsecured notes due 2014.

(v)

(g)

Reflects the tax effect of the pro forma adjustments at an estimated 35% effective tax rate.

Pro forma fiscal quarter ended March 29, 2009 compared to the pro forma fiscal quarter ended March 30, 2008

Net sales. Net sales were $3,196.3 million for the pro forma fiscal quarter ended March 29, 2009 as compared to $3,344.1 million for the pro forma fiscal quarter ended March 30, 2008. Net sales decreased by $147.8 million, or 4.4%, due to a sales price decrease of 10.6% in Beef segment prices coupled with a decrease in slaughter volumes of 1.6% in the legacy Swift beef facilities and a 6.1% decrease in hog slaughter volumes in our Pork segment, which was partially offset by a 4.6% increase in Pork segment prices. The addition of smalls in Australia for the period ended March 29, 2009 was the primary driver of the decline in per unit selling prices in our Beef segment. For calculation of the price changes in the period subsequent to the Tasman Acquisition, we have used a 12 to 1 ratio of smalls to cattle equivalents based on relative weights. The value of the Australian dollar as compared to the U.S. dollar declined 27.0% between the two periods. The 1.6% decrease in slaughter volumes was primarily due to overall differences in market conditions, including demand and margins, and the 6.1% decrease in the Pork segment was primarily due to overall differences in market conditions, including demand and margins.

Cost of goods sold. Cost of goods sold totaled $3,123.4 million for the pro forma fiscal quarter ended March 29, 2009 as compared to $3,298.8 million for the pro forma fiscal quarter ended March 30, 2008. Cost of goods sold decreased $175.5 million, or 5.3%, for the pro forma fiscal quarter ended March 29, 2009 as compared to the pro forma fiscal quarter ended March 30, 2008. Cost of goods sold declined in our Beef segment as a result of an 11.7% decrease in cattle prices coupled with a 1.6% decrease in slaughter volumes in the legacy Swift beef facilities. In addition, we recorded a 0.2% decrease in cost of goods sold in our Pork segment driven by a 6.1% decrease in slaughter volumes, partially offset by a 7.2% increase in hog prices. We demonstrated reductions in per head cost for the following categories: lower freight costs, hourly wages including overtime, utilities costs (driven by lower natural gas prices), repairs and maintenance costs and storage costs.

Gross margin percentages. Gross margin percentage (gross profit as a percentage of net sales) was 2.3% for the pro forma fiscal quarter ended March 29, 2009 as compared to 1.4% for the pro forma fiscal quarter ended March 30, 2008. This increase reflected improvements in sales markets which place higher value on certain cuts, reductions in our operating costs and improvements in plant efficiency and yields. The increase also reflects a margin increase of 1.4% in our Beef segment, partially offset by a margin decrease of 1.5% in our Pork segment. Margin enhancements in our Beef segment reflect cost reductions due to renegotiation of supply contracts, elimination of certain third- party service providers (including cattle hotelling, lab services, and maintenance service providers) and the insourcing of these items at lower cost, operational yield enhancements which generated additional pounds to sell from each carcass and improved margins due to enhanced product mix resulting from the increases in volumes sold to international markets where products like the special cuts described above generate a higher return. Margin declines in our Pork segment were driven by a 7.2% increase in hog prices which could not be fully passed on through higher selling prices, especially for rendered products used for fuel for which demand and prices were lower due to lower petroleum product demand and prices from period to period.

Selling, general and administrative expenses. Selling, general and administrative expenses were $61.6 million for the pro forma fiscal quarter ended March 29, 2009 as compared to $51.6 million for the pro forma fiscal quarter ended March 30, 2008. These expenses increased by $10.0 million,

or 19.4%. During the pro forma fiscal quarter ended March 29, 2009, we reached an agreement to terminate our efforts to acquire National Beef, and as a result, we paid a breakage fee to the shareholders of National Beef totaling $19.9 million, and we recorded as an expense the related incurred legal costs totaling an additional $1.0 million. These non-recurring costs, totaling $20.9 million were recorded in selling, general and administrative expenses in the “Corporate and other” segment. This increase was partially offset by the effect of the depreciation of 27.0% in the value of the Australian dollar as compared to the U.S. dollar between the comparative fiscal quarters.

Foreign currency transaction, net. Foreign currency transaction, net for the pro forma fiscal quarter ended March 29, 2009 was a gain of $5.1 million as compared to a gain of $12.6 million for the pro forma fiscal quarter ended March 30, 2008. This $7.5 million decrease related to the variation in the value of the Australian dollar as compared to the U.S. dollar on our U.S. dollar-denominated intercompany note payable and receivable within Australia. The value of the Australian dollar as compared to the U.S. dollar depreciated 24.4% between the two period ends.

Interest expense, net. Interest expense was $24.6 million for the pro forma fiscal quarter ended March 29, 2009 as compared to $20.2 million for the pro forma fiscal quarter ended March 30, 2008. Interest expense increased by $4.4 million, or 21.8%, due primarily to increased borrowings under our revolving credit facility in 2009 that accrued interest at a higher average interest rate than the interest rate applicable to our intercompany loans in 2008.

Income tax expense, net. Income tax expense, net for the pro forma fiscal quarter ended March 29, 2009 was a benefit of $2.6 million as compared to an expense of $6.5 million for the pro forma fiscal quarter ended March 30, 2008. The expense for both periods relates mainly to our Australian operations as we had established a valuation allowance in the United States. Therefore, the $9.1 million decrease related to a decrease in our international income.

Net income. Our pro forma net income for the fiscal quarter ended March 29, 2009 was a loss of $4.3 million compared to a loss of $16.5 million in the prior period as a result of the factors described above.

Unaudited pro forma combined statement of operations for the fiscal year ended December 28, 2008


	JBS USA Holdings, Inc.			JBS Packerland			JBS Packerland			JBS Packerland			Five Rivers			Five Rivers			Adjustment for transaction					JBS USA Holdings, Inc.
	JBS USA Holdings, Inc.			JBS Packerland			JBS Packerland			JBS Packerland			Five Rivers			Five Rivers								JBS USA Holdings, Inc.
	Fiscal year ended December 28, 2008			December 31, 2007 through October 22, 2008 (a)(i)			Adjustment for 50% equity interest in Five Rivers (b)			Adjustment for assets not acquired (c)(i)			December 31, 2007 through October 22, 2008 (a)(ii)			Adjustment for assets not acquired (c)(ii)								Fiscal year ended December 28, 2008
	Historical			Historical									Historical									Notes		Pro forma

in thousands, except earnings per share	(+)			(+)			(-)			(-)			(+)			(-)			(+)

Net sales	$	12,362,281		$	2,548,224		$	—		$	4,923		$	1,461,140		$	912,920		$	(8,011	)	(d	)	$	15,445,791
Cost of goods sold		11,917,777			2,397,551			—			4,949			1,511,462			988,814			4,724		(d),(e	)		14,837,751

Gross profit (loss)		444,504			150,673			—			(26	)		(50,322	)		(75,894	)		(12,735	)				608,040
Selling, general and administrative expenses		148,785			78,793			—			24,017			11,093			9			4,052		(e	)		218,697
Foreign currency transaction losses		75,995			—			—			—			—			—			—					75,995
Other income, net		(10,107	)		44,465			39,139			5,555			(208	)		(74	)		—					(10,470	)
Loss on sales of property, plant and equipment		1,082			107			—			—			131			224			—					1,096
Interest expense, net		36,358			30,837			—			31,005			16,940			16,940			46,431		(f	)		82,621

Total expenses		252,113			154,202			39,139			60,577			27,956			17,099			50,483					367,939

Income (loss) from continuing operations before		192,391			(3,529	)		(39,139	)		(60,603	)		(78,278	)		(92,993	)		(63,218	)				240,101
Income tax expense		31,287			2,222			—			2,222			—			—			16,699		(g	)		47,986

Net income (loss)	$	161,104		$	(5,751	)	$	(39,139	)	$	(62,825	)	$	(78,278	)	$	(92,993	)	$	(79,917	)			$	192,115

Basic and diluted net income (loss) per share	$	1,611,040.00																						$	1,921,150.00

(a)

Represents the historical results of

(i)

JBS Packerland, and

(ii)

Five Rivers

for the period from December 31, 2007 through October 22, 2008.

(b)

(c)

Reflects the elimination of assets not acquired for

(i)

JBS Packerland, and

(ii)

Five Rivers.

The adjustment for assets not acquired includes (1) revenue and expenses associated with cattle owned by Smithfield Foods, Inc. that were retained by Smithfield Foods, Inc., (2) revenue and expenses associated with cattle owned by Five Rivers that were retained by Smithfield Foods, Inc., (3) the elimination of corporate overhead charge by Smithfield Foods, Inc. and (4) other assets and insignificant businesses not acquired and liabilities not assumed.

(d)

Reflects the elimination of $8.0 million of intercompany sales and $8.0 million of cost of goods sold between JBS Packerland and our Beef segment for the period from December 31, 2007 through October 22, 2008.

(e)

Represents the adjustment of $12.7 million to historical cost of goods sold and to selling, general and administrative expense of $4.1 million to reflect depreciation and amortization expense based on the estimated fair values and useful lives of identified tangible and intangible assets for JBS Packerland and Five Rivers based on a preliminary third-party valuation report. The purchase price allocation is preliminary pending completion of independent valuations of identified tangible and intangible assets acquired and certain liabilities acquired, including, but not limited to deferred taxes. The allocation of the purchase price presented below is preliminary and subject to change. The allocation presented below reflects the estimated fair value of the individual assets and liabilities as of October 23, 2008 (in thousands), and the following table details the purchase price components:


Purchase price allocation:
Purchase price paid to previous shareholders	$537,068
Fees and direct expenses	26,134

Total purchase price	$563,202


Preliminary purchase price allocation:
Current assets and liabilities	$43,052
Property, plant and equipment(i)	423,955
Deferred tax liabilities	(142,997	)
Goodwill	95,998
Intangible assets(ii)	138,023
Other noncurrent assets and liabilities, net	5,171

Total purchase price allocation	$563,202

(i)


Furniture, fixtures, office equipment and other		5 to 7 years
Machinery and equipment		5 to 15 years
Buildings and improvements		15 to 40 years
Leasehold improvements		shorter of useful life or the lease term

(ii)

(f)

Reflects the following adjustments to interest expense, net relating to the transactions:


Debt issuance amortization, 11.625% senior unsecured notes due 2014(i)	$ 467
Debt discount accretion, 11.625% senior unsecured notes due 2014(ii)	7,802
Interest expense, 11.625% senior unsecured notes due 2014(iii)	65,209
Interest expense, intercompany debt(iv)	(27,047	)

Total Interest expense, net(v)	$46,431

(i)

(ii)

(iii)

(iv)

(v)

(g)

Reflects the tax effect of the pro forma adjustments at an estimated 35% effective tax rate.

Unaudited pro forma combined statement of operations for the fiscal year ended December 30, 2007


	JBS USA Holdings, Inc.		JBS USA Holdings, Inc.		JBS Packerland		JBS Packerland		JBS Packerland		Five Rivers		Five Rivers						JBS USA Holdings, Inc.
	Dec. 25, 2006 to July 10, 2007 (a)		July 11, 2007 to Dec. 30, 2007 (a)		Dec. 25, 2006 through Dec. 30, 2007 (b)(i)		Adjust- ment for 50% equity interest in Five Rivers (c)		Adjust- ment for assets not acquired (d)(i)		Dec. 25, 2006 through Dec. 30, 2007 (b)(ii)		Adjust- ment for assets not acquired (d)(ii)		Adjust- ment for trans- action				Dec. 25, 2006 to Dec. 30, 2007
in thousands, except earnings per share	Historical		Historical		Historical						Historical						Notes		Pro forma

	(+)		(+)		(+)		(-)		(-)		(+)		(-)		(+)


Net sales	$	4,970,624	$	4,988,984	$	2,823,496	$	—	$	8,083	$	1,995,238	$	1,410,422	$	(6,091)	(e)		$	13,353,746
Cost of goods sold		4,920,594		5,013,084		2,750,464		—		41,475		1,941,093		1,393,107		18,917	(e),(f	),(g)		13,209,570

Gross profit (loss)		50,030		(24,100)		73,032		—		(33,392)		54,145		17,315		(25,008)				144,176
Selling, general and administrative expenses		92,333		60,727		60,850		—		1,938		12,953		—		10,012	(f),(g	)		234,937
Foreign currency transaction gains		(527)		(5,201)		—		—		—		—		—		—				(5,728)
Other income, net		(3,821)		(3,581)		(7,635)		(7,446)		(79)		(1,996)		(54)		—				(9,454)
(Gain) loss on sales of property, plant and equipment		(2,946)		182		133		—		—		324		—		—				(2,307)
Interest expense, net		66,383		34,340		41,056		—		41,056		27,972		28,136		(13,974)	(h	)		86,585

Total expenses		151,422		86,467		94,404		(7,446)		42,915		39,253		28,082		(3,962)				304,033

Income (loss) from continuing operations before income tax		(101,392)		(110,567)		(21,372)		7,446		(76,307)		14,892		(10,767)		(21,046)				(159,857)
Income tax expense (benefit)		(18,380)		1,025		—		—		—		—		—		18,236	(i	)		881

Net income (loss)	$	(83,012)	$	(111,592)	$	(21,372)	$	7,446	$	(76,307)	$	14,892	$	(10,767)	$	(39,282)			$	(160,738)

Basic and diluted net income (loss) per share(j)		N/A	$	(1,115,920.00)															$	(1,607,380.00)

(a)

Represents the historical results of JBS USA Holdings, Inc. for the period from December 25, 2006 through July 10, 2007 (predecessor) and the period from July 11, 2007 through December 30, 2007 (successor).

(b)

Represents the historical results of

(i)

JBS Packerland, and

(ii)

Five Rivers

for the period from December 25, 2006 through December 30, 2007.

(c)

Represents the elimination of the 50% equity interest in Five Rivers from the historical results of JBS Packerland for the period from December 25, 2006 through December 30, 2007. On a pro forma basis, the results of Five Rivers are reflected on a fully consolidated basis as part of the JBS Packerland Acquisition.

(d)

Reflects the elimination of assets not acquired for

(i)

JBS Packerland, and

(ii)

Five Rivers.

(e)

Reflects the elimination of $6.1 million of intercompany sales and $6.1 million of cost of goods sold between JBS Packerland and our legacy Swift Beef segment for the period from December 25, 2006 through December 30, 2007.

(f)

Represents the adjustment of $15.4 million to historical cost of goods sold and to selling, general and administrative expenses of $4.7 million to reflect an increase in depreciation and amortization expense based on the estimated fair values and useful lives of identified tangible and intangible assets for JBS Packerland and Five Rivers, based on a preliminary third-party valuation report. The purchase price allocation is preliminary pending completion of independent valuations of identified tangible and intangible assets acquired and certain liabilities acquired, including, but not limited to deferred taxes. The allocation of the purchase price presented below is preliminary and subject to change. The allocation presented below reflects the estimated fair value of the individual assets and liabilities as of October 23, 2008 (in thousands), and the following table details the purchase price components:


Purchase price allocation:
Purchase price paid to previous shareholders	$537,068
Fees and direct expenses	26,134

Total purchase price	$563,202


Preliminary purchase price allocation:
Current assets and liabilities	$43,052
Property, plant and equipment(i)	423,955
Deferred tax liabilities	(142,997	)
Goodwill	95,998
Intangible assets(ii)	138,023
Other noncurrent assets and liabilities, net	5,171

Total purchase price allocation	$563,202

(i)


Furniture, fixtures, office equipment and other		5 to 7 years
Machinery and equipment		5 to 15 years
Buildings and improvements		15 to 40 years
Leasehold improvements		shorter of useful life or the lease term

(ii)

Intangible assets include customer relationships and customer contracts resulting from the JBS Packerland Acquisition which are being amortized on an accelerated basis over 21 and 10 years, respectively. These represent management’s estimates of the period of expected economic benefit and annual customer profitability.

(g)

Represents the adjustment of $9.6 million to historical cost of goods sold and $5.3 million to selling, general and administrative expenses to reflect depreciation and amortization expense based on the fair values and useful lives of identified tangible and intangible assets for the Swift Acquisition. The aggregate purchase price for the acquisition was $1,470.6 million (including approximately $48.5 million of transaction costs). We accounted for the acquisition in accordance with the Statement of Financial Accounting Standard No. 141, Business Combinations.

(h)

Reflects the following adjustments to interest expense, net relating to the transactions:


Debt issuance amortization, 11.625% senior unsecured notes due 2014(i)	$	467
Debt discount accretion, 11.625% senior unsecured notes due 2014(ii)		7,802
Interest expense, 11.625% senior unsecured notes due 2014(iii)		65,209
Interest expense, predecessor(iv)		(102,573)
Interest expense, successor(v)		15,121

Total Interest expense, net(vi)	$	(13,974)

(i)

Includes pro forma interest expense for the amortization of debt issuance costs on $560.9 million of our 11.625% senior unsecured notes due 2014 for the period from December 25, 2006 through December 30, 2007, calculated on a straight-line basis.

(ii)

Includes pro forma interest expense for the accretion of the bond discount on $560.9 million of our 11.625% senior unsecured notes due 2014 for the period from December 25, 2006 through December 30, 2007, calculated on a straight-line basis.

(iii)

(iv)

Includes pro forma elimination of predecessor interest expense for the period from December 25, 2006 through December 30, 2007 related to debt that was repaid in connection with the Swift Acquisition.

(v)

Includes pro forma interest expense related to the residual outstanding balance of $230.4 million on unsecured bank loans resulting from the reduction of an initial $750.0 million in aggregate principal amount of those unsecured bank loans in connection with the Swift Acquisition reduced by the pro forma application of the net proceeds of $519.6 million in aggregate principal amount of 11.625% senior unsecured notes due 2014, calculated using an average interest rate of 6.37%.

(vi)

We have applied the adjustments in clauses (i), (ii) and (iii) above to $560.9 million in proceeds, bond discount and debt issuance costs of our 11.625% senior unsecured notes due 2014 because that is the amount of debt we would have to have issued to repay the portion of our intercompany loans from JBS S.A. described in clause (v) above. The total principal amount of our 11.625% senior secured notes due 2014 is $700.0 million, and our pro forma interest expense accordingly does not purport to be indicative of what our interest expense will be in the future.

(i)

Reflects the tax effect of the pro forma adjustments at an estimated 35% effective tax rate.

(j)

Pro forma fiscal year ended December 28, 2008 (53 weeks) compared to the pro forma fiscal year ended December 30, 2007 (52 weeks)

Net sales. Net sales were $15,445.8 million for the pro forma fiscal year ended December 28, 2008 as compared to $13,353.7 million for the pro forma fiscal year ended December 30, 2007. Net sales increased by $2,092.0 million, or 15.7%, primarily reflecting an overall 7.3% increase in volume combined with a 3.9% overall increase in sales prices. The volume increase was primarily due to an additional week of operating activity in the fiscal year ended December 28, 2008, coupled with increases in production volumes from the ramp-up of the Greeley plant’s second shift commencing in September 2007. The sales price increase included a 4.1% increase in Beef prices and a 2.2% increase in Pork prices. Volumes increased 13.0% in our Beef segment and 3.8% in our Pork segment. The volume increases in our Pork segment occurred across all of our facilities. The volume increases in our Beef segment were driven primarily by adding the second shift of production at our Greeley plant, but they also included volume increases at all of our Beef segment plants in the United States. In part, these volume increases were attributable to the return in mid-year 2008 of the South Korean beef market, as well as the identification of markets which maximize the margin of certain cuts, such as short rib to South Korea, picanha to Brazil, and the introduction of Australian meat to South American markets. For calculation of the price changes in the period subsequent to the Tasman Acquisition, we have used a 12 to 1 ratio of smalls to cattle equivalents based on relative weights. The value of the Australian dollar average exchange rate relative to the U.S. dollar declined 0.1% between the two periods, which negatively affected net sales from our Australian operations in U.S. dollar terms.

Cost of goods sold. Cost of goods sold totaled $14,837.8 million for the pro forma fiscal year ended December 28, 2008 as compared to $13,209.6 million for the pro forma fiscal year ended December 30, 2007. The increase, of $1,628.2 million, or 12.3%, was partially due to an additional week of operating activity in the fiscal year ended December 28, 2008. Cost of goods sold increased 13.7% in our Beef segment as a result of a 0.6% increase in cattle prices and a 13.0% increase in slaughter volumes, coupled with a 5.6% increase in our Pork segment driven by a 1.7% increase in hog prices and a 3.8% increase in slaughter volumes. Although total cost of sales increased year over year due to increased production volumes, we demonstrated reductions in per head cost for the following categories: renegotiation of contracts, operational performance improvements, packaging, freight, hourly labor, overtime, maintenance, contract services and operating supplies.

Gross margin percentages. Gross margin percentage (gross profit as a percentage of net sales) was 3.9% for the pro forma fiscal year ended December 28, 2008 as compared to 1.1% for the pro forma fiscal year ended December 30, 2007. This increase reflects improvements in sales to

markets which place higher value on certain cuts, reductions in our operating costs and improvements in plant efficiency and yields. This increase reflects a margin increase of 3.4% in our Beef segment and a margin increase of 0.5% in our Pork segment. Margin enhancements in our Beef segment reflect cost reductions due to the renegotiation of supply contracts, elimination of certain third-party service providers (including cattle hotelling, lab services and maintenance service providers) and the insourcing of these items at lower cost, operational yield enhancements which generated additional pounds to sell from each carcass and improved margins due to enhanced product mix resulting from the increases in volumes sold to international markets where products like the special cuts described above generate a higher return.

Selling, general and administrative expenses. Selling, general and administrative expenses were $218.7 million for the pro forma fiscal year ended December 28, 2008 as compared to $234.9 million for the pro forma fiscal year ended December 30, 2007. These expenses decreased by $16.2 million, or 6.9%. The reduction in selling, general and administrative costs was a result of increased management focus on spending, the elimination of outside consultants, reductions in professional service fees and reductions in the number of executive management personnel in mid-2007 for which a full year of cost savings is reflected in fiscal 2008, partially offset by the inclusion of higher management incentives in fiscal 2008 due to improved business performance. In addition, the 0.1% decrease in the value of the Australian dollar relative to the U.S. dollar between the periods contributed to the decrease in expenses, partially offset by the additional week of operating expenses for the period ended December 28, 2008.

Foreign currency transaction, net. Foreign currency transaction, net for the pro forma fiscal year ended December 28, 2008 was a loss of $76.0 million as compared to a gain of $5.7 million for the pro forma fiscal year ended December 30, 2007. This decrease of $81.7 million related to the variation in the exchange rate relating to the U.S. dollar-denominated intercompany note payable and receivable in Australia. The value of the Australian dollar relative to the U.S. dollar decreased 20.1% between the two periods.

Interest expense, net. Interest expense, net was $82.6 million for the pro forma fiscal year ended December 28, 2008 as compared to $86.6 million for the pro forma fiscal year ended December 30, 2007. Interest expense, net decreased by $4.0 million, or 4.6%, due primarily to reduced borrowings.

Income tax expense, net. Income tax expense, net for the pro forma fiscal year ended December 28, 2008 was $48.0 million as compared to $1.0 million for the pro forma fiscal year ended December 30, 2007. This $47.0 million decrease is related primarily to a change in our valuation allowance due to the JBS Packerland Acquisition in which we acquired additional deferred tax liabilities.

Net income. Our pro forma net income for the fiscal year ended December 28, 2008 was $192.1 million as compared to a net loss of $160.7 million for the fiscal year ended December 30, 2007.

Liquidity and capital resources

Our ongoing operations require the availability of funds to service debt, fund working capital needs, invest in our business, and pay our liabilities. We currently finance and expect to continue to finance these activities through cash flow from operations and from amounts available under our senior secured revolving credit facility.

As of March 29, 2009, we had working capital of $745.7 million compared to $829.1 million as of December 28, 2008. The decrease from December 2008 is primarily due to normal seasonality factors in the beef and pork industries. Our average Days Inventory Outstanding, or DIO, and Days Sales Outstanding, or DSO, for the fiscal quarter ended March 29, 2009 were 18.9 and 14.6, respectively, compared to 20.1 and 16.2, respectively, for the fiscal quarter ended March 30, 2008. We consider accounts receivable and inventory to be readily convertible to cash and an additional source of cash liquidity as compared to companies and industries with longer DSO or DIO.

We believe that cash on hand, cash flows from operations, availability under our senior secured revolving credit facility and other long-term borrowings will be sufficient to meet ongoing operating requirements, make scheduled principal and interest payments on debt, and fund ordinary capital expenditures for the foreseeable future. Our ability to generate sufficient cash, however, is subject to certain general economic, financial, industry, legislative, regulatory and other factors beyond our control. Capital expenditures for 2009 are expected to approximate $150 million, of which approximately 50% is expected to be for maintenance and the remainder for major renewals, improvements and the development of new processing capabilities. We anticipate that we may spend approximately $1.5 billion to $2.0 billion from 2010 through 2012, of which approximately $500 million is expected to be for maintenance, major renewals, improvements and the development of new processing capabilities, and the remainder, or approximately $1.0 to 1.5 billion, may be used to fund our strategy to enhance our direct distribution capabilities.

Cash flows

Operating activities. Net cash provided by (used in) operating activities increased to $282.1 million for the fiscal year ended December 28, 2008 as compared to $(110.7) million for the 173-day period from July 11, 2007 through December 30, 2007 (successor) and $(107.8) million for the 198-day period December 25, 2006 to July 10, 2007 (predecessor), respectively. The primary source of operational cash flow improvements was improved operational results between the periods driven by increased volumes, higher sales margins and lower operating costs, coupled with a deferred revenue advance payment of $175.0 million. See “—External sources of liquidity and description of indebtedness—Customer advance payment relating to raw material supply agreement.”

Net cash provided by (used in) operating activities increased by $179.9 million to $51.0 million for the fiscal quarter ended March 29, 2009 as compared to $(128.9) million for the fiscal quarter ended March 30, 2008. The increase is attributable to improved margins which are the result of improvements in our sales product mix, identification of higher value markets for certain of our products, reduction in our manufacturing costs and improved operational efficiencies including year-over-year inventory management.

Investing activities. Cash used in investing activities totaled $783.7 million for the fiscal year ended December 28, 2008 as compared to cash used of $39.4 million for the 173-day period July 11, 2007 through December 30, 2007 (successor) and $27.8 million for the 198-day period December 25, 2006 to July 10, 2007 (predecessor), respectively. The primary factors in the increase in investments were the JBS Packerland and Tasman Acquisitions during the fiscal year ended December 28, 2008.

Cash used in investing activities totaled $206.4 million for the fiscal year quarter ended March 29, 2009 as compared to cash used of $15.4 million for the fiscal quarter ended March 30, 2008. The increase in cash used was primarily due to the issuance by us of a $171.3 million note receivable

to an unconsolidated affiliate. The cash we loaned to the affiliate was used to acquire live cattle to feed in the Five Rivers feedlots and ultimately to be delivered for processing to our Beef segment plants. See “Certain relationships and related party transactions—Arrangements with J&F Oklahoma—Cattle purchase and sale agreement.”

Financing activities. For the fiscal year ended December 28, 2008, cash provided by financing activities totaled $571.3 million, as compared to cash provided by financing activities of $346.7 million for the 173-day period July 11, 2007 through December 30, 2007 (successor) and $100.5 million for the 198-day period December 25, 2006 to July 10, 2007 (predecessor), respectively. The primary source of the increase in financing activities was the increase in capital contributions from our parent and intercompany borrowings as compared to the prior year periods.

Cash provided by financing activities totaled $55.7 million for the fiscal quarter ended March 29, 2009, an increase of $22.1 million from the fiscal quarter ended March 30, 2008. The increase resulted primarily from increased borrowings under our senior secured revolving credit facility in the current year while the prior year funding was from investments from JBS S.A., net of payments on outstanding debt.

External sources of liquidity and description of indebtedness

Our primary financing objective is to maintain a balance sheet that provides the flexibility to pursue our business strategy. To finance our working capital needs, we utilize cash flow from operations and borrow from our senior secured revolving credit facility in addition to a combination of equity and long-term debt to finance non-current assets.

Senior secured revolving credit facility

On November 5, 2008, we entered into a senior secured revolving credit facility that allows borrowings up to $400.0 million, and terminates on November 5, 2011. On April 22, 2009, we entered into an amendment to our senior secured revolving facility that allows us to request an increase in the size of the facility to $500.0 million, to the extent we receive additional commitments.

Up to $75.0 million of the revolving credit facility is available for the issuance of letters of credit. Borrowings that are index rate loans will bear interest at a per annum rate equal to the prime rate plus a margin of 2.25% while LIBOR rate loans will bear interest at a per annum rate equal to the applicable LIBOR rate plus a margin of 3.25%. At March 29, 2009, the rates were 5.50% and 3.75%, respectively. Upon approval by the lender, LIBOR rate loans may be taken for one, two-, or three-month terms (or six months at the discretion of the agent under our senior secured revolving credit facility).

Availability. Availability under our senior secured revolving credit facility is subject to a borrowing base. The borrowing base is based on certain of our domestic wholly owned subsidiaries’ assets as described below, with the exclusion of Five Rivers. The borrowing base consists of percentages of eligible accounts receivable, inventory, and supplies and less certain eligibility and availability reserves. As of March 29, 2009, our borrowing base totaled $303.6 million.

Security and guarantees. Borrowings made by us and all guarantees of those borrowings are collateralized by a first priority perfected lien and interest in accounts receivable, inventory, and general intangibles related thereto and proceeds of the foregoing.

Covenants. Our senior secured revolving credit facility contains customary representations and warranties and a springing financial covenant that requires a minimum fixed charge coverage ratio of not less than 1.15 to 1.00. The fixed charge coverage ratio is defined as the ratio of EBITDA to fixed charges, each as defined in our senior secured revolving credit facility. This ratio is only applicable if borrowing availability falls below the minimum threshold, which is the greater of 20% of the aggregate commitments or $70.0 million. Our senior secured revolving credit facility also contains negative covenants that limit our ability and the ability of our subsidiaries to, among other things:

•

make capital expenditures greater than $175.0 million per year;

•

incur additional indebtedness;

•

create liens on property, revenue, or assets;

•

make certain loans or investments;

•

sell or dispose of assets;

•

pay certain dividends and other restricted payments;

•

prepay, cancel or amend certain indebtedness;

•

dissolve, consolidate, merge, or acquire the business or assets of other entities;

•

enter into joint ventures other than certain permitted joint ventures or create certain other subsidiaries;

•

enter into new lines of business;

•

enter into certain transactions with affiliates; and

•

enter into sale/leaseback transactions.

Events of default. Our senior secured revolving credit facility also contains customary events of default, including failure to perform or observe terms, covenants or agreements included in our senior secured revolving credit facility, payment of defaults on other indebtedness, defaults on other indebtedness if the effect is to permit acceleration, entry of unsatisfied judgments or orders against a loan party or its subsidiaries, failure of any collateral document to create or maintain a priority lien, and certain events related to bankruptcy and insolvency or ERISA matters. If an event of default occurs the lenders under our senior secured revolving credit facility may, among other things, terminate their commitments, declare all outstanding borrowings to be immediately due and payable together with accrued interest, and fees and exercise remedies under the collateral documents relating to our senior secured revolving credit facility. At March 29, 2009, we were in compliance with all covenants.

11.625% senior unsecured notes due 2014

Our wholly owned subsidiaries JBS USA, LLC and JBS USA Finance, Inc. issued 11.625% notes due 2014 in an aggregate principal amount of $700.0 million on April 27, 2009. These notes are guaranteed by JBS S.A., us, JBS Hungary Holdings Kft. (a wholly owned, indirect subsidiary of JBS S.A., the selling stockholder in this offering and our direct controlling stockholder), and each of our U.S. restricted subsidiaries that guarantee our senior secured revolving facility (subject to certain exceptions). Interest on these notes accrues at a rate of 11.625% per annum and is payable semi-annually in arrears on May 1 and November 1 of each year, beginning on November 1, 2009. The principal amount of these notes is payable in full on May 1, 2014.

Covenants. The indenture for the 11.625% senior unsecured notes due 2014, contains customary negative covenants that limit our, JBS USA, LLC’s and restricted subsidiaries’ ability to, among other things:

•

incur additional indebtedness subject to complying with certain net debt to EBITDA incurrence ratios;

•

incur liens;

•

sell or dispose of assets;

•

pay dividends or make certain payments to our shareholders;

•

permit restrictions on dividends and other restricted payments by its restricted subsidiaries;

•

enter into related party transactions;

•

enter into sale/leaseback transactions; and

•

undergo changes of control without making an offer to purchase the notes.

Events of default. The indenture also contains customary events of default, including failure to perform or observe terms, covenants or other agreements in the indenture, defaults on other indebtedness if the effect is to permit acceleration, failure to make a payment on other indebtedness waived or extended within the applicable grace period, entry of unsatisfied judgments or orders against the issuer or its subsidiaries, and certain events related to bankruptcy and insolvency matters. If an event of default occurs, the trustee or the holders of at least 25% in aggregate principal amount of the notes then outstanding, may declare such principal and accrued interest on the notes to be immediately due and payable.

Guarantee of 10.50% senior notes due 2016 of JBS S.A.

On August 4, 2006, JBS S.A. issued 10.50% senior notes due 2016, or the 2016 Notes, in an aggregate principal amount of $300.0 million. Interest on the 2016 Notes accrues at a rate of 10.50% per annum and is payable semi-annually in arrears on February 4 and August 4 of each year, beginning on February 4, 2007. The principal amount of the 2016 Notes is payable in full on August 4, 2016.

Guarantees. The indenture governing the 2016 Notes requires any significant subsidiary (any subsidiary constituting at least 20% of JBS S.A.’s total assets or annual gross revenues, as shown on the latest financial statements of JBS S.A.) to guarantee all of JBS S.A.’s obligations under the 2016 Notes. The 2016 Notes are guaranteed by JBS Hungary Holdings Kft. (a wholly owned, indirect subsidiary of JBS S.A., the selling stockholder in this offering and our direct controlling stockholder), our company and our subsidiaries, JBS USA Holdings, Inc., JBS USA, LLC and Swift Beef Company. Additional subsidiaries of JBS S.A. (including our subsidiaries) may be required to guarantee the 2016 Notes in the future.

Covenants. The indentures, for the 10.50% senior notes due 2016 contain customary negative covenants that limit the ability of JBS S.A. and its subsidiaries (including us) to, among other things:

•

incur additional indebtedness;

•

incur liens;

•

sell or dispose of assets;

•

pay dividends or make certain payments to JBS S.A.’s shareholders;

•

permit restrictions on dividends and other restricted payments by its subsidiaries;

•

enter into related party transactions;

•

enter into sale/leaseback transactions; and

•

undergo changes of control without making an offer to purchase the notes.

Events of default. The indentures also contain customary events of default, including for failure to perform or observe terms, covenants or other agreements in the indenture, defaults on other indebtedness if the effect is to permit acceleration, failure to make a payment on other indebtedness waived or extended within the applicable grace period, entry of unsatisfied judgments or orders against the issuer or its subsidiaries, and certain events related to bankruptcy and insolvency matters. If an event of default occurs, the trustee or the holders of at least 25% in aggregate principal amount of the notes then outstanding, may declare such principal and accrued interest on the notes to be immediately due and payable.

Unsecured Australian revolving credit facility

Our Australian subsidiary Swift Australia Pty Limited, entered into an Australian dollar denominated, or A$120 million unsecured revolving credit facility on February 26, 2008 to fund working capital and letter of credit requirements. Under this facility, A$80 million can be borrowed for cash needs, and A$40 million is available to fund letters of credit. Borrowings are made at the cash advance rate (BBSY) plus a margin of 0.975% plus a commitment fee of 0.1%. This credit facility contains certain financial covenants which require JBS Holdco Australia Pty Ltd and its subsidiaries to maintain predetermined ratio levels related to interest coverage, debt coverage, tangible net worth and current assets to current liabilities. As of March 29, 2009, Swift Australia Pty Limited was in compliance with all covenants and had U.S.$34.6 million outstanding. This facility will terminate on October 1, 2009. We intend to seek to refinance this facility. The lenders under this facility may terminate the facility if the ratings of JBS S.A. are downgraded.

Secured Australian credit facility

Our Australian subsidiary Swift Australia (Southern) Pty Limited (formerly known as Tasman Group Services Pty Ltd A.C.N.), entered into an A$80 million secured revolving credit facility on May 2, 2008. Under this facility, up to (1) A$50 million can be borrowed to provide funding relating to the Tasman Acquisition, (2) A$15 million may be used to provide working capital and to fund letters of credit, and (3) A$15 million may be used to finance payroll and general expenses. This credit facility contains covenants that limit the borrowers’ ability to, among other things, repay loans, make redemptions of equity, create liens, raise any financial accommodation from any other party, merge with or acquire another company or entity and dispose of assets. The credit amount is secured by certain registered mortgages and a subordination agreement over intercompany loan providers. As of March 29, 2009, we were in compliance with all covenants and had U.S. $36.8 million outstanding. This facility will terminate on October 1, 2009. We intend to seek to refinance this facility.

Cactus bonds

On May 15, 2007, we entered into an Installment Bond Purchase Agreement with the city of Cactus, Texas. Under this agreement, we committed to purchase up to $26.5 million of bonds from the city of Cactus, which are being issued to fund improvements to the city’s sewer system, which is used by our beef processing plant located in Cactus, Texas. We will purchase the bonds in installments as improvements are completed through an anticipated date of June 2010. The interest rate on the bonds is six-month LIBOR plus 350 basis points. The bonds mature on June 1, 2032 and are subject to annual mandatory sinking fund redemption payments beginning on June 1, 2011. We have purchased $12.0 million in bonds as of March 31, 2009 and expect to purchase the remaining $14.5 million in 2009.

Related party debt

As of March 31, 2009, we owed an aggregate of $658.6 million under various intercompany loans from JBS S.A., which were subsequently assigned to JBS HU Liquidity Management LLC (Hungary), a wholly owned, indirect subsidiary of JBS S.A. The proceeds of these intercompany loans were used to fund our operations, the Tasman Acquisition and the JBS Packerland Acquisition. On April 27, 2009, in connection with the issuance of the 11.625% senior unsecured notes due 2014 by our subsidiary JBS USA LLC, these intercompany loan agreements were consolidated into one loan agreement, the maturity dates of the principal of the intercompany loans were extended to April 18, 2019, and the interest rate was changed from approximately 6.5% to 12% per annum. The net proceeds of the offering of the 11.625% senior unsecured notes due 2014 (other than $100.0 million) were used to repay accrued interest and a portion of the principal on these intercompany loans. As of May 31, 2009, we owed an aggregate principal amount of $133.0 million under the consolidated intercompany loan agreement. In addition, we recently entered into an additional intercompany term loan agreement in the aggregate principal amount of $6.0 million on the same terms as the consolidated intercompany loan agreement.

Customer advance payment relating to raw material supply agreement

On October 22, 2008, we received an advance cash payment of $175 million relating to a raw material supply agreement entered into on February 27, 2008 pursuant to which we granted a customer the exclusive right to collect a certain beef fabrication by-product from all of our U.S. beef plants for the term of the agreement. This customer advance payment is recorded as deferred revenue in our audited financial statements and is amortized as sales revenue as the agreed upon by-product is delivered to the customer over the term of the agreement. The customer advance payment is secured by a note agreement, which bears interest at two-month LIBOR plus 200 basis points and provides the lender with an option to convert the outstanding amount of the loan under the note agreement into our common stock upon the occurrence and continuance of any event of default under the note agreement.

Dividend restrictions

Certain covenants of our debt agreements include restrictions on our ability to pay dividends. As of December 28, 2008 and March 29, 2009, we had $22.7 million and $17.7 million, respectively, of retained earnings available to pay dividends.

Covenant compliance

JBS S.A. pro forma net debt to EBITDA ratio

The terms and conditions of (1) our 11.625% senior unsecured notes due 2014 and (2) JBS S.A.’s 10.50% senior notes due 2016 both include a covenant prohibiting JBS S.A. and its subsidiaries, including us, from incurring any debt (subject to certain exceptions) unless JBS S.A.’s pro forma net debt to EBITDA ratio at the date of such incurrence is less than 4.5 to 1.0.

The terms and conditions of both of these notes define:

•

the Net Debt to EBITDA ratio as the ratio of JBS S.A.’s Net Debt to JBS S.A.’s EBITDA for the then most recently concluded period of four consecutive fiscal quarters, subject to adjustments for asset dispositions and investments made during the period;

•

Net Debt at any time as the aggregate amount of debt of JBS S.A. and its subsidiaries (including us) less the sum of cash, cash equivalents and marketable securities recorded as current assets (except for any capital stock in any person); and

•

EBITDA for any period as to JBS S.A. and its subsidiaries (on a consolidated basis) as

•

aggregate net income (or loss) plus

•

current and deferred income tax and social contribution; minus

•

non-operating income (expense), net; plus

•

equity in the earnings (loss) of subsidiary companies; plus

•

financial income (expenses), net; plus

•

any depreciation or amortization;

as each such item is reported on the most recent financial statements or financial information prepared in accordance with generally accepted accounting principles in Brazil.

JBS S.A. has informed us that it believes it will be able to comply with this financial ratio for the foreseeable future to the extent that it or any of its subsidiaries decides to incur debt.

JBS USA, LLC pro forma net debt to EBITDA ratio

In addition, our 11.625% senior unsecured notes due 2014 include a covenant prohibiting our subsidiary, JBS USA, LLC and its subsidiaries that are guaranteeing the 11.625% senior unsecured notes due 2014 from incurring any debt or issuing any disqualified capital stock (subject to certain exceptions) unless JBS USA, LLC’s pro forma net debt to EBITDA ratio at the date of such incurrence and the application of the proceeds therefrom, would be less than 3.0 to 1.0. The co-issuers of our 11.625% senior unsecured notes due 2014 were our wholly-owned subsidiaries JBS USA, LLC and JBS USA Finance, Inc.

The calculation of the net debt to EBITDA ratio thereunder is calculated based on the net debt and EBITDA of JBS USA, LLC and its restricted subsidiaries, and not our company.

The terms and conditions of these notes define:

•

the Net Debt to EBITDA ratio as of any date of determination (the “Calculation Date”) the ratio of JBS USA, LLC’s Net Debt as of the Calculation Date to consolidated EBITDA for JBS USA, LLC and its restricted subsidiaries for the period of the then most recently concluded period of four consecutive fiscal quarters, subject to adjustments for asset dispositions and investments made during the period;

•

Net Debt at any time as the aggregate amount of debt of JBS USA, LLC and its restricted subsidiaries less the sum of cash, cash equivalents and marketable securities recorded as current assets (except for any capital stock in any person); provided that Net Debt shall include the aggregate principal amount of JBS S.A.’s 10.50% senior notes due 2016 and any other debt of JBS S.A. that may be guaranteed by JBS USA, LLC or its restricted subsidiaries; and

•

consolidated EBITDA of JBS USA, LLC and its restricted subsidiaries for any period as

(1)

consolidated net income for such period, subject to certain adjustments, minus

(2)

the sum of:

(a)

income tax credits;

(b)

interest income;

(c)

gain from extraordinary items;

(d)

any aggregate net gain (but not any aggregate net loss) arising from the sale, exchange or other disposition of capital assets by JBS USA, LLC and its restricted subsidiaries (including any fixed assets, whether tangible or intangible, all inventory sold in conjunction with the disposition of fixed assets and all securities); and

(e)

any other non-cash gains that have been added in determining consolidated net income,

in each case to the extent included in the calculation of consolidated net income of JBS USA, LLC in accordance with GAAP, but without duplication, plus

(3)

the sum of:

(a)

any provision for income taxes;

(b)

consolidated interest expense;

(c)

loss from extraordinary items;

(d)

depreciation and amortization;

(e)

any aggregate net loss (but not any aggregate net gain) arising from the sale, exchange or other disposition of capital assets by JBS USA, LLC (including any fixed assets, whether tangible or intangible);

(f)

amortized debt discount;

(g)

the amount of any deduction to consolidated net income as the result of any grant to any members of the management of JBS USA, LLC or its restricted subsidiaries of any equity interests; and

(h)

any other non-cash losses that have been deducted in determining consolidated net income (other than non-cash losses related to write-downs or write-offs of accounts receivable or inventory);

in each case to the extent included in the calculation of consolidated net income of JBS USA, LLC in accordance with GAAP, but without duplication, and as further adjusted to exclude certain non-cash items and non-recurring items.

For purposes of this covenant, consolidated net income is adjusted to exclude, among other things, (1) income from restricted subsidiaries to the extent that the payment of dividends or similar distributions by the restricted subsidiaries is not permitted by law or any agreement to which the restricted subsidiaries are parties, (2) income of any entity in which JBS USA, LLC has a joint interest, except to the extent of the dividends or other distributions actually paid to JBS USA, LLC or one of its wholly owned restricted subsidiaries and (3) certain non-cash items and non-recurring items.

As mentioned above, the calculation of our net debt to EBITDA ratio is calculated based on the net debt and EBITDA of JBS USA, LLC and its restricted subsidiaries, and not our net debt and EBITDA. We had Adjusted EBITDA of $537.7 million on a pro forma basis in the fiscal year ended December 28, 2008 and $66.1 million in the fiscal quarter ended March 29, 2009. For these same periods, JBS USA, LLC and its restricted subsidiaries had Adjusted EBITDA of $398.2 million and $67.1 million, respectively. The main differences between our Adjusted EBITDA and JBS USA, LLC and its restricted subsidiaries’ Adjusted EBITDA are that JBS USA, LLC’s Adjusted EBITDA excludes (1) Five Rivers’ consolidated net income because Five Rivers is currently an unrestricted subsidiary under the 11.625% senior unsecured notes due 2014 and (2) the payment by us (and not JBS USA, LLC) of a one-time breakage fee to the shareholders of National Beef totaling $19.9 million as full and final settlement of any and all liabilities relating to the potential acquisition of National Beef in the first quarter ended March 29, 2009 that we (and not JBS USA, LLC) recorded as a non-recurring expense. For the Five Rivers’ assets that we acquired, Five Rivers had consolidated pro forma net income of $9.6 million for the period from January 1, 2008 through October 22, 2008 and $2.9 million for the period from October 23, 2008 through December 28, 2008.

We had net debt of $657.6 million on a pro forma basis as of December 28, 2008 and $854.5 million on a pro forma basis as of March 29, 2009. We calculated pro forma net debt as of December 28, 2008 as pro forma total debt of $910.0 minus pro forma cash and cash equivalents of $252.4 million and pro forma net debt as of March 29, 2009 as total debt of $1,008.8 million minus cash and cash equivalents of $154.3 million. For these same periods, JBS USA, LLC and its restricted subsidiaries had net debt of $(35.1) million and $161.8 million, respectively. JBS USA, LLC calculated net debt as of December 28, 2008 as total debt of $219.7 million minus cash and cash equivalents of $254.8 million and net debt as of March 29, 2009 as total debt of $318.5 million minus cash and cash equivalents of $156.7 million. The main differences between our net debt and the net debt of JBS USA, LLC and its restricted subsidiaries are that (1) JBS USA, LLC’s net debt excludes Five Rivers’ debt and cash because Five Rivers is an unrestricted subsidiary and (2) JBS USA, LLC’s guarantee of JBS S.A.’s 10.50% senior notes due 2016 would also be included in JBS USA, LLC’s net debt (and not in ours) for purposes of calculating its net debt to EBITDA ratio.

For the four fiscal quarters ended June 30, 2009, JBS USA, LLC had a net debt to EBITDA ratio of to 1.00. We cannot assure you that JBS USA, LLC will not need to incur additional indebtedness at a time when its net debt to EBITDA ratio is equal to or greater than 3.0 to 1.0. JBS USA, LLC’s compliance with this covenant could limit its flexibility in planning for, or reacting to changes in, our business by limiting the funds that we can seek to borrow or raise in the capital markets to pursue capital expenditures, acquisitions, our distribution strategy or other plans.

We have included this calculation of JBS USA, LLC’s net debt, EBITDA and net debt to EBITDA ratio, as we believe that this ratio is important to investors, and the indenture governing our 11.625% senior unsecured notes due 2014 is a material debt agreement for us.

Contractual obligations

The following table summarizes our contractual obligations as of December 28, 2008:


in millions	2009		2010		2011		2012		2013		After year 5		Total


Contractual obligations:
Revolving credit facilities	$	67.0	$	—	$	114.7	$	—	$	—	$	—	$	181.7
Related party debt		—		658.6		—		—		—		—		658.6
Deferred revenue		18.0		18.0		18.0		18.0		18.0		83.2		173.2
Interest(1)		59.8		54.2		12.1		6.3		6.0		15.8		154.2
Capital lease obligations		3.2		3.0		2.6		2.3		2.4		13.2		26.7
Operating leases(2)		17.4		13.4		11.0		4.9		4.1		5.1		55.9
Installment note payable		1.3		1.3		0.9		0.9		6.9		—		11.3

Purchase obligations:
Livestock procurement(3)		3,395.2		1,035.1		862.4		710.2		483.7		99.1		6,585.7
Cactus bonds(4)		14.5		—		—		—		—		—		14.5
Other(5)		—		—		—		—		—		16.2		16.2

Total contractual obligations	$	3,576.4	$	1,783.6	$	1,021.7	$	742.6	$	521.1	$	232.6	$	7,878.0

(1)

Interest expense assumes the continuation of interest rates and outstanding borrowings under our credit facilities as of December 28, 2008.

(2)

Excludes amounts associated with operating leases having remaining non-cancelable lease terms of one year or less.

(3)

Represents hog and cattle purchase agreements with certain hog and cattle producers. The number of animals that we will be obligated to purchase is based on minimum quantity commitments to the extent the agreements contain those commitments, or management estimates based on past history for such hog and cattle purchases. The contracts are subject to market pricing at delivery. Due to the uncertainty of market prices at the time of future delivery we have estimated market prices based on futures contracts and applied those prices to all years. Cattle purchase agreements are short-term contracts with renewal options. Therefore, cattle purchase commitments have only been estimated through year one. See Note 13, “Commitments and contingencies” to our audited consolidated financial statements included in this prospectus.

(4)

On May 15, 2007, we entered into an Installment Bond Purchase Agreement with the City of Cactus, Texas, or the City. Under this agreement, we committed to purchase up to $26.5 million of bonds from the City, which are being issued to fund improvements to its sewer system, which is used by our beef processing plant located in Cactus, Texas. We will purchase the bonds in installments as improvements are completed through an anticipated date of June 2010. The interest rate on the bonds is six-month LIBOR plus 350 basis points. The bonds mature on June 1, 2032 and are subject to annual mandatory sinking fund redemption payments beginning on June 1, 2011. We have purchased $12.0 million in bonds as of December 28, 2008 and expect to purchase the remaining $14.5 million in 2009.

(5)

Includes certain obligations for capital expenditures and other insignificant purchase obligations.

The following table summarizes our contractual obligations, on a pro forma basis as of March 29, 2009, giving effect to the offering and sale of our 11.625% senior unsecured notes due 2014 and the application of the proceeds therefrom as if they had occurred on March 29, 2009 (including the use of a portion of the proceeds of our 11.625% senior unsecured notes due 2014 to repay $100.0 million of borrowings under our secured revolving credit facility):


in millions	2009		2010		2011		2012		2013		After year 5		Total


Contractual obligations:
Revolving credit facilities	$	71.4	$	—	$	110.2	$	—	$	—	$	—	$	181.6
11.625% senior unsecured notes due 2014		—		—		—		—		—		700.0		700.0
Related party debt		—		—		—		—		—		139.0		139.0
Deferred revenue		13.6		18.0		18.0		18.0		18.0		83.2		168.8
Interest(1)		113.1		111.0		110.7		104.4		104.0		99.2		642.4
Capital lease obligations		2.3		3.0		2.7		2.2		2.4		13.4		26.0
Operating leases(2)		13.1		13.8		11.4		5.1		4.4		5.4		53.2
Installment note payable		1.1		1.3		0.9		0.9		6.6		—		10.8

Purchase obligations:
Livestock procurement(3)		3,178.8		1,088.1		808.8		722.2		489.3		98.2		6,385.4
Cactus bonds(4)		14.5		—		—		—		—		—		14.5
Other(5)		—		—		—		—		—		16.2		16.2

Total contractual obligations	$	3,407.9	$	1,235.2	$	1,062.7	$	852.8	$	624.7	$	1,154.6	$	8,337.9

(1)

Interest expense assumes the continuation of interest rates and outstanding borrowings under our credit facilities as of March 29, 2009.

(2)

Excludes amounts associated with operating leases having remaining non-cancelable lease terms of one year or less.

(3)

Represents hog and cattle purchase agreements with certain hog and cattle producers. The number of animals that we will be obligated to purchase is based on minimum quantity commitments to the extent the agreements contain those commitments, or management estimates based on past history for such hog and cattle purchases. The contracts are subject to market pricing at delivery. Due to the uncertainty of market prices at the time of future delivery we have estimated market prices based on futures contracts and applied those prices to all years. Cattle purchase agreements are short-term contracts with renewal options. Therefore, cattle purchase commitments have only been estimated through year one. See Note 12, “Commitments and contingencies” to our unaudited consolidated financial statements included in this prospectus.

(4)

On May 15, 2007, we entered into an Installment Bond Purchase Agreement with the City of Cactus, Texas, or the City. Under this agreement, we committed to purchase up to $26.5 million of bonds from the City, which are being issued to fund improvements to its sewer system which is utilized by our beef processing plant located in Cactus, Texas. We will purchase the bonds in installments as improvements are completed through an anticipated date of June 2010. The interest rate on the bonds is six-month LIBOR plus 350 basis points. The bonds mature on June 1, 2032 and are subject to annual mandatory sinking fund redemption beginning on June 1, 2011. We have purchased $12.0 million in bonds as of December 28, 2008 and expect to purchase the remaining $14.5 million in 2009.

(5)

Includes certain obligations for capital expenditures and other insignificant purchase obligations.

Off-balance sheet arrangements

As of March 29, 2009, we did not have any significant off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of SEC Regulation S-K.

However, as of March 29, 2009, we did have the following guarantees and keepwell obligations that are not recorded on our balance sheet: (1) our guarantee of JBS S.A.’s 10.5% senior notes due 2016 described under “—Liquidity and capital resources—External sources of liquidity and description of indebtedness—Guarantee of 10.5% senior notes due 2016 of JBS S.A.” and (2) Five Rivers’ obligation under a keepwell agreement to pay up to $250.0 million of the obligations of J&F Oklahoma under J&F Oklahoma’s credit facility described in “Certain relationships and related party transactions—Arrangements with J&F Oklahoma—Guarantee of J&F Oklahoma revolving credit facility.”

Quantitative and qualitative disclosures about market risk

Market risk relating to our operations results primarily from changes in commodity prices, interest rates and foreign exchange rates, as well as credit risk concentrations. To address certain of these risks, we enter into various derivative transactions as described below. If a derivative instrument is accounted for as a hedge, as defined by Statement of Financial Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended (SFAS No. 133(R)), depending on the nature of the hedge, changes in the fair value of the instrument either will be offset against the change in fair value of the hedged assets, liabilities or firm commitments through earnings, or be recognized in other comprehensive income (loss) until the hedged item is recognized in earnings. The ineffective portion of an instrument’s change in fair value, as defined by SFAS No. 133(R), is recognized immediately. Additionally, we hold certain positions, primarily in grain and livestock futures, that either do not meet the criteria for hedge accounting or are not designated as hedges. These positions are marked to market, and the unrealized gains and losses are reported in earnings at each reporting date. Changes in market value of derivatives used in our risk management activities relating to forward sales contracts are recorded in net sales. Changes in market value of derivatives used in our risk management activities surrounding inventories on hand or anticipated purchases of inventories are recorded in cost of sales.

The sensitivity analyses presented below are the measures of potential losses of fair value resulting from hypothetical changes in market prices related to commodities. Sensitivity analyses do not consider the actions we may take to mitigate our exposure to changes, nor do they consider the effects such hypothetical adverse changes may have on overall economic activity. Actual changes in market prices may differ from hypothetical changes.

Commodity risk

We utilize various raw materials in our operations, including cattle, hogs, and energy, such as natural gas, electricity and diesel fuel, which are all considered commodities. We consider these raw materials generally available from a number of different sources and believe we can obtain them to meet our requirements. These commodities are subject to price fluctuations and related price risk due to factors beyond our control, such as economic and political conditions, supply and demand, weather, governmental regulation and other circumstances. Generally, we purchase derivatives in an attempt to mitigate price risk related to our anticipated consumption of commodity inputs for periods of up to 12 months. We may enter into longer-term derivatives on particular commodities if deemed appropriate. As of December 28, 2008 and March 29, 2009, we had derivative positions in place covering less than 1% and 2.5% of anticipated cattle needs and 11% and 14%, respectively, of anticipated hog needs, in each case through December 2009.

We use derivatives for the purpose of mitigating exposure to market risk, such as changes in commodity prices and foreign currency exchange rates. We use exchange-traded futures and options to hedge livestock commodities. The fair value of derivative assets is recognized within other current assets, while the fair value of derivative liabilities is recognized within accrued liabilities. The fair value of derivatives at December 28, 2008 and March 29, 2009 are as follows:


in thousands	As of December 28, 2008	As of March 29, 2009


Assets:
Commodity derivatives	$42,087	$23,582
Foreign currency rate derivatives	12,002	14,463

Total fair value, assets	$54,089	$38,045


Liabilities:
Commodity derivatives	$16,392	$7,056
Foreign currency rate derivatives	592	5,246

Total fair value, liabilities	$16,984	$12,302


Net commodity derivatives	$25,695	$16,526
Net foreign currency rate derivatives	11,410	9,217

Total net fair value	$37,105	$25,743

As of December 28, 2008 and March 29, 2009, the net deferred amount of derivative losses recognized in accumulated other comprehensive income was $0.3 million and $90,000, net of tax. We anticipate these amounts will be transferred out of accumulated other comprehensive income and recognized within earnings over the next 12 months.

Interest rate risk

As of December 28, 2008 and March 29, 2009, we had fixed-rate debt of $19.0 million and $17.8 million, respectively, with a weighted average interest rate of 8.4% for each period. We have exposure to changes in interest rates on this fixed-rate debt. Market risk for fixed-rate debt is estimated as the potential increase in fair value resulting from a hypothetical 10% decrease in interest rates. A hypothetical 10% decrease in interest rates would have increased the fair value of our fixed-rate debt by approximately $0.4 million at March 29, 2009 and $0.4 million at December 28, 2008. The fair values of our debt were estimated based on quoted market prices and/or published market interest rates.

As of December 28, 2008 and March 29, 2009, we had variable rate debt of $859.3 million and $959.2 million, respectively, with a weighted average interest rate of 6.2% and 5.8%, respectively. A hypothetical 10% increase in interest rates effective at March 29, 2009, and December 28, 2008, would have increased interest expense by approximately $5.6 million for the fiscal quarter ended March 29, 2009 and $5.3 million for the fiscal year ended December 28, 2008.

Foreign currency risk

We have foreign exchange gain/loss exposure from fluctuations in foreign currency exchange rates primarily as a result of a U.S. dollar-denominated intercompany note between two of our subsidiaries located in Australia. The primary currency exchange rate to which we have exposure is the U.S. dollar to Australian dollar exchange rate due to: (1) our significant investment in our Australian subsidiaries and (2) sales denominated in currencies other than U.S. dollars. While we use foreign currency forward contracts to mitigate price risk on committed future deliveries, we have elected not to use foreign currency forward contracts to mitigate the risk related to our investment in Australia, primarily since the effect of these fluctuations is non-cash in nature and the purchase of forward contracts would have a cash cost. In addition, the definition of EBITDA used by our lending institutions eliminates foreign currency gains and losses prior to calculating covenant compliance. In the future we may elect to enter into forward contracts to mitigate this foreign currency risk.

Sensitivity analysis

The following sensitivity analysis table estimates our exposure to changes in the fair value of commodity price derivatives and foreign currency exchange rate derivatives at December 28, 2008 and March 29, 2009. The sensitivity analysis reflects the impact of a hypothetical 10% adverse change in the fair value of applicable commodity prices and foreign exchange currency rates and excludes the underlying items that are being hedged, such as future sales commitments or future livestock commitments.


in thousands	As of December 28, 2008	As of March 29, 2009


Fair value:
Commodity derivatives	$25,695	$16,526
Foreign currency rate derivatives	11,410	9,217

Total	$37,105	$25,743


Estimated fair value volatility (-10%):
Commodity derivatives	$17,680	$11,607
Foreign currency rate derivatives	25,391	18,865

Total	$43,071	$30,472

Business

Overview

We are a global leader in beef and pork processing with approximately $15.4 billion in net sales for the fiscal year ended December 28, 2008 on a pro forma basis. In terms of daily slaughtering capacity, we are among the leading beef and pork processors in the United States and we have been the number one processor of beef in Australia for the past 15 years. As a standalone company, we would be the largest beef processor in the world. We also own and operate the largest feedlot business in the United States. We process, prepare, package and deliver fresh, processed and value-added beef and pork products for sale to customers in over 60 countries on six continents. Our operations consist of supplying fresh meat products, processed meat products and value-added meat products. Fresh meat products include refrigerated beef and pork processed to standard industry specifications and sold primarily in boxed form. Our processed meat offerings, which include beef and pork products, are cut, ground and packaged in a customized manner for specific orders. Additionally, we process lamb and mutton products. Our value-added products include moisture-enhanced, seasoned, marinated and consumer-ready products. We also provide services to our customers designed to help them develop more comprehensive and profitable sales programs. Our customers are in the food service, international, further processor and retail distribution channels. We also produce and sell by-products that are derived from our meat processing operations, such as hides and variety meats, to customers in the clothing, pet food and automotive industries, among others.

Prior to 2002, our predecessor was owned and operated by a multinational food company and not operated as a raw material supplier for the processed portions of its business. From 2002 to 2007, we were owned by a private equity company that pursued a strategy of restricting our capital expenditures and maximizing dividends, including reducing the operations at our Greeley, Colorado plant to a single shift and selling five feedlot facilities, two cow slaughter facilities, and an Australian beef patty making and distribution facility.

•

on July 11, 2007, JBS S.A. acquired Swift Foods Company (our predecessor company, which was subsequently renamed JBS USA Holdings, Inc.), which we refer to as the Swift Acquisition;

•

on May 2, 2008, we acquired substantially all of the assets of the Tasman Group Services, Pty. Ltd., or the Tasman Group, which we refer to as the Tasman Acquisition; and

•

what we believe is the most technologically advanced facility in the country, and five feedlots which supply approximately 18% of our fed cattle needs. Our small animals processing facilities in Australia process hogs, lamb and sheep, or smalls. Our Australian facilities are strategically located to access raw materials in a cost effective manner and to service our global customer base. We have the capacity to process approximately 28,600 cattle, 48,500 hogs and 4,500 lambs daily in the United States and 8,690 cattle and 15,000 smalls daily in Australia based on our facilities’ existing configurations.

Our business operations are organized into two segments:

•

our Pork segment, through which we conduct our domestic pork and lamb processing business.

Industry overview

Beef

United States

processors are primarily “spread” operators, and their operating profit is largely determined by plant operating efficiency rather than by fluctuations in prices of cattle and beef.

During the past few decades, consumer demand for beef products in the United States has been in line with population growth, which is the primary driver of aggregate demand. Export demand has fluctuated widely due to the closing of certain international markets following the discovery of isolated cases of BSE (also commonly referred to as mad cow disease), in 2003 and 2004, and the sporadic re-opening of such markets. We believe that consumer demand for U.S. exports in developing countries is driven by population growth compounded by economic growth. As consumers’ economic circumstances improve, they increasingly shift their diets to protein. Industry-wide export sales have been ramping up from 2004 through mid-2009, trending toward pre-2003 levels.

Australia

Global exports

In contrast, Brazil and Argentina have prohibited the use of growth hormones on their cattle. JBS S.A. is a large exporter of beef to the European Union.

Pork

Pork processors include vertically integrated companies, which own and raise hogs on feed for use in their processing facilities, and pure processors, who do not own hogs on feed. Vertically integrated pork processors can be subjected to significant financial impact from working capital demands, since hogs feed in the yards for approximately 180 days without revenue generation until processed. Additionally, since hogs on feed consume feed with a replacement price that is subject to market changes, vertically integrated pork processors have direct financial exposure to the volatility in corn and other feedstock prices. Pure processors generally purchase finished hogs under long-term supply contracts at prevailing market prices, process the hogs in their own facilities and sell the finished products at spot prices. Finished hogs are typically purchased at market prices and held for less than one day before processing, thus pure processors are not exposed to changing market prices over as great a time span as vertically integrated processors. Pure pork processors are primarily “spread” operators, and their operating profit is largely determined by plant operating efficiency and not by fluctuations in prices of hogs and pork.

Competitive strengths

Scale and leading market positions in beef and pork industries

•

source our products based on the most favorable conditions of input costs,

•

diversify our operations to minimize sanitary risk, and

•

attain proximity to our raw materials and end customers given our geographical reach, saving freight and storage costs.

Diversified business model with international reach

Our business is well diversified across proteins and all major distribution channels, as well as geographically with respect to production and distribution.

•

Sales and distribution channel diversification: We benefit from our diversified sales and distribution channels, which include national and regional retailers (including supermarket

chains, independent grocers, club stores and wholesale distributors), further processors (including those that make bacon, sausage and deli and luncheon meats), international markets and the food service industry (including food service distributors, which service restaurant and hotel chains and other institutional customers). We sell our products to over 6,000 customers worldwide with no customer accounting for more than 4.5% of our net sales. This reduces our dependence on any market or customer and provides multiple channels for potential growth. In the retail segment, we further benefit from a variety of widely recognized brands, including Swift, Swift Premium, Swift Angus Select, Swift Premium Black Angus, Miller Blue Ribbon Beef and G.F. Swift 1855 among others. We also manufacture products for some of our main customers’ private label brands.

•

Our processing platforms in the United States and Australia, which are two major beef producing countries, provide us with enough geographic diversification and operating flexibility to satisfy demand depending on market conditions and sanitary restrictions. For example, our facilities in Dinmore, Beef City, Brooklyn and Longford, Australia accommodate non-hormone-treated fed cattle allowing us to market our products to the European Union (which prohibits imports of hormone-treated products). Accordingly, each of these facilities is eligible to ship to the European Union. We also benefit from greater international market access through our Worthington pork plant, which is one of only three facilities in the United States certified for export to the European Union. Additionally, our JBS Packerland facilities are located near major metropolitan areas, resulting in lower freight costs relative to cattle processing facilities in more rural locations.

World class operations

100

of our planning, forecasting, scheduling, procurement and manufacturing functions to drive performance in the supply chain. Our efforts in 2008 were focused on increasing beef yields, reducing operational costs and lowering overhead. One of the key initiatives in delivering on this strategy was returning our Greeley, Colorado processing facility to its originally designed capacity as a two-shift operation. Producing more volume in the same length of time reduces our cost per pound. As a measure of our progress, excluding the JBS Packerland Acquisition and the Tasman Acquisition, during the fiscal year ended December 28, 2008, our Beef and Pork segments demonstrated an 8.5% and 3.8% increase in throughput, respectively, compared to the combined fiscal year ended December 30, 2007. As a result, we remain focused on leveraging our fixed cost base to improve our operating margins.

Strong balance sheet and limited derivative exposure relative to our peers

Established customer relationships

We have developed long-standing relationships with numerous well-established, global customers, many of whom have been doing business with us for more than 20 years. We serve many of the largest food service distributors, quick-service restaurants and retail chains in the United States. Additionally, we are focused on developing close, mutually beneficial relationships with our customers, who we believe view us as a long-term strategic partner and consider us an extended part of their operations. We believe that the high-quality long-standing relationships we have developed provide us with revenue stability and forecasting transparency.

Proven management team and high performance work force

Our strategy

Prior to 2002, our predecessor was owned and operated by a multinational food company. From 2002 to 2007, our predecessor was owned by a private equity company. Since the Swift

101

Acquisition in July 2007, we have significantly changed our business strategy. Our current strategy is to continue to grow our business’ revenues and profitability through the following strategic initiatives:

Continuously improve profitability through process optimization

Continue to successfully integrate recent acquisitions and selectively pursue additional value-enhancing growth opportunities

102

Increase sales and enhance margins by significantly expanding our direct distribution network

Increase processed and value-added offerings

Promote innovation across the value chain

103

margins. Additionally, we have developed and implemented energy conversion and recovery processes including real-time processes by which byproducts of purchased natural gas or grease produced in our rendering operations are converted into useable fuels and a methane recovery process resulting in useable methane gas that is subsequently resold in North American pipelines. We have also instituted Halal processing capabilities in our Australian operations, providing us with the opportunity to expand our exports to Muslim customers located in the Middle East, which we believe sets us apart from our competitors in Australia. We will continue to seek to develop innovative process and product improvements across the value chain.

Maintain leadership in food and employee safety

Description of business segments

Beef segment

Products, sales and marketing

United States

The majority of our beef revenues in the U.S. are generated from the sale of fresh beef, which includes chuck cuts, rib cuts, loin cuts, round cuts, thin meats, ground beef and other products. In addition, we sell beef by-products to the variety meat, feed processing, fertilizer, and pet food industries. Cattle hides are sold for both domestic and international use, primarily to the clothing and automotive industries. We market products under several brand names, including “Swift Premium, Swift Angus Select, Swift Premium Black Angus, Miller Blue Ribbon Beef and G.F. Swift 1855.” Our hallmark brand, Swift, was founded in 1855 and we believe it is synonymous with our industry leadership in innovation and food quality. We believe that our brands, marketed primarily at the wholesale level, provide a platform for further growth and expansion of our value-added and premium program product lines.

We market our beef products through several channels including:

•

national and regional retailers including supermarket chains, independent grocers, club stores and wholesale distributors;

•

further processors who use our beef products as a food ingredient for prepared meals, raw materials for hamburger, and by-products for pharmaceutical and leather production;

•

the food service industry, including food service distributors, which service restaurant and hotel chains and other institutional customers; and

104

•

international markets, including Japan, Mexico, South Korea, Canada, and China among others, many of which have reopened to U.S. beef following the 2003 BSE outbreak, as well as other smaller foreign markets, some of which are limited to boxed beef products from cattle younger than 30 months of age.

Our largest distribution channel is retail. We have increased sales to the international channels by approximately 139% from 176 million pounds in 2005 to 420 million pounds in 2008, trending toward pre-BSE levels, which were 456 million pounds in 2003. We intend to continue to focus on increasing our sales in the food service and international distribution channels, in particular, quick-service restaurants and their suppliers, which we believe are likely to continue to be profitable and growing over time.

Total net sales contribution by channel is:


	Fiscal year ended			Fiscal quarter ended March 29, 2009
	2006	2007	2008	Fiscal quarter ended March 29, 2009

Retail	48%	47%	48%	54%
Further processors	23	23	26	23
Food service	22	21	14	14
International	7	9	12	9

Total	100%	100%	100%	100%

Australia

The majority of our beef revenues in Australia are generated from the sale of fresh beef, which includes chuck cuts, rib cuts, loin cuts, round cuts, thin meats, ground beef and other products. We also produce value-added meat products, including toppings for pizza. Approximately 79% of the beef products sold by us are derived from grass-fed cattle. The remainder of our beef products is derived from grain-fed animals that are sold primarily to Japan. Grain-fed cattle provide higher quality meat, which commands a premium price. Our Beef segment also includes our lamb and sheep operations in Australia.

Our Australian operations currently generate approximately 89% of total net sales as exports to foreign countries, including Japan, our largest export market, as well as the United States. Australia’s sales to export markets have continued to benefit from the 2003 North American BSE incident, which had closed key Asian markets to the import of U.S. beef. Since 2003, these market closings increased the marketability of our Australian beef into those markets as Australia had no similar import restrictions on its production.

Global exports

We sell our products in over 60 countries on six continents. Overall, exports accounted for approximately 24% of our sales in 2008 on a pro forma basis and 21% of our sales for the fiscal quarter ended March 29, 2009. The international beef market is divided between the Pacific Block (which includes the United States, Japan, Canada, Mexico and South Korea) and the Atlantic Block (Europe, Africa, the Middle East and South America). This division reflects not only historical and geographical ties but also certain common sanitary criteria.

The Pacific Block prohibits imports of fresh beef from countries or regions where there is still a risk of new outbreaks of foot-and-mouth disease, or FMD, and from countries or regions that are

105

FMD-free but implement FMD vaccination programs. However, the Pacific Block permits imports of processed beef (including cooked and pre-cooked products) from these countries.

Most countries of the Atlantic Block permit imports of fresh beef from FMD-free countries that implement FMD vaccination programs. They also recognize that FMD can be eradicated on a regional (as opposed to national) basis in certain countries, including Brazil, which has areas that are FMD-free and have vaccination programs, qualifying them to export fresh beef. Under this regionalization concept, many beef producing regions in Brazil are thus qualified to export fresh beef to countries in the Atlantic Block. Notwithstanding the foregoing, most countries in the Atlantic Block impose import restrictions on beef treated with growth hormones, citing health concerns. Brazil and Argentina have prohibited the use of growth hormones on their cattle.

Australia is an FMD-free country and does not implement vaccination programs against the disease. It also does not use growth hormones in a small part of its cattle herd and is therefore able to export to any country in the world.

As a result of this division and the sanitary restrictions between the Pacific Block and the Atlantic Block, we believe that our U.S. export operations of fresh beef today do not directly compete with our parent company’s Brazilian and Argentine export operations of fresh beef in our main export destinations. Although JBS S.A. is a large exporter of beef to the European Union, for example, we do not have relevant export volume to the European Union because of its restrictions on beef treated with growth hormones. Consequently, we do not have formal arrangements with JBS S.A. to coordinate our exports in our export markets. However, to the extent that sanitary restrictions change in the future, we could become direct competitors of our parent company in certain export markets.

Raw material and feedlot operations

United States

The primary raw material for our U.S. processing facilities is live cattle. All of our U.S. cattle procurement process is centralized at our headquarters in Greeley, Colorado, except for our JBS Packerland procurement process, which is centralized in Green Bay, Wisconsin. We require all of our cattle suppliers to document the quality of their feedlot operations, verify that the use of antibiotics and agricultural chemicals follow the manufacturer’s intended standards and confirm that feed containing animal based protein products, which have been associated with outbreaks of BSE, has not been used. We have in excess of 3,000 cattle suppliers.

We secure approximately 29% of our annual cattle needs under forward purchase arrangements and purchase our remaining needs on the spot market. These forward purchase contracts are not fixed price contracts but rather they are priced at market upon delivery, thus generally

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minimizing our exposure to price volatility before delivery. On a pro forma basis, we will purchase approximately 24% of our U.S. cattle needs under an arrangement whereby we are entitled to a portion of the seller’s gains, and are obligated to reimburse the seller for a portion of its losses, in its sale of cattle to us. See “Certain relationships and related party transactions— Arrangements with J&F Oklahoma—Cattle purchase and sale agreement.”

Five Rivers operates 11 cattle feedlots with a one-time feeding capacity of 820,000 cattle, located in Colorado, Idaho, Kansas, Oklahoma and Texas, adjacent to our existing Beef segment slaughter facilities. Almost 1.5 million head of cattle were fattened in these feedlots in 2008 and approximately 334 thousand head of cattle during the fiscal quarter ended March 29, 2009. Five Rivers does not own cattle and simply operates its feedlots and charges beef companies (including us) to feed and care for their cattle. Five Rivers supplies us with approximately 30% of our cattle needs and is obligated to sell to us, on an annual basis, a minimum of 500,000 cattle at market prices upon delivery.

Historically, cattle prices have been subject to substantial fluctuations. Cattle supplies and prices are affected by factors such as corn and soybean meal prices, weather and farmers’ access to capital. JBS Packerland’s four processing plants purchase lean Holstein steers and cows and other cattle primarily from feedlots, auction barns, direct contract relationships with suppliers in close proximity to processing plants and from its existing cattle feeding operations. The close proximity of these plants to most of their suppliers reduces transportation costs, shrinkage and bruising of livestock in transit.

Vertically integrated beef processors, which own cattle on feed, can be subject to significant financial impact in terms of working capital utilization, since cattle on feed eat in the yards for 90-180 days and do not generate revenue until slaughtered. Since cattle on feed consume feed with a replacement price that is subject to market changes, vertically integrated beef processors have direct financial exposure to the volatility in corn and other feedstock prices. We do not own cattle on feed, and we generally purchase cattle in the spot market or pursuant to market-priced supply arrangements from feedlot operators, and, except as described below, typically hold cattle for less than one day before processing. After processing, we sell the beef at spot prices. Because we generally buy cattle at market prices and sell the finished beef product at market prices with just a short time between the purchase and sale, we are not exposed to changing market prices over as great a span of time as vertically integrated processors. As such we are primarily a “spread” operator, and our operating profit is largely determined by plant operating efficiency and not by fluctuations in prices of cattle and beef.

Australia

The primary raw materials we use in our Australian processing facilities are live cattle, lamb and sheep. Our cattle procurement function is focused on efficiently sourcing both grass-fed cattle and feeder cattle for our grain-fed business. Grass-fed cattle are primarily sourced from third-party suppliers with specific weight and grade characteristics. This process helps ensure that the cattle we source meet our future order requirements. The majority of grain-fed cattle are sourced from company-owned feedlot operations.

We operate five feedlots that provide grain-fed cattle exclusively for our processing operations in Australia. We source feeder cattle from livestock producers in Australia. On average, cattle remain in our feedlots for approximately 140 days before they are transferred to our processing operations. Our feedlots produce approximately 288,000 cattle per year for processing. Our

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Australian feedlots operate essentially in the same manner as retained ownership feedlots in the United States, meaning that we own the cattle and therefore carry the risk on the cattle. For a large proportion of these cattle, we know the eventual customers and their product requirements based on our close relationship with these customers and their purchasing history. Feed rations are determined based on scientific analysis. It is worth highlighting the distinction between retained ownership feedlots and custom feedlots, like our U.S. feedlots. In custom feedlots the animals are sold by the feedlot to beef processors on behalf of the livestock owner and the livestock owner’s proceeds are paid to the livestock owner after the feedlot has deducted the yardage cost for fattening the animal and delivering the fattened animal to the meat processor. The distinction is important since in custom feedlots the livestock owner is at risk for the ultimate sale of the animal at completion, whereas in retained ownership feedlots the feedlot carries the risk of holding the cattle until they are sold.

Processing facilities

United States

Our beef operations in the United States consist of eight fed cattle facilities. Steers and heifers raised on concentrated rations are typically referred to in the cattle industry as “fed cattle,” and cattle not fed such concentrated rations are usually referred to as “non-fed cattle.”

Our facilities utilize modern, highly-automated equipment to process and package beef products, which are typically marketed in the form of boxed beef. We also customize production and packaging of beef products for several large domestic and international customers. The designs of our facilities emphasize worker safety to ensure regulatory compliance and to reduce worker injuries. Our facilities are also designed to reduce waste products and emissions and dispose of waste in accordance with applicable environmental standards. We have equipped our Santa Fe Springs, California facility to process value-added products, including, for example, the G.F. Swift 1855 brand line of premium beef products. Our Greeley, Colorado, Cactus, Texas, and Grand Island, Nebraska facilities have been equipped to produce value-added operations, including slicing, grinding and cubing of beef products for retail and food service customers.

Our JBS Packerland facilities are engineered to slaughter both fed cattle and cows. Many beef processing facilities in the United States are engineered to slaughter only cows or only fed cattle. This flexibility enables us to shift operations between fed cattle and cows based upon market availability, seasonal demand and margins. In addition, JBS Packerland facilities are located near major metropolitan areas, resulting in lower freight costs compared to cattle processing facilities in other localities. JBS Packerland’s Tolleson, Arizona plant is located near Phoenix, Tucson, and Los Angeles; the Plainwell, Michigan plant is located near Chicago and Detroit; the Green Bay plant is located near Milwaukee and Chicago; and the Souderton, Pennsylvania plant is located near Baltimore, Philadelphia and New York.

Our food safety efforts incorporate what we believe to be a comprehensive network of leading technologies, such as MultiCheck, that minimize the risks involved in beef processing. Two of the elements of MultiCheck are double pasteurization of carcasses prior to chilling and a chilled carcass treatment using organic acid immediately prior to carcass disassembly. SwiftTrace^TM is another element we implemented as part of our on-going commitment to animal and human safety. SwiftTrace^TM is a process whereby live animals and finished animal products can be traced backward or forward in the supply chain. This process helps to build confidence from suppliers, customers and consumers in the food supply chain.

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Australia

Our ten processing facilities are strategically located for efficient livestock acquisition, availability of labor and access to shipping and distribution. Our facilities utilize modern, highly-automated equipment to process and package beef products. The Dinmore facility is the largest plant in Australia. The Beef City plant processes grain-fed cattle.

Since July 2007, we have made important capital and operational expenditures, including the installation of plate freezers and finely textured meat processing, as well as value-added variety meats capture technology. These expenditures have enhanced product quality, improved customer satisfaction and increased sales potential. We have equipped our facilities to process value-added products and consumer-ready products. Our facilities produce additional value-added products, including seasoned and marinated beef items. The design of our facilities emphasizes worker safety to ensure regulatory compliance and to reduce worker injuries. Our facilities are also designed to reduce waste products and emissions and dispose of waste in accordance with applicable environmental standards.

All products are subject to stringent animal husbandry and food safety procedures. Our processing facilities are operating under the strictest food safety and quality assurance regime to comply with international customer requirements. Our Dinmore and Beef City facilities are European Union-certified facilities, which enable us to export primal cuts to Europe. Our feedlots are managed with cattle friendly policies, providing a clean and scientific feeding regimen to ensure that safe grain-fed products are delivered to our customers.

Pork segment

Products, sales and marketing

We are the third largest pork producer in the United States, with a slaughtering capacity of 48,500 head per day. A significant portion of our revenues are generated from the sale of fresh pork products, including trimmed cuts such as loins, roasts, chops, butts, picnics and ribs. Other pork products, including hams, bellies and trimmings, are sold predominantly to further processors who, in turn, manufacture bacon, sausage and deli and luncheon meats. The remaining sales are derived from by-products and from further-processed, higher margin products. Due to the higher margins attributable to value-added products, we intend to place greater emphasis on the sale of moisture-enhanced, seasoned, marinated and consumer-ready pork products to the retail channel and boneless ham and skinless bellies to the further processor channel. Our U.S. lamb business currently operates under our Pork segment and accounted for less than 1% of our total net sales for the fiscal quarter ended March 29, 2009. During the fiscal quarter ended March 29, 2009, our Pork segment had net sales of $526.3 billion and EBITDA of $7.5 million. See “Management’s discussion and analysis of financial condition and results of operations–Supplemental financial data.”

We market our pork products through several channels, including:

•

national and regional retailers including supermarket chains, independent grocers, club stores and wholesale distributors;

•

further processors that use its pork products as a food ingredient for prepared meals, raw material for sausage manufacturing and by-products for pharmaceutical production;

•

international markets including Japan, Mexico and China, among others; and

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•

the food service industry, including food service distributors, fast food, restaurant and hotel chains and other institutional customers.

Pork products sold to the domestic retail and further processor channels comprised approximately 80% of total net sales for the fiscal quarter ended March 29, 2009. Pork exports contributed approximately 16% of net sales over the same period. We consider the overseas markets an opportunity for future growth.

Total net sales contribution by channel were:


				Fiscal quarter ended March 29, 2009
	Fiscal year ended
	2006	2007	2008

Retail	44%	42%	40%	44%
Further processors	41	42	40	36
International	11	12	16	16
Food service	4	4	4	4

Total	100%	100%	100%	100%

Raw material

The primary raw material that we use in our processing facilities is live hogs. We employ a network of hog buyers at our processing plants and buying stations to secure our hog supply. Approximately 69% of our hog purchases are made through various forms of supply contracts that provide us with a stable supply of high-quality hogs. These supply contracts are typically four to five years in duration and stipulate minimum and maximum purchase commitments with prices based in part on the market price of hogs upon delivery, with adjustments based on quality, weight, lean composition and meat quality. We purchase the remaining approximately 31% of our hogs on the spot market at a daily market price with the same general quality and yield grade as we require under our contracts. We require an extensive supplier certification program and conduct comprehensive cutting tests of our potential suppliers’ animals to determine carcass composition and leanness.

Vertically integrated pork processors, which own hogs on feed, can be subject to significant financial impact in terms of working capital utilization, since hogs on feed eat in the yards for approximately 180 days and do not generate revenue until slaughtered. In addition, since hogs on feed consume feed with a replacement price that is subject to market changes, vertically integrated pork processors have direct financial exposure to the volatility in corn and other feedstock prices. We are a non-vertically integrated pork processor. We do not own hogs on feed and generally purchase finished hogs under long-term supply contracts at prevailing market prices, fabricate the hogs in our production facilities and sell the finished products at spot prices. Because the finished hogs typically are acquired within 24 hours of slaughter, they are not exposed to changing market prices over as great a span of time as vertically integrated processors.

Processing facilities

Our operations in the United States consist of three processing facilities located in close proximity to major hog growing regions of the country, a value-added facility that produces consumer-ready pork for certain customers and a lamb processing facility.

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Our facilities utilize modern, highly-automated equipment to process and package pork products, which are typically marketed in the form of boxed pork. Since July 2007, we have made important capital and operational expenditures, including the installation of plate freezers and finely textured meat processing, as well as value-added variety meats capture technology. We believe that these expenditures have enhanced product quality, improved customer satisfaction and increased sales potential. We have equipped our Santa Fe Springs, California facility to process value-added products and consumer-ready products. Our Louisville, Kentucky and Marshalltown, Iowa facilities produce additional value-added products, including seasoned and marinated pork items. The design of our facilities emphasizes worker safety to ensure regulatory compliance and to reduce worker injuries. Our facilities are also designed to reduce waste products and emissions and dispose of waste in accordance with applicable environmental standards. Our Worthington, Minnesota and Marshalltown, Iowa pork plants currently have International Standards Organization (ISO) 9001 certified quality management systems, and Worthington is a European Union-certified facility that enables us to export primal cuts to Europe.

Our food safety task force consists of experts in the field of meat processing, food microbiology and quality assurance, all working together to assure compliance at all stages of the production chain and distribution channels. Our internal programs, policies and standards are designed to exceed both regulatory requirements and customer specifications. Our food safety efforts incorporate what we believe is a comprehensive network of leading technologies, such as MultiCheck, that minimize the risks involved in pork processing.

Facilities

In the United States, we conduct our Beef and Pork segment operations through eight beef processing facilities, three pork processing facilities, one lamb slaughter facility, one case-ready beef and pork facility, one hide tannery, seven leased regional distribution centers and two grease producing facilities, as well as 11 feedlots operated by Five Rivers. In Australia, we operate our Beef segment operations through ten beef and smalls processing facilities, including the largest and what we believe is the most technologically advanced facility in Australia, and five feedlots, all of which are owned by us. Our facilities are strategically located to access raw materials in a cost effective manner and to service our global customer base. We have the ability to process approximately 28,600 cattle, 48,500 hogs, and 4,500 lambs daily in the United States and the ability to process 8,690 cattle and 15,000 smalls daily in Australia based on our facilities’ existing configurations. In addition, our leased Sante Fe Springs facility is used to process beef and pork products.

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The following table shows the location, capacity and segments represented by our processing facilities in the United States and Australia as of March 29, 2009, all of which are owned:


Facility location by segment
Beef segment	Cattle/day	Smalls/day	Hogs/day


*United States*
Cactus, TX	6,000	—	—
Grand Island, NE	6,000	—	—
Greeley, CO	6,000	—	—
Green Bay, WI	2,400	—	—
Hyrum, UT	2,500	—	—
Plainwell, MI	1,900	—	—
Souderton, PA	1,900	—	—
Tolleson, AZ	1,900	—	—

*Australia*
Beef City	1,100	—	—
Brooklyn	1,500	8,000	—
Cobram	—	3,000	—
Devon Port	150	2,500	—
Dinmore	3,350	—	—
King’s Island	180	—	—
Longford	480	1,500	—
Rockhampton	650	—	—
Townsville	900	—	—
Yarrawonga	380	—	—

Pork segment
*United States*
Greeley, CO	—	4,500	—
Louisville, KY	—	—	10,100
Marshalltown, IA	—	—	19,700
Worthington, MN	—	—	18,700

Transportation

We own or lease approximately 600 trucks in the U.S. and Australia that are specially equipped to transport raw materials and finished products. In addition, we have recently entered into an agreement to lease an additional 400 trucks, which have begun to be delivered. We also utilize third-party shipping companies that provide us with additional trucks to transport our raw materials and finished products.

Distribution

Our distribution varies by product type. We lease seven distribution facilities located in New Jersey, Florida, Nebraska, Arizona, Colorado and Texas and eight trading/distribution facilities in Australia. These distribution facilities are strategically located near certain of our processing facilities. We also sell our products to food service distributors that further distribute our

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products to restaurants and hotel chains and other customers. These food service distributors purchase our products from both our processing facilities and our current distribution facilities. We intend to pursue a global direct distribution strategy that will enable us to improve our ability to service current customers and give us the opportunity to directly service new customers in the food service and retail channels. This direct distribution strategy requires that we substantially expand our distribution network and sales force domestically and internationally. See “—Our strategy—Increase sales and enhance margins by significantly expanding our direct distribution network” above. We intend to continue to sell our products to food service distributors following the implementation of our direct distribution strategy.

Competition

The beef and pork processing industries are highly competitive. Competition exists both in the purchase of live cattle and hogs, as well as in the sale of beef and pork products. Our products compete with a large number of other protein sources, including chicken, turkey and seafood, but their principal competition comes from other beef and pork processors, including Tyson Foods, Inc. and Cargill, Inc. Our management believes that the principal competitive factors in the beef and pork processing industries are price, quality, food safety, product distribution and brand loyalty.

In addition, we are pursuing a global direct distribution strategy as we seek to enhance our operating margins. This strategy may expose us to direct competition with our existing third-party food service distribution customers in some segments, which could affect our relationship with these customers. See “Risk factors—Risks relating to our business and the beef and pork industry—We face competition in our business, which may adversely affect our market share and profitability” and “—Failure to successfully implement our business strategies may affect our plans to increase our revenue and cash flow.”

Employees

As of March 29, 2009, we had approximately 31,900 employees, including approximately 25,700 in our Beef segment and approximately 6,200 in our Pork segment. We consider relations with our employees to be good. Approximately 17,700 employees at our United States facilities are represented by labor organizations and work under collective bargaining agreements expiring between 2009 and 2010. Approximately 6,600 employees at our Australia plants are parties to Awards of Enterprise or Certified Agreements between various labor organizations and our Australian subsidiaries and work under collective agreements expiring between 2010 and 2014.

In 2001, ConAgra Beef Company, the predecessor to Swift Beef Company, paid a fine as a result of a lawsuit by the Department of Labor claiming that ConAgra Beef Company had acted improperly in too aggressively investigating the backgrounds of its job applicants. As a result, at the government’s suggestion, we began to use E-Verify, a free and voluntary online system operated jointly by the United States Department of Homeland Security and the Social Security Administration, through which participating employers can determine the employment eligibility of new hires. To date, no civil or criminal charges have been filed by the U.S. government against us or any of our current or former management employees related to an employee’s eligibility to work in the U.S.

On December 12, 2006, agents from ICE and other law enforcement agencies conducted on-site employee interviews at all of our U.S. production facilities, except with respect to the facilities

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located in Louisville, Kentucky and Santa Fe Springs, California, in connection with an investigation of the immigration status of an unspecified number of our workers. Approximately 1,300 individuals were detained by ICE and removed from our domestic labor force. On December 12, 2006, after a six- to seven-hour suspension of operations due to the employee interview process, we resumed production at all of our facilities in the United States, but at reduced output levels. We resumed normal production at our pork processing facilities in March 2007 and reported in May 2007 that we had returned to standard staffing levels at all of our beef processing facilities. See “Risk factors—Risks relating to our business and the beef and pork industries—Our performance depends on favorable labor relations with our employees and our compliance with labor laws. Any deterioration of those relations or increase in labor costs due to our compliance with labor laws could adversely affect our business.”

As of April 18, 2007, we implemented new policies for hiring our employees. According to the new policies, our human resources department will use all information obtained during the initial review of the documentation of the individuals applying for a job with us to verify the veracity of the relevant applicant’s information throughout the entire hiring process. This policy includes (1) checking if such information is consistent with other information related to the applicant (such as prior places of residence and previous jobs) and (2) cross-checking the information against certain indicia of fraud to determine whether the documentation is consistent with the applicant’s known identity. Applicants will not be hired if false documents are identified at any stage of the hiring process. In addition to these policies, we audit 100% of the documentation of new employees on a weekly basis and, on a quarterly basis, a manager that is not involved in the hiring process audits the documentation and the hiring process of 50 randomly selected employees. We also utilize a third-party immigration law expert to periodically audit our processes and methods.

Our performance depends on favorable labor relations with our employees. Any deterioration of those relations or increase in labor costs could adversely affect our business. See “Risk factors—Risk factors relating to our business and the beef and pork industry—Our performance depends on favorable labor relations with our employees and our compliance with labor laws. Any deterioration of those relations or increase in labor costs due to our compliance with labor laws could adversely affect our business.”

Regulation

Our operations are subject to extensive regulation by the USDA, the EPA, and other state, local and foreign authorities regarding the processing, packaging, storage, distribution, advertising and labeling of its products, including food safety standards.

Our United States operations are subject to extensive regulation by the EPA and other state and local authorities relating to handling and discharge of waste water, storm water, air emissions, treatment, storage and disposal of wastes, handling of hazardous substances and remediation of contaminated soil, surface water and groundwater. Our Australian operations also are subject to extensive regulation by the Australian Quarantine Inspection Service as well as Australian environmental authorities. The EPA, AQIS, and/or other U.S. or Australian state and local authorities may, from time to time, adopt revisions to environmental rules and regulations, and/or changes in the terms and conditions of our environmental permits, with which we must comply. Such compliance may require us to incur additional capital and operating expenses which may be significant. In order to ensure ongoing compliance with existing environmental laws, rules, and regulations, we must, from time to time, replace, repair, or upgrade existing facilities,

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equipment, or supplies, which may require us to incur additional capital. Some of our facilities discharge wastewater to municipally operated wastewater treatment plants, and if such

municipal plants are unable to comply with their own environmental permits, they may require that we make improvements or operational changes that could result in additional costs. In addition, some of our facilities use hazardous substances such as ammonia in refrigerant systems, and releases resulting from leaks or other accidental occurrences could result in liability. Some of our properties have been impacted by contamination from spills or other releases, and we or our predecessors have incurred costs to remediate such contamination. We also have voluntarily upgraded some existing facilities to address concerns of local governmental officials and/or our neighbors. See “Risk factors—Risks relating to our business and the beef and pork industries—Compliance with environmental requirements may result in significant costs, and failure to comply may result in civil liabilities for damages as well as criminal and administrative sanctions and liability for damages.”

Increasing efforts to control emissions of greenhouse gases, or GHG, are likely to impact us. In the United States, the EPA recently proposed a mandatory GHG reporting system for certain activities, including manure management systems, which exceed specified emission thresholds. The EPA has also announced a proposed finding relating to GHG emissions that may result in promulgation of GHG air quality standards. The U.S. Congress is considering various options including a cap and trade system which would impose a limit and a price on GHG emissions, and establish a market for trading GHG credits. The House of Representatives recently passed a bill contemplating such a cap and trade system, and the bill is now before the Senate. Certain states have taken steps to regulate GHG emissions that may be more stringent than federal regulations. In Australia, the federal government has proposed a GHG cap and trade system that would cover agricultural operations, including certain of our feedlots, and at least two of our processing plants. Certain states in Australia could also adopt regulations of GHG emissions which are stricter than Australian federal regulations. While it is not possible to estimate the specific impact final GHG regulations will have on our operations, there can be no guarantee that these measures will not result in significant impacts on us.

Our U.S. operations are subject to the U.S. Packers and Stockyards Act of 1921. This statute generally prohibits meat packers in the livestock industry from engaging in certain anti-competitive practices. In addition, this statute requires us to make payment for our livestock purchases before the close of the next business day following the purchase and transfer of possession of the livestock we purchase, unless otherwise agreed to by our livestock suppliers. Any delay or attempt to delay payment will be deemed an unfair practice in violation of the statute. Under the Packers and Stockyards Act, we must hold our cash livestock purchases in trust for our livestock suppliers until they have received full payment of the cash purchase price. As of March 29, 2009, we maintained surety bonds in the aggregate amount of approximately $70.4 million to secure our payment obligations to our livestock suppliers.

We are also subject to voluntary market withdrawals and recalls of our meat products in the event of suspected contamination or adulteration that could constitute food safety hazards. We maintain a rigorous program of interventions, inspections and testing to reduce the likelihood of food safety hazards. As a proactive measure, our management team expanded our testing procedures in all of our beef processing plants. We recently undertook a voluntary recall of certain of our beef products. See “Risk factors—Risks relating to our business and the beef and pork industries—Any perceived or real health risks related to the food industry could adversely affect our ability to sell our products. If our products become contaminated, we may be subject to product liability claims and product recalls.”

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We monitor certain asset retirement obligations in connection with our operations. These obligations relate to clean-up, removal or replacement activities and related costs for “in-place” exposures only when those exposures are moved or modified, such as during renovations of our facilities. These in-place exposures include asbestos, refrigerants, wastewater, oil, lubricants and other contaminants common in manufacturing environments. Under existing regulations, we are not required to remove these exposures and there are no plans or expectations of plans to undertake a renovation that would require removal of the asbestos, nor the remediation of the other in place exposures at this time. The facilities are expected to be maintained and repaired by activities that will not result in the removal or disruption of these in place exposures. As a result, there is an indeterminate settlement date for these asset retirement obligations because the range of time over which we may incur these liabilities is unknown and cannot be reasonably estimated. Therefore, we cannot reasonably estimate and have not recorded the fair value of the potential liability.

Our facilities have, from time to time received notices from regulatory authorities, citizens groups or others asserting that we are not in compliance with specified laws and regulations, and sometimes our facilities have been subject to additional investigations and/or enforcement actions regarding such alleged violations by us or by our predecessors. In some instances, litigation ensues, including the matters discussed below in “Legal proceedings.”

Legal proceedings

From time to time, we are parties to various legal proceedings incident to our business. As of the date of this prospectus, there were no legal proceedings against us with respect to matters arising outside the ordinary course of business or which we anticipate would have a material adverse effect on us other than the matters described under “Wastewater issues” below.

Wastewater issues

Smithfield Souderton, Pennsylvania facility

In connection with the JBS Packerland Acquisition, we acquired a beef processing plant in Souderton, Pennsylvania. There were two reported wastewater incidents at the Souderton facility in 2006. These incidents were resolved by a consent order and agreement with the State of Pennsylvania providing for civil penalties and damages totaling $77,888 and establishing an enforceable schedule for the completion of a planned $5 million upgrade to the facility’s existing wastewater treatment system.

On August 10, 2007, the Souderton facility experienced a separate wastewater release, which reached a nearby tributary, Skippack Creek. The facility received an EPA Section 308 Information Request pursuant to the Clean Water Act from the Environmental Protection Agency Region III requesting further details on, among other things, this incident and overflows generally from the collection system that routes wastewater from facility process units to the wastewater treatment works.

On December 5, 2007, the Souderton facility experienced an operational upset in a part of the chlorination system of its wastewater treatment plant. The plant discharges to Skippack Creek. JBS Packerland provided notice of the upset on the same day, and then filed a written report to the Pennsylvania Department of Environmental Protection and the Pennsylvania Fish and Boat Commission. In the written report, JBS Packerland stated that it had already reconfigured the chlorination system to prevent a recurrence and that the facility intended to replace the existing

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chlorination system, pending approval of plans that had been submitted to the State prior to the upset. The EPA and the Department of Justice have commenced an investigation into the incident and have issued grand jury subpoenas for documents and testimony. The facility is cooperating with the investigation.

On June 10, 2008, the Souderton facility experienced a separate release, which reached Skippack Creek and resulted in a fish kill. An initial investigation revealed the discharge was condenser water from JBS Packerland’s rendering plant which had bypassed the wastewater treatment facility. The facility provided notice of the release on the same day to state environmental authorities and filed a written report with the Pennsylvania Department of Environmental Protection and Fish and Boat Commission. The EPA has commenced an investigation, and the facility is cooperating with the investigation.

On December 29, 2008, the United States Department of Justice commenced a civil action against us in the federal district court for the Eastern District of Pennsylvania in connection with these past violations of the federal Clean Water Act at the Souderton facility. At this time, due to the nature and circumstances of this enforcement action, it is not possible to assess the liability, including any potential penalties, associated with these incidents. In connection with the JBS Packerland Acquisition, Smithfield Foods, Inc. agreed to indemnify us for all damages arising from the wastewater incidents of August 10, 2007 and December 5, 2007. Smithfield Foods, Inc. also agreed to indemnify us for costs and damages arising from the June 10, 2008 wastewater incident, and any other breaches of its environmental representations and warranties, subject to an aggregate $100 million cap and $2.5 million deductible (excluding claims of $25,000 or less) generally applicable to Smithfield Foods’ indemnity obligations, and subject to certain time and other limitations.

Grand Island, Nebraska facility

In May 2008, the Nebraska Department of Environmental Quality, or DEQ, and the EPA alleged that from 2004 to the present the wastewater discharge from our Grand Island, Nebraska plant had violated various provisions of the Nebraska Environmental Protection Act and the federal Clean Water Act by causing the City of Grand Island to violate the limits in its wastewater discharge permit. The EPA and DEQ are seeking a fine and an injunction to ensure our future compliance with the Nebraska Environmental Protection Act and the federal Clean Water Act. We are currently conducting settlement negotiations with the EPA and DEQ to resolve this matter.

In January 2009, we received a grand jury subpoena from the United States Attorney’s Office for the District of Nebraska, requesting documents related to our wastewater pretreatment system for the Grand Island plant. We are complying with the subpoena. Given the nature and circumstances of these matters, we are not able to estimate the liability or other impacts on us, including any penalties associated with them.

Intellectual property

We hold a number of trademarks, patents and domain names that we believe are material to our business and which are registered with the United States Patent and Trademark Office, including “Swift” and “Monfort” derivative trade names and “Miller Blue Ribbon Beef.” We have also registered “Swift” and “Monfort” derivative trademarks in most of the foreign countries to which we sell our products, except in Argentina, Canada, Japan and in the Philippines. In

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Argentina, the “Swift” and derivative trademarks are owned by JBS S.A. In Japan, we are authorized to use the trademark “Swift” under an exclusive license agreement entered into with Nippon Meat Packers Inc. Currently, we have a number of patent applications and trademark registrations pending in the United States and in foreign countries. In addition to trademark protection, we attempt to protect our unregistered trademarks and other proprietary information under trade secret laws, employee and third-party non-disclosure agreements and other laws and methods of protection.

Insurance

We have an insurance program that provides for protection against (1) property damages affecting most of our buildings, furniture, machinery, appliances, products and raw materials caused by fire, lightning, explosion, flooding, electrical faults, landslides, riots, strikes, lock-outs and windstorms, (2) deterioration of goods in refrigerated areas, and (3) robbery and theft. Our insurance is renewed annually. We believe that our insurance policy provides suitable coverage for the risks inherent to our operations both in terms of the type of coverage and of the insured amounts. Even though we have insurance policies, there are risks that are not insurable, such as war, unavoidable and unforeseen circumstances or the interruption of some activities and losses arising from events that are not insured. If any of these events occur, we may incur significant costs which may have a material adverse effect upon our financial performance and results of operation.

Information technology

Our software system of accounts receivable, accounts payable, inventory, accounting, payroll and procurement, which is used by our legacy business units, allows us to accurately manage our cash flows, accounts receivable and accounts payable in our operating locations. These systems are being integrated into the newly acquired businesses. We continue to analyze new information technology alternatives to increase our efficiency and reduce our costs.

We have a strong track record of managing the integration of information technology. For example, we have already fully integrated into our reporting structure the Tasman Group and JBS Packerland, including Five Rivers.

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Management

Directors and executive officers

The following table sets forth the name, age and position of individuals who currently serve as the directors and executive officers of JBS USA Holdings, Inc. Ages are as of April 10, 2009.


Name	Age	Position(s)

Wesley Mendonça Batista	39	President, Chief Executive Officer and Director

André Nogueira de Souza	40	Chief Financial Officer

Dennis Roerty	44	Treasurer

Robert Daubenspeck	49	Head of Human Resources

Martin J. Dooley	48	Head of Pork

Brent Eastwood	43	Head of JBS Trading

William G. Trupkiewicz	45	Chief Accounting Officer, Secretary

Richard Vesta	62	Head of Beef

Joesley Mendonça Batista	37	Director

José Batista Júnior	49	Director

The following is a biographical summary of the experience of our directors and executive officers.

Wesley Mendonça Batista became our President and Chief Executive Officer in May 2007. Mr. Batista also serves as a member of our Board of Directors. In addition to his responsibilities in the United States, Mr. Batista is currently the Executive Director of Operations of JBS S.A. and is the Vice President of its Board of Directors. Mr. Batista has served in various capacities at JBS S.A. since 1987. Mr. Batista is the brother of Joesley Mendonça Batista, the President of JBS S.A., and José Batista Júnior, a Director of JBS S.A., and is the son of José Batista Sobrinho, the founder of JBS S.A. and a member of its Board of Directors.

André Nogueira de Souza began acting as our Chief Financial Officer in August 2007. Before joining us, Mr. Nogueira served as head of Corporate Banking for Banco do Brasil in their New York and São Paulo offices from January 2000 to August 2007.

Dennis Roerty became our Treasurer in February 2009. Prior to that date, Mr. Roerty was the Treasurer of UAP Holding Corp. from March 2004 to February 2009, where he was responsible for treasury, financial planning and analysis, and leading the company’s acquisition program. Prior to joining UAP, Mr. Roerty worked for PPL Global, LLC from 1998 to 2004, serving most recently as Director of Acquisitions and Divestitures. Mr. Roerty also held various positions in financial analysis and treasury with Air Products and Chemicals from 1988 to 1998.

Robert Daubenspeck became our head of Human Resources in February 2009. Prior to serving in such role, Mr. Daubenspeck served in the same capacity for JBS Packerland from 2002 to 2008. Previously, Mr. Daubenspeck has served as human resources director for JBS Packerland’s Souderton, Pennsylvania plant.

Martin J. Dooley became the head of our Pork segment in June 2007. From May 2006 to May 2007, Mr. Dooley was our Executive Vice President, Margin Management. From November 2004 to May 2006, Mr. Dooley was employed as Vice President, Margin Management of Swift Foods

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Company and was responsible for cattle and hog procurement, beef and pork pricing, and risk management. From September 2002 to November 2004, Mr. Dooley was employed as Vice President, Processor Sales, Beef and Pork of Swift Food Company. From 1998 to 2002, Mr. Dooley was Swift Food Company’s Vice President Processor Sales and Risk Management, Pork. From 1993 to 1998, Mr. Dooley was Swift Food Company’s Vice President Processor Sales, Pork. Prior to 1993, Mr. Dooley was employed in various positions in product management and sales for Swift Food Company.

Brent Eastwood became our head of JBS Trading in October 2007. Prior to serving as head of JBS Trading, Mr. Eastwood served as General Manager of Trading for Swift/AMH in Australia for six years. Prior to joining Swift, Mr. Eastwood served as Managing Director of ConAgra Trade Group’s Australian Meat Division.

William G. Trupkiewicz became the Corporate Controller, Chief Accounting Officer and Secretary of JBS USA Holdings and its subsidiaries in July 2007. Mr. Trupkiewicz served as Acting Treasurer of JBS USA Holdings, Inc. from June 2008 to February 2009 and as Acting Chief Financial Officer of predecessor companies effective February 20, 2006 until October 26, 2006. Mr. Trupkiewicz served in senior financial positions including Senior Vice President, Corporate Controller and Chief Accounting Officer of predecessor companies from September 2002 until May 2006. Mr. Trupkiewicz has been employed by JBS USA Holdings, Inc. and its predecessor companies in various senior finance and accounting positions since October 1994. From June 1993 until October 1994, Mr. Trupkiewicz was employed as Vice President, Controller of Vessels Oil and Gas Company, a Denver-based oil and gas production company. Prior to his employment at Vessels, Mr. Trupkiewicz served as Vice President Financial Reporting and Tax for SafeCard Services, Inc., a NYSE traded consumer products company. From July 1985 until June 1992, Mr. Trupkiewicz was employed by Price Waterhouse LLC serving in various capacities in its audit practice. Mr. Trupkiewicz is a Certified Public Accountant.

Richard Vesta became the head of our Beef segment in March 2009. Prior to that date, Mr. Vesta served as president and chief executive officer of Smithfield Beef Group, Inc. (now known as JBS Packerland) from 2002 to 2009. Prior to that, Mr. Vesta held senior executive positions in the beef industry with Packerland Packing Company, Inc., Land O’Lakes, Swift Independent Packing Company and Val-Agri Inc., Monfort and Murco. Mr. Vesta began his career in the meat industry as a retail meat cutter, eventually holding various senior positions in retail meat sales at a regional chain.

Joesley Mendonça Batista is currently the Chief Executive of JBS S.A. and the President of its board of directors. Mr. Batista has served in various capacities at JBS S.A. since 1988. Mr. Batista is the brother of Wesley Mendonça Batista and the son of José Batista Sobrinho, the founder of JBS S.A.

José Batista Júnior is currently a director of JBS USA, LLC and JBS S.A. Mr. Batista Júnior has served in various capacities at JBS S.A. since 1974 and as a member of the board of directors of JBS S.A. since January 2, 2007. Mr. Batista Júnior is the brother of Wesley Mendonça Batista and Joesley Mendonça Batista, and the son of José Batista Sobrinho, the founder of JBS S.A.

Board composition after this offering

Upon the closing of this offering, our board of directors will consist of seven members. Our amended and restated certificate of incorporation and amended and restated bylaws in effect

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immediately following this offering will provide that the number of directors will be fixed from time to time by resolution of the board.

All directors hold office until their successors have been elected and qualified or until their earlier death, resignation, disqualification or removal. Effective upon the closing of this offering, we will divide the terms of office of the directors into three classes:

•

Class I, whose term will expire at the annual meeting of stockholders to be held in 2010;

•

Class II, whose term will expire at the annual meeting of stockholders to be held in 2011; and

•

Class III, whose term will expire at the annual meeting of stockholders to be held in 2012.

Upon the closing of this offering, Class I shall consist of Messrs. and , Class II shall consist of Messrs. and and Class III shall consist of Messrs. , and .

At each annual meeting of stockholders after the initial classification, the successors to directors whose terms then expire will serve from the time of election and qualification until the third annual meeting following election and until their successors are duly elected and qualified. Any additional directorships resulting from an increase in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of the directors.

Director independence

Currently, our three directors are not considered independent under the applicable provisions of federal securities laws and the rules and regulations of the New York Stock Exchange, or the NYSE, as detailed below:


Director		Reason for lack of independence

Joesley Mendonça Batista		Chief Executive Officer of JBS S.A. and beneficial ownership greater than 5%

Wesley Mendonça Batista		Chief Executive Officer of JBS USA Holdings, Inc. and beneficial ownership greater than 5%

José Batista Júnior		Beneficial ownership greater than 5%

We intend to avail ourselves of the “controlled company” exception under the corporate governance rules of the NYSE. Accordingly, we will not have a majority of independent directors on our board of directors. In accordance with NYSE rules applicable to “controlled companies” such as ours, upon the completion of this offering, we expect that at least one member of our board of directors will be independent. We expect to add another independent director within three months following the completion of this offering and one additional independent director to our board of directors within one year following the completion of this offering.

Committees of the board of directors

Upon the closing of this offering, we will have an audit committee and a compensation committee. As a “controlled company,” we do not expect to have a nominating or corporate governance committee upon the closing of this offering, and we do not intend for our compensation committee to be composed entirely of independent directors.

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Audit committee

The “controlled company” exception does not modify the independence requirements for the audit committee, and upon the completion of this offering our audit committee will composed of at least three members, a majority of whom will be independent within three months from the date of this prospectus and each of whom will be independent within one year from the date of this prospectus. For each individual to be deemed to be independent, our board will determine (a) that there is no relationship with JBS USA Holdings, Inc., or (b) the relationship is immaterial. The board has considered the independence standards of the NYSE.

The composition, duties, and responsibilities of our audit committee are set forth below.

Upon completion of this offering our audit committee will consist of (chair), and . is an “audit committee financial expert” within the meaning of the rules and regulations of the Securities and Exchange Commission.

The audit committee is responsible for:

•

selecting the independent auditor;

•

approving the overall scope of the audit;

•

discussing the annual audited financial statements and quarterly reviewed financial statements, including matters required to be reviewed under applicable legal and regulatory requirements, with management and the independent auditor;

•

discussing earnings press releases and other financial information provided to the public with management and the independent auditor, as appropriate;

•

discussing with management and the independent auditor, as appropriate, any audit problems or difficulties and management’s response;

•

discussing our risk assessment and risk management policies;

•

reviewing our financial reporting and accounting standards and principles, significant changes in such standards or principles, and the key accounting decisions affecting our financial statements;

•

reviewing and approving the internal corporate audit staff functions;

•

reviewing our internal system of audit, financial, and disclosure controls and the results of internal audits;

•

annually reviewing the independent auditor’s written report describing the auditing firm’s internal quality-control procedures and any material issues raised by the auditing firm’s internal quality-control review or peer reviews of the auditing firm;

•

reviewing and investigating matters pertaining to the integrity of management;

•

reviewing and approving all transactions between us and our officers, directors and principal stockholders and their affiliates for potential conflicts of interest;

•

establishing procedures concerning the treatment of complaints and concerns regarding accounting, internal accounting controls, or audit matters;

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•

meeting separately with management, the corporate audit staff, and the independent auditor;

•

handling such other matters that are specifically delegated to the audit committee by the board of directors from time to time; and

•

reporting regularly to the full board of directors.

Compensation committee

For fiscal 2008, compensation decisions were made by a committee comprised of Wesley Batista, our chief executive officer, and our head of human resources. Between January 1, 2008 and October 22, 2008, the position of head of human resources was filled by John R. Shandley. From October 23, 2008 through December 28, 2008, that position was held by our current head of human resources, Robert Daubenspeck. Decisions concerning our chief executive officer’s compensation are made by our board of directors.

Upon completion of this offering our compensation committee will consist of (chair), and .

The compensation committee is responsible for:

•

reviewing and approving corporate goals and objectives relevant to the compensation of our executives and key management employees;

•

annually evaluating our executives’ and key management employees’ performance in light of these goals;

•

reviewing and approving the compensation and incentive opportunities of our executives and key management employees;

•

reviewing and approving employment contracts, severance arrangements, incentive arrangements, change-in-control arrangements, and other similar arrangements between us and our executives and key management employees;

•

receiving periodic reports on our compensation programs as they affect all employees; reviewing executive succession plans for business and staff organizations; and

•

handling such other matters that are specifically delegated to the compensation committee by the board of directors from time to time.

On and after the effective date of this offering, the compensation committee shall continue to oversee our executive compensation program on behalf of the board. In the performance of this function, the compensation committee will meet at least quarterly and, among other things, review and discuss with management the compensation discussion and analysis set forth below.

Other committees

Our board of directors may establish other committees as it deems necessary or appropriate from time to time.

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Code of ethics

We have adopted a code of conduct applicable to all employees. In 2002, we adopted a code of ethics specifically applying to our chief executive officer, chief financial officer, chief accounting officer and controller. The code of ethics for such officers reinforces our commitment to:

•

deter wrongdoing and promote honest and ethical conduct;

•

provide full, fair, accurate, timely, and understandable disclosure in public reports;

•

comply with applicable laws;

•

ensure prompt internal reporting of code violations; and

•

provide accountability for adherence to the code.

The financial code of ethics is available in the investor information section of our website at www.jbsswift.com.

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Compensation discussion and analysis

Overview

This compensation discussion and analysis describes the material elements of compensation paid to our executive officers as well as the objectives and material factors underlying our compensation policies and decisions. The information in this compensation discussion and analysis provides context for the compensation disclosures in the tables and related narrative discussions that follow. When we refer to our named executive officers, we are referring to the five individuals listed in the summary compensation table below.

In designing our executive compensation program, we place significant emphasis on performance. Consequently, a majority of each named executive officer’s total potential compensation is “at risk” and tied to our financial performance. During fiscal 2008, our overall financial performance was above that of recent years. This had the effect of increasing the amount of incentive compensation received by our corporate level executives and by many of the managers of our business units, including our named executive officers. These results were consistent with our fundamental philosophy of paying for performance.

Compensation philosophy and objectives

The primary goal of our executive compensation program is the same as our goal for our overall operations—to maximize corporate performance. To accomplish this goal, our executive compensation program is designed to achieve the following objectives:

•

Attracting and retaining top talent. The compensation of our executives must be competitive with the organizations with which we compete for talent so that we may attract and retain talented and experienced executives. We consider our competitors to be Smithfield Foods, Inc., Tyson Foods Inc., Cargill Inc., Hormel Foods Corporation, Sara Lee Corporation and National Beef Packing Company, LLC, among others in the food, protein and packaged consumer products industries. Our executives have, on average, approximately 15 years of experience with us and our predecessors.

•

Paying for performance. We structure a significant portion of our executives’ compensation to be subject to corporate and business unit performance measures and therefore be “at risk.” Amounts of performance-based compensation can vary widely from year to year depending on an executive’s performance and the volatile nature of our agricultural commodity-based industry. However, in fiscal 2008, our chief executive officer declined to receive performance-based compensation despite our record financial performance. We anticipate developing a performance-based compensation package for our chief executive officer following this offering.

•

Alignment with the interests of our shareholders. We believe that equity-based awards can be an effective means of aligning an executive’s financial interests with those of our shareholders by providing value to the executive only if the market price of our stock increases. While we did not have the ability to provide equity-based awards in fiscal 2008, we intend to adopt a stock-based incentive plan which will become effective immediately prior to this offering. See “2009 stock incentive compensation plan” below.

Each element of our compensation program is designed to achieve one or more of these objectives. The structure of a particular executive’s compensation may vary depending on the

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scope and level of that executive’s responsibilities. For an executive with corporate level responsibilities and qualifications, performance-based compensation is generally based on our consolidated results of operations. In contrast, for an executive responsible for an individual business unit, performance-based compensation historically has been based on a combination of the following: individual behavioral assessment, personal goal achievement, business unit performance and overall consolidated results of operations. Our compensation practices for business unit executives were adopted in recognition of the belief that the efforts of these executives primarily impact the financial performance of the respective units they manage and thus, it is important that compensation be tied directly to the executive’s performance and business unit performance as well as our consolidated results of operations. In addition, beginning in fiscal 2009, these business unit managers are expected to receive an increased proportion of their total compensation in the form of long-term equity incentives, thus providing the managers with incentives tied to our overall operating and share performance.

Determining executive compensation

Our chief executive officer makes recommendations to the compensation committee regarding the amounts of salaries, annual cash incentive payments and, beginning in fiscal 2009, stock-based awards, if any, for key employees, including all other named executive officers. For executive officers, including all other named executive officers, whose annual cash incentive awards are based partly on individual performance, our chief executive officer’s evaluation of the executive officer’s individual performance is provided to and reviewed by the compensation committee. To assist the compensation committee in carrying out its responsibilities, the compensation committee may from time to time retain an independent compensation consultant. The compensation committee also annually reviews executive pay tallies for our executive officers detailing the amount of each element of total compensation and accumulated equity holdings. Based on the foregoing, the compensation committee uses its judgment in making compensation decisions that it believes will best carry out our compensation philosophy and objectives. The board of directors determines our chief executive officer’s compensation based on its evaluation of our chief executive officer’s individual performance and our company’s performance.

Elements of our compensation program

In fiscal 2008, total compensation for our executive officers consisted of the following components:

•

base salary;

•

annual incentive cash payments;

•

additional cash bonuses;

•

retirement compensation; and

•

perquisites and personal benefits.

All of our named executive officers are employed at-will, without employment agreements, severance payment agreements or payment arrangements that would be triggered by a change of control of us, with the exception of Mr. Dooley, who has a retention agreement with us as described under “Estimated payments upon termination or change of control” below.

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Base salary. Base salaries are intended to provide a fixed level of compensation sufficient to attract and retain an effective management team when considered in combination with other components of our executive compensation program that are performance-based. The relative levels of base salary for executive officers are designed to reflect each executive officer’s scope of responsibilities and accountability within our company. Base salaries are reviewed annually to determine if they are equitably aligned within our company and are at sufficient levels to attract and retain top talent. Consistent with our greater emphasis on performance-based pay, base salaries for executives are normally changed only on an infrequent basis and may remain the same for several years.

Annual incentive cash payments. During fiscal 2008, we provided performance-based annual cash incentive compensation opportunities to our named executive officers, excluding our chief executive officer. These awards are based on performance measures that seek to provide a direct link between the company’s and an executive’s performance and the amount of incentive compensation earned.

These awards utilize formulas set by our compensation committee at the beginning of the fiscal year, generally based on the named executive officers’ personal performance goals and our Adjusted EBITDA, the Adjusted EBITDA of a particular subsidiary or business segment, or a combination of the two, depending upon the scope of the executive’s duties. See “Summary historical and pro forma financial data” for the definition of Adjusted EBITDA. The potential payouts of these awards are a percentage of the named executive officer’s base salary, as determined by our compensation committee at the beginning of the fiscal year. The weighting of each of these performance measures and target payout as a percentage of base salary for fiscal 2008 are displayed in the following table for each relevant named executive officer:


	Weighting
Name	Personal goals (%)	Business unit Adjusted EBITDA (%)	Company Adjusted EBITDA (%)	Target payout relative to base salary (%)

André Nogueira de Souza	30	—	70	75
Iain Mars(1)	—	100	—	100
Martin J. Dooley(2)	30	20	50	70
H. Brent Eastwood	30	20	50	100

(1)

Australian operations

(2)

Pork segment

Under our performance-based annual cash incentive program, if actual business unit or company Adjusted EBITDA performance is below a threshold of 85% of the corresponding target Adjusted EBITDA, no amount is paid out under the financial portion of this program. If at least 85% of target business unit or company Adjusted EBITDA is achieved, 50% of the corresponding target Adjusted EBITDA-based annual cash incentive is payable. If actual business unit or company Adjusted EBITDA performance is between the corresponding threshold and target Adjusted EBITDA, the remaining 50% of the Adjusted EBITDA-based annual cash incentive that is payable is determined on a linear basis based on the extent to which actual performance exceeds 85%, and is less than 100%, of the target Adjusted EBITDA. If actual performance equals target business unit or company Adjusted EBITDA, 100% of the corresponding Adjusted EBITDA-based

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annual cash incentive is payable. If actual business unit or company Adjusted EBITDA performance exceeds 100% of the corresponding target Adjusted EBITDA, the Adjusted EBITDA-based annual cash incentive payable exceeds the targeted payout in the same proportion as actual performance exceeds target Adjusted EBITDA. There is no limit on the maximum business unit or company Adjusted EBITDA-based annual cash incentive payable as described above. The compensation committee may, in its discretion, pay bonuses in excess of the amount determined by the formula under the incentive program. See “Additional cash bonuses” below. If a named executive officer’s personal performance goals are not satisfied, then his annual cash incentive payout is reduced by his personal performance goals weighting percentage (shown in the table above). On the other hand, if a named executive officer’s personal performance goals are met or exceeded, then the target payout based on personal performance goals is paid out.

Financial goals are the same objectives set forth in our internally developed corporate budget. For fiscal 2008, our target Adjusted EBITDA was $285 million, and our actual Adjusted EBITDA was $398.2 million, or 140% of target. Business unit Adjusted EBITDA for each subsidiary or business segment is typically set at very challenging levels. In four of our last five fiscal years, budgeted company and business unit financial performance goals were not met. Personal performance goals are intended to add economic value and to align each executive officer’s compensation with expectations of leadership and achievement placed on the executive officer to realize various aspects of our business plan. Personal performance goals are set so that the full amount of the annual cash incentive with respect to these goals may only be attained through superior performance. For fiscal 2008, personal goals of our named executive officers related to cost reduction efforts, productivity (yield and throughput increases), improved employee satisfaction and organizational leadership. A named executive officer’s actual performance against his personal performance goals is determined by our compensation committee based on its subjective evaluation of the named executive officer’s performance.

The potential payouts under the named executive officers’ annual cash incentive awards are displayed in the “Grants of plan-based awards table” below. In February 2009, the compensation committee evaluated performance against the relevant performance goals and determined the amount of annual cash incentive payment made to each of our named executive officers (other than our chief executive officer). Each such named executive officer achieved his personal performance goals and achieved or exceeded relevant business unit and company Adjusted EBITDA targets. The actual amount of annual cash incentive payment made to each named executive officer is displayed in the “Non-equity incentive plan compensation” column of the summary compensation table below.

Additional cash bonuses. We paid additional cash bonuses to Messrs. Nogueira and Dooley with respect to fiscal 2008 in amounts the compensation committee determined, in its discretion, to be appropriate to reward elements of performance that were not reflected in the annual incentive awards and in light of our outstanding financial performance during fiscal 2008. These additional cash bonuses are shown in the “Bonus” column of the summary compensation table below. Mr. Nogueira received a discretionary bonus of $200,000 at the sole discretion of our compensation committee. In connection with the Swift Acquisition in July 2007, we entered into employee retention agreements with key members of management, including Mr. Dooley. Under the terms of his agreement, during fiscal 2008, he was paid the second installment of $318,750. The remaining $200,000 reported in the “Bonus” column of the summary compensation table for Mr. Dooley represents the discretionary component of his annual cash incentive, as determined by our compensation committee.

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Retirement compensation. Our named executive officers participate in the same retirement plans on the same terms as provided to most of our salaried employees. In the United States, this plan is a tax-qualified employee-funded 401(k) savings plan with employer matching contributions. Participation in this plan is voluntary. Therefore, the amount of compensation deferred and the amount of our matching contribution varies among employees, including our named executive officers. However, the same formulas are used to determine benefits for all participants in this plan. We also contribute to a superannuation plan on behalf of Mr. Mars (who is not eligible to participate in our 401(k) savings plan). These plans do not involve any above-market returns, as returns depend on actual investment results.

Perquisites and personal benefits. We provide a limited number of perquisites to our executive officers, including our named executive officers. The summary compensation table below contains an itemized disclosure of all perquisites to our named executive officers, regardless of amount. We believe that these minimal perquisites are reasonable and consistent with those paid to other executives in our industry. Providing these perquisites helps to keep our base compensation packages competitive. Although we do not typically provide our executives with tax gross-ups, in fiscal 2008, we provided Mr. Eastwood with a tax gross-up for the company’s reimbursement of certain relocation expenses incurred by him to relocate to Greeley, Colorado in connection with his commencement of employment with us.

We also provide certain benefits to substantially all salaried employees that are not included as perquisites in the summary compensation table for the named executive officers because they are broadly available. These include health and welfare benefits, disability and life insurance, education and tuition reimbursement and an employee assistance program.

Future equity incentive awards. Historically, we have not provided long-term incentive compensation in the form of stock options. Beginning on the completion date of this offering, however, we anticipate providing long-term incentive compensation to our named executive officers and other select employees in the form of stock-based awards under our 2009 Stock Incentive Compensation Plan, or the 2009 Plan, the material terms of which are summarized below under “2009 stock incentive compensation plan.” We believe that stock-based compensation can serve as an effective motivational tool by aligning an executive’s economic interests with those of our shareholders. We anticipate providing stock-based awards with terms and conditions that promote long-term tenure and encourage long-term strategic decision-making by our executive officers. We also anticipate that stock-based compensation will constitute a larger percentage of total compensation for corporate level executives than for business unit management because a business unit manager has less involvement in the performance of other business units which impact overall results and indirectly impact the market price of our common stock.

We anticipate that our chief executive officer will recommend to the compensation committee the recipients and sizes of stock-based awards, and the board of directors will determine the size of stock-based awards to be granted to our chief executive officer. In evaluating these recommendations, and in determining the size of stock-based awards for our chief executive officer, we anticipate that the compensation committee and the board of directors, as applicable, will consider a number of factors, including but not limited to:

•

the level of incentive already provided to the recipient by the size of prior grants or existing holdings of common stock;

•

whether the recipient’s responsibilities involve company-wide strategic decision-making and

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•

the compensation committee’s subjective evaluation of the recipient’s potential contribution to our future success.

As of the closing of this offering, we intend to grant shares of restricted stock under the 2009 Plan to the following named executive officers in the following amounts:



Name		Number of shares

We anticipate that these restricted stock awards will generally vest at the rate of one-third per year of service following the grant date.

Summary compensation table

The following table includes information concerning compensation paid to or earned by our named executive officers listed in the table for the fiscal year ended December 28, 2008.


Name and principal position(1)	Salary ($)	Bonus(2) ($)	Non-equity incentive plan compensation(3) ($)	All other compensation(4) ($)	Total ($)

Wesley M. Batista(5)	1,126,395	—	—	84,437	1,210,832
President, Chief executive officer and director
André Nogueira de Souza(6)	379,922	200,000	300,000	200,568	1,080,490
Chief financial officer
Iain Mars(7)	229,641	—	850,514	218,208	1,298,363
Head of Australia
Martin J. Dooley(8)	406,010	518,750	300,000	14,110	1,238,870
Head of Pork
H. Brent Eastwood(9)	259,615	—	275,000	160,994	695,609
Head of JBS Trading

(1)

The principal position listed in the table for each named executive officer was such individual’s title during fiscal 2008.

(2)

Represents cash bonuses received by each of Messrs. Nogueira and Dooley, as described under “Compensation discussion and analysis—Additional cash bonuses” above.

(3)

Represents annual incentive cash payments described in more detail under “Compensation discussion and analysis—Annual incentive cash payments” above.

(4)

The following table includes information concerning amounts reported in the All other compensation column of the summary compensation table above.


Name and principal position	Relocation expenses (a) ($)	Tax gross- up (b) ($)	Contributions to retirement plan (c) ($)	Company aircraft (d) ($)	Company leased automobile (e) ($)	Company leased residence (f) ($)	Excess life insurance (g) ($)	Total ($)

Wesley M. Batista	65,448	—	—	18,989	—	—	—	84,837
André Nogueira de Souza	200,000	—	—	—	—	—	568	200,568
Iain Mars	—	—	68,178	—	86,358	63,672	—	218,208
Martin J. Dooley	—	—	11,500	—	—	—	2,610	14,110
H. Brent Eastwood	148,754	12,240	—	—	—	—	—	160,994

The value of perquisites and other personal benefits and other compensation is based on the estimated incremental cost to us, for the following:

(a)

reimbursement of relocation expenses,

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(b)

tax gross-up on reimbursement of relocation expenses for Mr. Eastwood,

(c)

company contributions to 401(k) plan (or, in the case of Mr. Mars, to superannuation plan),

(d)

personal use of company aircraft, the direct cost per flight hour as calculated from our records for company-owned aircraft or as billed by third parties for chartered aircraft,

(e)

for company-leased automobiles, 100% of the lease cost, repairs, maintenance and fees,

(f)

for personal use of the company-leased residence, the average daily cost of maintaining the residence multiplied by the number of days used for personal purposes, and

(g)

for excess life insurance (i.e., having a face amount of coverage in excess of $50,000), the amount of premiums paid by us, on behalf of the executive.

(5)

Mr. Batista served as President and Chief Executive Officer from December 31, 2007 to December 28, 2008. Included in the salary above is salary in the amount of $419,000 paid by JBS S.A. from December 31, 2007 to February 15, 2008.

(6)

As an employee of JBS S.A. in Brazil, Mr. Nogueira provided financial oversight for JBS S.A. from December 31, 2007 through September 30, 2008. On October 1, 2008, Mr. Nogueira transferred to JBS USA Holdings, Inc. and served as our Chief Financial Officer through December 28, 2008. Included in Mr. Nogueira’s salary above is salary in the amount of $263,000 paid by JBS S.A. from December 31, 2007 to September 30, 2008.

(7)

Mr. Mars served as the Head of Australia from December 31, 2007 to December 28, 2008. For purposes of computation, the exchange rate used was based on the calendar 2008 average U.S. dollar to Australian dollar exchange rate of .8369.

(8)

Mr. Dooley served as the Head of Pork from December 31, 2007 to December 28, 2008.

(9)

Mr. Eastwood served as the Head of JBS Trading from December 31, 2007 to December 28, 2008.

Grants of plan-based awards

The following table includes information concerning grants of plan-based awards made to our named executive officers listed in the table during the fiscal year ended December 28, 2008.


	Estimated future payouts under non-equity incentive plan awards
Name and principal position	Threshold(1) ($)	Target ($)	Maximum ($)

Wesley M. Batista	N/A	N/A	N/A
André Nogueira de Souza	150,000	300,000	N/A
Iain Mars	192,500	385,000	N/A
Martin J. Dooley	131,250	262,500	N/A
H. Brent Eastwood	137,500	275,000	N/A

(1)

There is no threshold with respect to the payout amount based on personal performance goals under our performance-based annual cash incentive program. As such, these amounts assume that a named executive officer met his personal performance goals and that the target payout based on personal performance is paid out. See “Compensation discussion and analysis—Annual incentive cash payments”.

Estimated payments upon termination or change of control.

On July 11, 2007, we entered into a retention agreement with Mr. Dooley. If Mr. Dooley’s employment was terminated by us without cause on December 28, 2008, the last day of fiscal 2008, he would have received a cash severance payment in the amount of $673,500 under this retention agreement. No other named executive officer would have received any payments or benefits in connection with termination of their employment or a change of control of us had the triggering event occurred on December 28, 2008.

Director compensation

During fiscal 2008, our directors received no compensation for attending our board of directors’ meetings. However, after the completion of this offering, we anticipate that we will institute a director compensation program for our non-employee directors which will compensate them for attending meetings in person or telephonically and serving on committees of the board of directors.

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The following table includes information concerning compensation paid to or earned by our directors listed in the table for the fiscal year ended December 28, 2008.


Name and principal position	Fees earned or paid in cash ($)	Non-equity incentive plan compensation ($)	All other compensation(1) ($)	Total ($)

José Batista Júnior	—	—	709,115	709,115
Director

Joesley Mendonça Batista	—	—	—	—
Director

(1)

Mr. José Batista Júnior received the compensation reflected above for his services as an employee of JBS USA, LLC. This amount includes: $646,150 paid as cash compensation, $59,250 paid to reimburse relocation expenses and $3,715 related to insurance premiums paid by us.

2009 stock incentive compensation plan

Prior to the closing of this offering, we intend to adopt the JBS USA, Inc. 2009 Stock Incentive Compensation Plan, or the “2009 Plan”, which will become effective immediately prior to this offering. The 2009 Plan is intended to further our success by increasing the ownership interest of certain of our employees and directors in our company and to enhance our ability to attract and retain employees and directors. This is a summary of the 2009 Plan. You should read the text of the 2009 Plan filed as an exhibit to the registration statement of which this prospectus is part for a full statement of the terms and provisions of the 2009 Plan.

We may issue up to shares of our common stock, subject to adjustment if particular capital changes affect the common stock, upon the exercise or settlement of stock options, stock appreciation rights (“SARs”), restricted stock awards, restricted stock units, performance unit awards, performance share awards, cash-based awards and other stock-based awards granted under the 2009 Plan. The shares of common stock that may be issued under the 2009 Plan may be either authorized and unissued shares or previously issued shares held as treasury stock.

A stock option is the right to purchase a specified number of shares of common stock in the future at a specified exercise price and subject to the other terms and conditions specified in the option agreement and the 2009 Plan. Any stock options granted under the 2009 Plan are either “incentive stock options,” which may be eligible for special tax treatment under the Internal Revenue Code of 1986, or options other than incentive stock options (referred to as “nonqualified stock options”), as determined by the compensation committee and stated in the option agreement. The exercise price of each option granted under the 2009 Plan is equal to or greater than the fair market value of our common stock on the option grant date, with certain limited exceptions for options granted in exchange for other outstanding awards in connection with a corporate transaction. The exercise price of any stock options granted under the 2009 Plan may be paid in cash, a cashless broker-assisted exercise that complies with law, withholding of shares otherwise deliverable upon exercise or any other method permitted by law and approved by the compensation committee.

SARs may be granted under the 2009 Plan alone or together with specific stock options granted under the 2009 Plan. SARs are awards that, upon their exercise, give a participant the right to receive from us an amount equal to (1) the number of shares for which the SAR is exercised, multiplied by (2) the excess of the fair market value of a share of the common stock on the

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exercise date over the grant price of the SAR. The grant price of each SAR granted under the 2009 Plan is equal to or greater than the fair market value of our common stock on the SAR’s grant date, with certain limited exceptions for SARs granted under the 2009 Plan in exchange for other outstanding awards in connection with a corporate transaction. A SAR may be settled in cash, shares or a combination of cash and shares, as determined by the compensation committee. If an option and a SAR are granted in tandem, the option and the SAR may become exercisable and will terminate at the same time, but the holder may exercise only the option or the SAR, but not both, for a given number of shares.

Restricted stock awards are shares of common stock that are awarded to a participant subject to the satisfaction of terms and conditions established by the compensation committee. Until such time as the applicable restrictions lapse, shares of restricted stock are subject to forfeiture and may not be sold, assigned, pledged or otherwise disposed of by the participant who holds those shares. Restricted stock units are denominated in units of shares of common stock, except that no shares are actually issued to the participant on the grant date. When a restricted stock unit award vests, the participant is entitled to receive shares of common stock, a cash payment based on the value of shares of common stock or a combination of shares and cash.

Performance units, performance shares and cash-based awards entitle the recipient to receive shares of common stock or a cash payment if performance goals and other conditions specified by the compensation committee are attained. Other stock-based awards are stock-based or stock-related awards payable in common stock or cash on terms and conditions set by the compensation committee and may include a grant or sale of unrestricted shares of common stock. The compensation committee may provide for the payment of dividend equivalents with respect to shares of common stock subject to an award, such as restricted stock units, that have not actually been issued under that award.

The compensation committee administers the 2009 Plan. The board of directors may, subject to any legal limitations, exercise any powers or duties of the compensation committee concerning the 2009 Plan. The compensation committee will select eligible employees, directors and/or consultants of us and our subsidiaries or affiliates to receive awards under the 2009 Plan and will determine the sizes and types of awards, the terms and conditions of awards and the form and content of the award agreements representing awards.

Holders of options, SARs, unvested restricted stock and other awards may not transfer those awards, unless they die or, except in the case of incentive stock options, the compensation committee determines otherwise.

A change of control of us (as defined in the 2009 Plan) will have no effect on outstanding awards under the 2009 Plan that the board of directors or the compensation committee determines will be honored or assumed or replaced with new rights by a new employer so long as any such alternative award is substantially equivalent to the outstanding award and has certain terms that appropriately protect the holder of the award, as determined under criteria set forth in the 2009 Plan. If the board of directors or the compensation committee does not make this determination with respect to any outstanding awards, then (a) the awards will fully vest and, if applicable, become fully exercisable and will be settled in cash and/or publicly traded securities of the new employer, generally based on the fair market value of our common stock on the change of control date, in the case of options or SARs, reduced by the exercise or grant price of the option or SAR, or the price per share offered for our common stock in the change of control transaction, or, in some cases, the highest fair market value of the common stock during the 30 trading days

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preceding the change of control date, in the case of restricted stock, restricted stock units and any other awards denominated in shares, (b) the target performance goals applicable to any outstanding awards will be deemed to be fully attained, unless actual performance exceeds the target, in which case actual performance will be used, for the entire performance period then outstanding; and (c) the board of directors or the compensation committee may otherwise adjust or settle outstanding awards as it deems appropriate, consistent with the plan’s purposes.

In the event of a change in our capital structure or a corporate transaction, the compensation committee or the board of directors will make substitutions or adjustments that it deems appropriate and equitable to the securities available under the 2009 Incentive Plan and outstanding awards, the exercise or other prices of securities subject to outstanding awards and other terms and conditions of outstanding awards, such as cancellation of outstanding awards in exchange for payments of cash and/or property or substitution of stock of another company for shares of our common stock subject to outstanding awards. The compensation committee will also make appropriate adjustments and modifications in the terms of any outstanding awards to reflect, or related to, any such events, adjustments, substitutions or changes, including modifications of performance goals and changes in the length of performance periods.

Subject to particular limitations specified in the 2009 Plan, the board of directors may amend or terminate the 2009 Plan, and the compensation committee may amend awards outstanding under the 2009 Plan. The 2009 Plan will continue in effect until all shares of the common stock available under the 2009 Plan are delivered and all restrictions on those shares have lapsed, unless the 2009 Plan is terminated earlier by the board of directors. No awards may be granted under the 2009 Plan on or after the tenth anniversary of the date of this offering.

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Certain relationships and related party transactions

Relationship with JBS S.A.

Controlling interest

Before this offering, all of our outstanding shares of common stock were owned by JBS Hungary Holdings Kft., the selling stockholder and a wholly owned, indirect subsidiary of JBS S.A. After completion of this offering, the selling stockholder will own approximately % of the outstanding shares of our common stock, or % if the international underwriters exercise their over-allotment option in full. JBS S.A. has advised us that its current intent is to continue to retain, through the selling stockholder, at least 50.1% of the equity interest in us following this offering for the foreseeable future. The selling stockholder is not subject to any contractual obligation to retain its controlling interest in us, except that the selling stockholder has agreed, subject to exceptions described in “Underwriting”, not to sell or otherwise dispose of any of our shares of common stock for a period of 180 days after the date of this prospectus without the prior written consent of the representatives of the underwriters. Any shares of common stock issued pursuant to the international underwriters’ over-allotment option will increase the total number of shares outstanding after this offering.

As our controlling stockholder after this offering, JBS S.A., through the selling stockholder, will continue to exercise significant influence over our business policies and affairs, including the composition of our board of directors and any action requiring the approval of our stockholders. See “Risk factors—We will be a “controlled company” within the meaning of the NYSE rules, and, as a result, will rely on exemptions from certain corporate governance requirements that provide protection to stockholders of other companies” and “—We are controlled by JBS S.A., which is a publicly traded company in Brazil, whose interest in our business may be different than yours.”

In the subsection entitled “Business—Description of business segments—Beef segment—Global exports,” we describe the reasons why we do not believe JBS S.A. is currently a significant competitor of our Beef segment.

The following is a description of transactions since July 11, 2007 in which we have been a participant, in which the amount involved exceeded or will exceed $120,000 and in which any of our directors, executive officers, beneficial holders of more than 5% of our capital stock, immediate family members or entities affiliated with them, had or will have a direct or indirect material interest.

We have not included a description of related party transactions prior to July 11, 2007 because the related party transactions that took place prior to this date involved our predecessor company and its affiliates, and we do not believe this information is meaningful to investors.

Guarantee of JBS S.A. debt

We, together with our subsidiaries, JBS USA, LLC and Swift Beef Company, guarantee on an unsecured basis, $300.0 million of the 10.5% notes due 2016 issued by JBS S.A. as a result of a covenant contained in the indenture governing these notes. Additional subsidiaries of JBS Holdings, Inc. may be required to guarantee these notes of JBS S.A. See “External sources of liquidity and description of indebtedness—Guarantee of 10.50% senior notes due 2016 of JBS S.A.”

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Our ability to use JBS S.A.’s brokerage account in Brazil

We and JBS S.A. are party to a financial agreement pursuant to which JBS S.A. granted us the ability to use one of JBS S.A.’s brokerage accounts in Brazil, enabling us to take a currency position in a market we cannot reasonably access from the United States in a timely manner. Under the agreement, the outstanding amounts of the intercompany loan agreements executed between the parties will be increased to reflect any losses and will be offset by any gains. In case of loss, the amounts of such loss shall be increased to the outstanding amounts of such intercompany loans.

Intercompany loans owed by JBS USA Holdings, Inc. to a subsidiary of JBS S.A.

As of March 29, 2009, we owed an aggregate of $658.6 million under various intercompany loans from JBS S.A., which were subsequently assigned to JBS HU Liquidity Management LLC (Hungary), a wholly owned, indirect subsidiary of JBS S.A. The proceeds of these intercompany loans were used to fund our operations and the Tasman Acquisition and the JBS Packerland Acquisition. On April 27, 2009, these intercompany loan agreements were consolidated into one loan agreement, and the maturity dates of the principal of the intercompany loans was extended to April 18, 2019, and the interest rate was changed to 12% per annum. The net proceeds of the offering and sale of our 11.625% senior unsecured notes due 2014 (other than $100.0 million) were applied to the repayment of accrued interest and a portion of the principal on these intercompany loans. As of May 31, 2009, we owed an aggregate principal amount of $133.0 million under the consolidated intercompany loan agreement. In addition, we recently entered into an additional intercompany term loan agreement in the aggregate principal amount of $6.0 million under the same terms as the consolidated intercompany loan agreement.

Arrangements with J&F Oklahoma

Cattle supply and feeding agreement. Five Rivers is party to a cattle supply and feeding agreement with our affiliate J&F Oklahoma Holdings Inc., or J&F Oklahoma. J&F Oklahoma is a wholly owned subsidiary of J&F Participacoes S.A., which is owned in equal shares by the six children of José Batista Sobrinho (the founder of JBS S.A.) and Mr. Sobrinho. Pursuant to the agreement, Five Rivers feeds and takes care of cattle owned by J&F Oklahoma. J&F Oklahoma pays Five Rivers for the cost of feed and medicine at cost plus a yardage fee on a per head per day basis. Beginning on June 23, 2009 or such earlier date on which Five Rivers’ feedlots are at least 85% full of cattle and ending on October 23, 2011, J&F Oklahoma agrees to maintain sufficient cattle on Five Rivers’ feedlots so that such feedlots are at least 85% full of cattle at all times. The agreement commenced on October 23, 2008 and continues until the last of the cattle on Five Rivers’ feedlots as of October 23, 2011 are shipped to J&F Oklahoma, a packer or another third party.

Cattle purchase and sale agreement. JBS USA, LLC is party to a cattle purchase and sale agreement with J&F Oklahoma. Under this agreement, J&F Oklahoma agrees to sell to JBS USA, LLC, and JBS USA, LLC agrees to purchase from J&F Oklahoma, at least 500,000 cattle during each year from 2009 through 2011. The price paid by JBS USA, LLC is determined pursuant to JBS USA, LLC’s pricing grid as in effect on the date of delivery. The grid used for J&F Oklahoma is identical to the grid used for unrelated third parties. If the cattle sold by J&F Oklahoma in a quarter result in a breakeven loss (selling price below accumulated cost to acquire the feeder animal and fatten it to delivered weight), then JBS USA, LLC will reimburse 40% of the average per head breakeven

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loss incurred by J&F Oklahoma on up to 125,000 head delivered to JBS USA, LLC in that quarter. If the cattle sold by J&F Oklahoma in a quarter result in a breakeven gain (selling price above the accumulated cost to acquire the feeder animal and fatten it to delivered weight), then JBS USA, LLC will receive from J&F Oklahoma an amount of cash equal to 40% of that per head gain on up to 125,000 head delivered to JBS USA, LLC in that quarter.

Guarantee of J&F Oklahoma revolving credit facility. J&F Oklahoma has a $600.0 million secured revolving credit facility with a commercial bank. Its parent company, J&F Participacoes S.A., has entered into a keepwell agreement with J&F Oklahoma whereby it will make contributions to J&F Oklahoma if J&F Oklahoma is not in compliance with its financial covenants under this credit facility. If J&F Oklahoma defaults on its obligations under this credit facility and such default is not cured by J&F Participações S.A. under the keepwell agreement, Five Rivers is obligated to pay up to $250.0 million of the obligations under this credit facility. This credit facility is available for revolving loans and letters of credit. Borrowings under this credit facility accrue interest at a per annum rate of LIBOR plus 2.25% or base rate plus 1.00%, and interest is payable at least quarterly. Commitment fees of 0.45% per annum accrue on unused commitments. This credit facility matures on October 7, 2011. This credit facility and the guarantees thereof are secured by the assets of J&F Oklahoma and, in the case of Five Rivers, they are secured by and limited to the lesser of $250 million or the net assets of Five Rivers, including loans made pursuant to the credit facility discussed below. This credit facility is used to finance the procurement of cattle by J&F Oklahoma, which are then fed in the Five Rivers feedlots pursuant to the cattle supply and feeding agreement described above. The finished cattle are sold to JBS USA, LLC pursuant to the cattle purchase and sale agreement described above.

Credit facility to J&F Oklahoma. Five Rivers is party to an agreement with J&F Oklahoma, pursuant to which Five Rivers has agreed to loan up to $200.0 million in revolving loans to J&F Oklahoma. The loans are used by J&F Oklahoma to acquire feeder animals which are placed in Five Rivers feedlots for finishing. Borrowings accrue interest at a per annum rate of LIBOR plus 2.25% or base rate plus 1.00%, and interest is payable at least quarterly. This credit facility matures on October 7, 2011. During the period from October 23, 2008 (when Five Rivers was acquired) through December 28, 2008, average borrowings were approximately $131.0 million, and total interest accrued was approximately $663,000 and was recognized in interest income on the statement of operations. As of March 29, 2009, the aggregate outstanding balance of the loan was $171.4 million, including accrued interest of $40,000.

Loan to executive officer

On April 24, 2009, we made a loan to an executive officer in the amount of $235,000. This loan was made as a form of retention bonus. Interest on this loan accrues at a rate of 5.25% per annum and is payable annually. The principal amount of this loan is payable in four equal annual installments, beginning on April 23, 2010. We have agreed to forgive the principal and interest on this loan contingent upon the executive officer remaining employed by us for a specified period of time, and these amounts will be accounted for as taxable income to the executive officer. In addition, if the executive officer ceases to be our employee under certain circumstances, including termination by us without cause, all remaining amounts under this loan will be forgiven. If the executive officer is terminated for cause, the loan will be accelerated and the executive officer must pay accrued and unpaid interest.

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Other related party transactions

We enter into transactions in the normal course of our business with affiliates of JBS S.A. Sales to affiliated companies included in the net sales in the statement of operations for the thirteen weeks ended March 30, 2008 and March 29, 2009 were $5.4 million and $109.4 million, respectively. These transactions primarily consist of sales of our products to JBS S.A. and its subsidiaries (other than ourselves) in individually negotiated transactions at prevailing market prices. Amounts owed to us by affiliates as of March 30, 2008 and March 29, 2009 totaled approximately $5.8 million and $219.4 million, respectively.

Purchases from affiliated companies included in the statement of operations for the thirteen weeks ended March 30, 2008 and March 29, 2009 were $0.4 million and $16,600, respectively. No amounts were due to affiliates by us at March 29, 2009 related to these purchases.

We had a $50,000 receivable from an executive officer at March 29, 2009. On April 28, 2009, the executive officer repaid the amount in full.

For the fiscal quarter ended March 30, 2008, we recorded $22,000 of rental income related to real property that we leased to two of our executive officers. At March 29, 2009, we had no rental income related to these real estate transactions.

Policies and procedures for related party transactions

Our audit committee is expected to review and approve in advance any related party transaction. All of our directors, officers and employees will be required to report to the audit committee any related party transaction prior to entering into the transaction. See “Management—Committees of the board of directors—Audit committee.”

It is our intention to ensure that all future transactions between us and our officers, directors and principal stockholders and their affiliates are approved by the audit committee of our board of directors, and are on terms no less favorable to us than those that we could obtain from unaffiliated third parties.

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Principal and selling stockholder

Before this offering, all of the outstanding shares of our common stock were owned beneficially and of record by JBS Hungary Holdings Kft., the selling stockholder and a wholly owned, indirect subsidiary of JBS S.A. The following table sets forth information regarding beneficial ownership of our common stock as of March 29, 2009, and as adjusted to reflect the shares of common stock to be issued and sold in this offering assuming no exercise of the international underwriters’ and the Brazilian underwriters’ option to purchase additional shares, by:

•

each person or group of affiliated persons known by us to be the beneficial owner of more than 5% of our common stock;

•

each of our named executive officers;

•

each of our directors;

•

all executive officers and directors as a group; and

•

our selling stockholder.

Beneficial ownership in this table is determined in accordance with the rules of the SEC and does not necessarily indicate beneficial ownership for any other purpose. Under these rules, the number of shares of common stock deemed outstanding includes shares issuable upon exercise of options held by the respective person or group that may be exercised within 60 days after March 29, 2009. For purposes of calculating each person’s or group’s percentage ownership, stock options exercisable within 60 days after March 29, 2009 are included for that person or group but not the stock options of any other person or group. This table does not reflect any shares of common stock that our directors and executive officers may purchase in this offering, including through the directed share program described in “Underwriting”.

Percentage of beneficial ownership is based on 100 shares of common stock outstanding as of March 29, 2009 (without giving effect to the stock split to occur immediately prior to completion of this offering) and shares of common stock outstanding after completion of this offering.

Unless otherwise indicated and subject to applicable community property laws, to our knowledge, each stockholder named in the following table possesses sole voting and investment power over the shares listed, except for those jointly owned with that person’s spouse. Beneficial ownership representing less than 1% is denoted with an asterisk (*).

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The address of each director and executive officer shown in the table below is c/o JBS USA Holdings, Inc., 1770 Promontory Circle, Greeley, Colorado 80634.


Name and address of beneficial owner	Shares of common stock beneficially owned before this offering		Number of shares being offered	Shares of common stock beneficially owned after this offering		Percent of class beneficially owned assuming exercise of the international underwriters’ over- allotment option
Name and address of beneficial owner	Number	Percentage	Number of shares being offered	Number	Percentage

Principal shareholder
JBS S.A.(1)	100	100%			%	%
Directors and named executive officers					%	%
Wesley Mendonça Batista(1)		%			%	%
Joesley Mendonça Batista(1)		%			%	%
José Batista Júnior(1)		%			%	%
André Nogueira de Souza	—	—			%	%
Iain Mars	—	—			%	%
Martin J. Dooley	—	—			%	%
H. Brent Eastwood	—	—			%	%
All directors and executive officers as a group		%			%	%

(1)

We are a wholly owned subsidiary of JBS Hungary Holdings Kft., the selling stockholder and a wholly owned, indirect subsidiary of JBS S.A. JBS S.A. is ultimately controlled by the Batista family, which is comprised of José Batista Sobrinho, the founder of JBS S.A., Flora Mendonça Batista, and their six children, José Batista Júnior, Valéria Batista Mendonça Ramos, Vanessa Mendonça Batista, Wesley Mendonça Batista, Joesley Mendonça Batista and Vivianne Mendonça Batista. The Batista family indirectly owns 100.0% of the issued and outstanding shares of J&F Participações S.A., a Brazilian corporation which owns 44.0% of the outstanding capital of JBS S.A., and, except for Mr. José Batista Sobrinho and Mrs. Flora Mendonça Batista, directly owns 100% of the equity interests in ZMF Fundo de Investimento em Participações, a Brazilian investment fund which owns 6.1% of the outstanding capital of JBS S.A. Wesley Mendonça Batista, Joesley Mendonça Batista and José Batista Júnior are members of our board of directors. Through J&F Participações S.A. and ZMF Fundo de Investimento em Participações, Wesley Mendonça Batista, Joesley Mendonça Batista and José Batista Júnior each benefically own shares of our common stock.

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The following table sets forth the principal holders of JBS S.A.’s outstanding common shares and their respective shareholding, as of March 29, 2009:


		As of March 29, 2009
Shareholders	Address	Number of Common Shares	Percentage

J&F Participações S.A.(a)	Av. Brigadeiro Faria Lima, 2,391, 2nd Floor 01452-000, São Paulo, SP Brazil	632,781,603	44.0%

ZMF Fundo de Investimento em Participações(b)	Praia de Botafogo, 501, 5th Floor Rio de Janeiro, RJ Brazil	87,903,348	6.1%

PROT FIP(c)	Ave. Presidente Wilson, 231 11th Floor Rio de Janeiro, RJ Brazil	205,365,101	14.3%

BNDESPAR(d)	Av. República de Chile, 100 20031-917, Rio de Janeiro, RJ Brazil	186,891,800	13.0%
Other public minority shareholders (as a group)		287,996,774	20.0%
Treasury shares		37,140,300	2.6%

Total		1,438,078,926	100.0%

(a)

J&F Participações S.A. is a Brazilian corporation which owns 44.0% of the total capital of JBS S.A. The members of the Batista family (José Batista Sobrinho and Flora Mendonça Batista, and their six children José Batista Júnior, Valéria Batista Mendonça Ramos, Vanessa Mendonça Batista, Wesley Mendonça Batista, Joesley Mendonça Batista and Vivianne Mendonça Batista) indirectly, through several holding companies, own 100.0% of the issued and outstanding shares of J&F Participações S.A.

(b)

ZMF Fundo de Investimento em Participações is a Brazilian investment fund which owns 6.1% of the total capital of JBS S.A. The Batista family (except for Mr. José Batista Sobrinho and Mrs. Flora Mendonça Batista) owns 100% of the equity interests in ZMF Fundo de Investimento em Participações.

(c)

PROT Fundo de Investimento em Participações is a Brazilian equity investment fund.

(d)

BNDES Participações S.A.—BNDESPAR, is a subsidiary of Banco Nacional de Desenvolvimento Económico e Social, Brazil’s national development bank. BNDESPAR invests, and owns equity interests, in Brazilian companies, including JBS S.A.

There are no current arrangements which will result in a change of control.

JBS S.A. investment and shareholders’ agreements

On March 18, 2008, BNDES Participações S.A., or BNDESPar, PROT—Fundo de Investimento em Participações, or PROT, J&F Participações S.A., or J&F, and ZMF Fundo de Investimento em Participações, or ZMF, entered into an investment agreement with JBS S.A. as intervening and consenting party, or the JBS investment agreement. Pursuant to the JBS investment agreement, BNDESPAR, PROT, J&F and ZMF agreed to make capital contributions to JBS S.A. in the amount of up to R$2,550.0 million. The terms of the investment agreement also required PROT, J&F and ZMF to enter into a shareholders’ agreement to govern their relationship as shareholders of JBS S.A. The parties entered into this shareholders’ agreement on July 8, 2008. Under the terms of the shareholders’ agreement, each of the parties has agreed, among other things, that without the prior approval of PROT, J&F and ZMF will not exercise their power to vote to:

•

modify the bylaws of JBS S.A. to make the permanent audit committee of JBS S.A. non-permanent;

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•

modify the bylaws of JBS S.A. to remove the provisions regarding the disclosure and availability of related party contracts, shareholders’ agreements or stock option plans;

•

restrict in any way PROT’s right to elect and maintain one member on the board of directors for as long as PROT holds greater than 10% of the capital stock of JBS S.A.; and

•

incur additional indebtedness in the event Net Debt/EBITDA would be greater than a specified level.

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Description of capital stock

General

Upon the closing of this offering, our authorized capital stock will consist of shares of common stock, par value $0.01 per share, and shares of undesignated preferred stock, par value $0.01 per share. Immediately following the completion of this offering, an aggregate of shares of common stock will be issued and outstanding and no shares of preferred stock will be issued and outstanding. As of the date of this prospectus, JBS Hungary Holdings Kft., the selling stockholder, was the sole record holder of our common stock. All outstanding shares of our common stock will be legally issued, fully paid and non-assessable.

The following description of the material provisions of our capital stock and our amended and restated certificate of incorporation, amended and restated bylaws and other agreements with and among our stockholders is only a summary, does not purport to be complete and is qualified by applicable law and the full provisions of our amended and restated certificate of incorporation, amended and restated bylaws and other agreements. You should refer to our amended and restated certificate of incorporation, amended and restated bylaws and related agreements as in effect upon the closing of this offering, which will be included as exhibits to the registration statement of which this prospectus is a part.

Common stock

Voting. The holders of our common stock are entitled to one vote for each outstanding share of common stock owned by that stockholder on every matter properly submitted to the stockholders for their vote. Stockholders are not entitled to vote cumulatively for the election of directors.

Dividend rights. Subject to the dividend rights of the holders of any outstanding series of preferred stock, holders of our common stock are entitled to receive ratably such dividends and other distributions of cash or any other right or property as may be declared by our board of directors out of our assets or funds legally available for such dividends or distributions. See “Dividend policy.”

Liquidation rights. In the event of any voluntary or involuntary liquidation, dissolution or winding up of our affairs, holders of our common stock are entitled to share ratably in our assets that are legally available for distribution to stockholders after payment of liabilities. If we have any preferred stock outstanding at such time, holders of the preferred stock may be entitled to distribution and/or liquidation preferences. In either such case, we must pay the applicable distribution to the holders of our preferred stock before we may pay distributions to the holders of our common stock.

Undesignated preferred stock

Our amended and restated certificate of incorporation will authorize our board of directors, subject to limitations prescribed by law, to issue up to shares of undesignated preferred stock in one or more series without further stockholder approval. The board will have discretion to determine the rights, preferences, privileges and restrictions of, including, without limitation, voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences of, and to fix the number of shares of, each series of our preferred stock.

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Anti-takeover effects of Delaware law

Upon the completion of this offering, we will be subject to Section 203 of the Delaware General Corporation Law, or Section 203. In general, Section 203 prohibits a Delaware corporation from engaging in any business combination with any interested stockholder for a period of three years following the date that the stockholder became an interested stockholder, unless:

•

prior to that date, the board of directors of the corporation approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder;

•

upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the number of shares outstanding those shares owned by persons who are directors and also officers and by excluding employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or

•

on or subsequent to that date, the business combination is approved by the board of directors of the corporation and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 66²/3% of the outstanding voting stock that is not owned by the interested stockholder.

In general, Section 203 defines an “interested stockholder” as any entity or person beneficially owning 15% or more of the outstanding voting stock of the corporation and any entity or person affiliated with or controlling or controlled by such entity or person. Section 203 defines “business combination” to include: (1) any merger or consolidation involving the corporation and the interested stockholder; (2) any sale, transfer, pledge or other disposition of 10% or more of the assets of the corporation involving the interested stockholder; (3) subject to certain exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder; (4) any transaction involving the corporation that has the effect of increasing the proportionate share of the stock of any class or series of the corporation beneficially owned by the interested stockholder; or (5) the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation.

A Delaware corporation may opt out of Section 203 either by an express provision in its original certificate of incorporation or in an amendment to its certificate of incorporation or bylaws approved by its stockholders. We have not opted out, and do not currently intend to opt out, of this provision. The statute could prohibit or delay mergers or other takeover or change of control attempts and, accordingly, may discourage attempts to acquire us.

Anti-takeover effects of our amended and restated certificate of incorporation and bylaw provisions

Our amended and restated certificate of incorporation and amended and restated bylaws will, upon the closing of this offering, contain some provisions that may be deemed to have an anti-takeover effect and may delay, defer or prevent a tender offer or takeover attempt that a stockholder might deem to be in the stockholder’s best interest. The existence of these provisions

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could limit the price that investors might be willing to pay in the future for shares of our common stock. These provisions include:

Board composition and filling vacancies. We will have a classified board of directors. See “Management—Board composition after this offering.” Accordingly, it will take at least two annual meetings of stockholders to elect a majority of the board of directors given our classified board. As a result, it may discourage third-party proxy contests, tender offers or attempts to obtain control of us.

Our amended and restated bylaws will provide that, subject to the rights, if any, of holders of preferred stock, directors may be removed only for cause by the affirmative vote of the holders of a majority of the voting power of our outstanding shares of common stock entitled to vote. Furthermore, any vacancy on our board of directors, however occurring, including a vacancy resulting from an increase in the size of our board, may only be filled by the affirmative vote of a majority of our directors then in office, even if less than a quorum.

Special meetings of stockholders. Our amended and restated certificate of incorporation and amended and restated bylaws will provide that a special meeting of stockholders may be called only by the chairman of the board of directors or pursuant to a resolution adopted by the affirmative vote of the majority of the total number of directors then in office. Notwithstanding the foregoing, for so long as JBS S.A. or any of its subsidiaries owns at least 50% of our outstanding shares of common stock, JBS S.A. or such subsidiary shall have the right to call a special meeting of stockholders.

Supermajority voting. In order to effect certain amendments to our amended and restated certificate of incorporation, our amended and restated certificate of incorporation will require first the approval of a majority of our board of directors pursuant to a resolution adopted by the directors then in office, in accordance with our amended and restated bylaws, and thereafter the approval by the holders of at least 66²/3% of our then outstanding shares of common stock. Subject to the provisions of our amended and restated certificate of incorporation, our amended and restated bylaws will expressly authorize our board of directors to make, alter or repeal our bylaws without further stockholder action. Our amended and restated bylaws may also be amended by the holders of 66²/3% of our then outstanding shares of common stock.

No stockholder action by written consent. Our amended and restated certificate of incorporation and amended and restated bylaws will provide that an action required or permitted to be taken at any annual or special meeting of our stockholders may only be taken at a duly called annual or special meeting of stockholders. This provision prevents stockholders from initiating or effecting any action by written consent, and thereby taking actions opposed by the board. Notwithstanding the foregoing, for so long as JBS S.A. or any of its subsidiaries owns at least 50% of our outstanding shares of common stock, our stockholders will be permitted to take action by written consent.

Requirements for advance notification of stockholder nominations and proposals. Our amended and restated bylaws will contain advance notice procedures with respect to stockholder proposals and the nomination of candidates for election as directors.

Undesignated preferred stock. The authorization of undesignated preferred stock will make it possible for our board of directors to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to change control of our company.

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The foregoing provisions of our amended and restated certificate of incorporation and our amended and restated bylaws could discourage potential acquisition proposals and could delay or prevent a change in control. These provisions are intended to enhance the likelihood of continuity and stability in the composition of the board of directors and in the policies formulated by the board of directors and to discourage certain types of transactions that may involve an actual or threatened change of control. These provisions are designed to reduce our vulnerability to an unsolicited acquisition proposal. The provisions also are intended to discourage certain tactics that may be used in proxy fights. However, such provisions could have the effect of discouraging others from making tender offers for our shares and, as a consequence, they also may inhibit fluctuations in the market price of our common stock that could result from actual or rumored takeover attempts. Such provisions also may have the effect of preventing changes in our management.

Limitations of director liability and indemnification of directors, officers and employees

As permitted by Delaware law, provisions in our amended and restated certificate of incorporation and amended and restated bylaws that will be in effect at the closing of this offering will limit or eliminate the personal liability of our directors. Consequently, directors will not be personally liable to us or our stockholders for monetary damages or breach of fiduciary duty as a director, except for liability for:

•

any breach of the director’s duty of loyalty to us or our stockholders;

•

any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law;

•

any unlawful payments related to dividends or unlawful stock repurchases, redemptions or other distributions; or

•

any transaction from which the director derived an improper personal benefit.

These limitations of liability do not alter director liability under the federal securities laws and do not affect the availability of equitable remedies, such as an injunction or rescission.

Our amended and restated certificate of incorporation and amended and restated bylaws that will be in effect upon the closing of this offering will also require us to indemnify our directors and officers to the fullest extent permitted by Delaware law and, as described under “Certain relationships and related party transactions,” we have entered into indemnification agreements with each of our directors and officers.

These provisions may discourage stockholders from bringing a lawsuit against our directors for breach of their fiduciary duty. These provisions may also have the effect of reducing the likelihood of derivative litigation against directors and officers, even though such an action, if successful, might otherwise benefit us and our stockholders. Furthermore, a stockholder’s investment may be adversely affected to the extent we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions. We believe that these provisions, the indemnification agreements and the insurance are necessary to attract and retain talented and experienced directors and officers.

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At present, there is no pending litigation or proceeding involving any of our directors or officers where indemnification will be required or permitted. We are not aware of any threatened litigation or proceeding that might result in a claim for such indemnification.

New York Stock Exchange and São Paulo Stock Exchange

We intend to apply to have our common stock listed on The New York Stock Exchange under the symbol “JBS.” We expect to apply to have the BDRs listed on the São Paulo Stock Exchange under the symbol “ .”

Transfer agent and registrar

We expect that the transfer agent and registrar for our shares of common stock will be .

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Shares eligible for future sale

Prior to this offering, there has not been any public market for our common stock, and we make no prediction as to the effect, if any, that market sales of shares of common stock or the availability of shares of common stock for sale will have on the market price of our common stock prevailing from time to time. Nevertheless, sales of substantial amounts of common stock in the public market, or the perception that these sales could occur, could adversely affect the market price of common stock and could impair our future ability to raise capital through the sale of equity securities.

Upon the completion of this offering, we will have an aggregate of shares of common stock outstanding, assuming no exercise of the international underwriters’ and the Brazilian underwriters’ over-allotment option, or an aggregate of shares of common stock outstanding, assuming full exercise of the international underwriters’ over-allotment option. Of the outstanding shares, all of the shares sold in this offering, including any additional shares sold upon exercise of the international underwriters’ and Brazilian underwriters’ option to purchase additional shares, will be freely tradable, except that any shares purchased by “affiliates” (as that term is defined in Rule 144 under the Securities Act) may only be sold in compliance with the limitations described below. The remaining shares of common stock outstanding after this offering will be deemed “restricted securities” as defined in Rule 144. Restricted securities may be sold in the public market only if registered or if they qualify for an exemption from registration under Rule 144 or Rule 701, promulgated under the Securities Act, which rules are summarized below. Subject to the lock-up agreements described below, shares held by our affiliates that are not restricted securities may be sold subject to compliance with Rule 144 of the Securities Act without regard to the prescribed one-year holding period under Rule 144.

Rule 144

In general, under Rule 144 as currently in effect, once we have been subject to public company reporting requirements for at least 90 days, a person who is not deemed to have been one of our affiliates for purposes of the Securities Act at any time during the 90 days preceding a sale and who has beneficially owned the shares proposed to be sold for at least six months, including the holding period of any prior owner other than our affiliates, is entitled to sell those shares without complying with the manner of sale, volume limitation or notice provisions of Rule 144, subject to compliance with the public information requirements of Rule 144. If such a person has beneficially owned the shares proposed to be sold for at least one year, including the holding period of any prior owner other than our affiliates, then that person is entitled to sell those shares without complying with any of the requirements of Rule 144.

In general, under Rule 144, as currently in effect, our affiliates or persons selling shares on behalf of our affiliates are entitled to sell upon expiration of the lock-up agreements described below, within any three-month period beginning 90 days after the date of this prospectus, a number of shares that does not exceed the greater of:

(i)

1% of the number of shares of common stock then outstanding, which will equal approximately shares immediately after this offering; or

(ii)

the average weekly trading volume of the common stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to that sale.

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Sales under Rule 144 by our affiliates or persons selling shares on behalf of our affiliates are also subject to certain manner of sale provisions and notice requirements and to the availability of current public information about us.

Rule 701

Rule 701 generally allows a stockholder who purchased shares of our common stock pursuant to a written compensatory plan or contract and who is not deemed to have been an affiliate of our company during the immediately preceding 90 days to sell these shares in reliance upon Rule 144, but without being required to comply with the public information, holding period, volume limitation or notice provisions of Rule 144. Rule 701 also permits affiliates of our company to sell their Rule 701 shares under Rule 144 without complying with the holding period requirements of Rule 144. All holders of Rule 701 shares, however, are required to wait until 90 days after the date of this prospectus before selling those shares pursuant to Rule 701.

Directed share program

At our request, the underwriters have reserved up to % of the shares of common stock for sale at the initial public offering price to persons who are directors, officers or employees, or who are otherwise associated with us, through a directed share program. The sales will be made by through a directed share program. The number of shares of common stock available for sale to the general public will be reduced by the number of directed shares purchased by participants in the program. We do not know if these persons will choose to purchase all or any portion of these reserved shares, but any purchases they do make will reduce the number of shares available to the general public. These persons must commit to purchase by a.m. on the day following the date of this prospectus. Any reserved shares not so purchased will be offered by the underwriters to the general public on the same terms as the other shares. Except for certain of our officers and directors who have entered into lock-up agreements as contemplated under “Lock-up agreements” below , each person buying shares through the directed share program has agreed that, for a period of calendar days from the date of this prospectus, he or she will not, without the prior written consent of , offer, pledge, announce the intention to sell, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase or otherwise transfer or dispose of, directly or indirectly, any shares of our common stock or any securities convertible into our or exchangeable for our common stock, enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of our common stock, or make any demand for or exercise any right with respect to the registration of any shares or any security convertible into or exercisable or exchangeable for shares of common stock. For officers and directors purchasing shares of common stock through the directed share program, the lock-up agreements contemplated under “Lock-up agreements” below shall govern with respect to their purchases.

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Lock-up agreements

We, the selling stockholder and our executive officers and directors have agreed with the underwriters prior to the commencement of this offering that we and each of these persons or entities, with limited exceptions, for a period of 180 days after the date of this prospectus, may not, without the prior written consent of the representatives, among other things:

(1)

offer, pledge, announce the intention to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any shares of our common stock (including, without limitation, BDRs representing such shares, common stock or BDRs that may be deemed to be beneficially owned by such directors, executive officers, managers and members in accordance with the rules and regulations of the SEC and securities which may be issued upon exercise of a stock option or warrant), or

(2)

enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of our common stock, including BDRs representing such shares,

whether any such transaction described in bullet points (1) or (2) above is to be settled by delivery of common stock or such other securities, in cash or otherwise. The 180-day restricted period described above will be extended if during the last 17 days of the 180-day restricted period we issue an earnings release or material news or a material event relating to us occurs or if prior to the expiration of the 180-day restricted period, we announce that we will release earnings results during the 16-day period beginning on the last day of the 180-day period, in which case the restrictions described above will continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event, as applicable, unless the representatives waive, in writing, such extension.

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Certain material United States federal income and estate tax considerations for non-U.S. holders

The following is a general discussion of material U.S. federal income and estate tax considerations for a non-U.S. holder (as defined below) regarding the acquisition, ownership and disposition of shares of our common stock, including BDRs representing such shares, as of the date hereof. This discussion only applies to non-U.S. holders who purchase and hold our common stock or BDRs as a capital asset for U.S. federal income tax purposes (generally property held for investment). This discussion does not describe all of the tax consequences that may be relevant to a non-U.S. holder in light of its particular circumstances.

For purposes of this discussion, a “non-U.S. holder” is any beneficial owner of 5% or less of shares of our common stock, including any beneficial owner of BDRs representing 5% or less of such shares, that is not, for U.S. federal income tax purposes:

•

an individual who is a citizen or resident of the United States;

•

a corporation, or other entity treated as a corporation for U.S. federal income tax purposes, that is created or organized in or under the laws of the United States, any state thereof or the District of Columbia;

•

a partnership or other entity taxable as a partnership for U.S. federal income tax purposes;

•

an estate, the income of which is subject to U.S. federal income tax regardless of its source; or

•

a trust, if (1) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more United States persons have the authority to control all substantial decisions of the trust or (2) it has a valid election in effect under applicable Treasury regulations to be treated as a United States person.

This discussion is based upon provisions of the Internal Revenue Code of 1986, as amended, or the Code, and Treasury regulations, rulings and judicial decisions as of the date hereof. These authorities may change, perhaps retroactively, which could result in U.S. federal income and estate tax consequences different from those summarized below. This discussion does not address all aspects of U.S. federal income and estate taxes and does not describe any foreign, state, local or other tax considerations that may be relevant to non-U.S. holders in light of their particular circumstances. In addition, this discussion does not describe the U.S. federal income and estate tax consequences applicable to a non-U.S. holder who is subject to special treatment under U.S. federal income tax laws (including a United States expatriate, a “controlled foreign corporation,” a “passive foreign investment company,” a corporation that accumulates earnings to avoid U.S. federal income tax, a foreign tax-exempt organization, a financial institution, a broker or dealer in securities, an insurance company, a regulated investment company, a real estate investment trust, a person who holds our common stock or BDRs as part of a hedging or conversion transaction or as part of a short-sale or straddle, a former U.S. citizen or resident or a pass-through entity or an investor in a pass-through entity). We cannot assure you that a change in law will not significantly alter the tax considerations that we describe in this discussion.

If a partnership holds shares of our common stock,including BDRs representing such shares, the tax treatment of a partner will generally depend upon the status of the partner and the activities of the partnership. Any partner of a partnership holding shares of our common stock, including BDRs representing such shares, should consult its own tax advisors.

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You should consult your tax advisor in determining the tax consequences to you of purchasing, owning and disposing of our common stock or BDRs, including the application to your particular situation of the U.S. federal income and estate tax considerations discussed below, as well as the application of state, local, foreign or other tax laws.

Ownership of BDRs in general

For U.S. federal income tax purposes, if you are a holder of BDRs, you generally will be treated as the owner of our common stock represented by such BDRs.

Dividends

In general, any distributions we make to you with respect to your shares of common stock or your BDRs representing such shares that constitute dividends for U.S. federal income tax purposes will be subject to U.S. withholding tax at a rate of 30% of the gross amount, unless you are eligible for a reduced rate of withholding tax under an applicable income tax treaty and (a) you provide an Internal Revenue Service, or IRS, Form W-8BEN (or the appropriate successor form) to us or our paying agent certifying under penalty of perjury that you are not a United States person as defined under the Code and you are entitled to benefits under the treaty or (b) you satisfy the relevant certification requirements of applicable Treasury regulations, if our common stock or BDRs are held through certain foreign intermediaries. Special certification and other requirements apply to certain non-U.S. holders that are pass-through entities rather than corporations or individuals. A distribution will constitute a dividend for U.S. federal income tax purposes to the extent of our current or accumulated earnings and profits as determined under the U.S. federal income tax principles. Any distribution not constituting a dividend will be treated first as reducing your basis in your shares of common stock or your BDRs representing such shares and, to the extent it exceeds your basis, as capital gain.

Dividends we pay to you that are effectively connected with your conduct of a trade or business within the United States (and, if certain income tax treaties apply, are attributable to a U.S. permanent establishment maintained by you) generally will not be subject to U.S. withholding tax if you provide us or our paying agent with a duly completed and executed IRS Form W-8ECI, or successor form. Instead, such dividends generally will be subject to U.S. federal income tax, net of certain deductions, at the same graduated individual or corporate rates applicable to a United States person as defined under the Code. In addition, if you are a corporation, effectively connected income may also be subject to a “branch profits tax” at a rate of 30% (or such lower rate as may be specified by an applicable income tax treaty). A non-U.S. holder of shares of our common stock, including BDRs representing such shares, eligible for a reduced rate of U.S. withholding tax pursuant to an income tax treaty may obtain a refund of any excess amounts withheld by filing an appropriate claim for refund with the IRS.

Gain on sale or other disposition of common stock or BDRs

In general, a non-U.S. holder will not be subject to U.S. federal income tax on any gain realized upon the sale or other disposition of shares of our common stock, including BDRs representing such shares, unless:

•

the gain is effectively connected with a trade or business carried on by the non-U.S. holder within the United States and, if required by an applicable income tax treaty, the gain is attributable to a permanent establishment of the non-U.S. holder maintained in the United

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States, in which case a non-U.S. holder will be subject to U.S. federal income tax on any gain realized upon the sale or other disposition on a net income basis, in the same manner as if the non-U.S. holder were a resident of the United States (and, possibly, the non-U.S. holder will be subject to additional branch profits tax discussed above in the case of a non-U.S. holder that is a corporation);

•

the non-U.S. holder is an individual and is present in the United States for 183 days or more in the taxable year of disposition and certain other requirements are met, in which case a non-U.S. holder will be subject to a flat 30% tax on any gain realized upon the sale or other disposition, which tax may be offset by U.S. source capital losses (even though the individual is not considered a resident of the United States); or

•

the non-U.S. holder owns more than 5% of shares of our common stock, including BDRs representing such shares, and we are or have been a United States real property holding corporation for U.S. federal income tax purposes at any time within the shorter of the five-year period preceding the disposition and the non-U.S. holder’s holding period.

Federal estate taxes

Common stock or BDRs owned or treated as owned by an individual who is not a citizen or resident (as defined for U.S. federal estate tax purposes) of the United States at the time of his or her death will be included in the individual’s gross estate for U.S. federal estate tax purposes, and therefore may be subject to U.S. federal estate tax, unless an applicable tax treaty provides otherwise.

Backup withholding, information reporting and other reporting requirements

Generally, we must report annually to the IRS, and to each non-U.S holder, the amount of dividends paid to such non-U.S. holder, the name and address of the recipient, and the amount, if any, of tax withheld with respect to such dividends, regardless of whether withholding was required. Copies of these information returns may also be made available to the tax authorities in the country in which the non-U.S. holder resides under the provisions of an applicable tax treaty. A non-U.S. holder may have to comply with certification procedures to establish that the holder is not a United States person as defined under the Code in order to avoid additional information reporting and backup withholding tax requirements, which may apply to dividends that we pay and the proceeds of a sale of our common stock or BDRs within the United States or conducted through certain U.S.-related financial intermediaries. The certification procedures required to claim a reduced rate of withholding under a treaty will satisfy the certification requirements necessary to avoid the backup withholding tax as well.

Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against a non-U.S. holder’s U.S. federal income tax liability, provided the required information is furnished to the IRS.

The foregoing discussion of certain material U.S. federal income and estate tax considerations is for general information only and is not tax advice. Accordingly, each prospective non-U.S. holder of shares of our common stock, including BDRs representing such shares, should consult his, her or its own tax advisor with respect to the federal, state, local and foreign tax consequences of the acquisition, ownership and disposition of common stock or BDRs.

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Underwriting

We and the selling stockholder are offering shares of common stock through a number of international underwriters. J.P. Morgan Securities Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated are acting as the representatives of the international underwriters and as joint bookrunners for the international offering. We and the selling stockholder have entered into an international underwriting agreement with the international underwriters. Subject to the terms and conditions of the international underwriting agreement, we and the selling stockholder have agreed to sell to the international underwriters, and each international underwriter has agreed to purchase, at the public offering price less the underwriting discount set forth on the cover page of this prospectus, the number of shares of our common stock listed next to its name in the following table.


Name		Number of shares


J.P. Morgan Securities Inc.
Merrill Lynch, Pierce, Fenner & Smith Incorporated


Total

The international underwriters are committed to purchase all the common stock offered by us and the selling stockholder if they purchase any shares of common stock (other than those shares of common stock covered by their option to purchase additional shares as described below). The international underwriting agreement also provides that if an international underwriter defaults, the purchase commitments of non-defaulting international underwriters may also be increased or the international offering may be terminated. The international underwriting agreement also provides that the obligations of the international underwriters are subject to certain conditions precedent, including the absence of any material adverse change in our business and the receipt of certain certificates, opinions and letters from us, our counsel and our independent auditors.

We and the selling stockholder have entered into a Brazilian underwriting agreement with a syndicate of Brazilian underwriters providing for the concurrent offering in Brazil of shares of our common stock in the form of BDRs.

The closing of the Brazilian offering will be conditioned on the closing of the international offering.

The international and Brazilian underwriters have entered into an intersyndicate agreement which governs specified matters relating to the global offering. Under this agreement, each international underwriter has agreed that, as part of its distribution of our common stock and subject to permitted exceptions, it has not offered or sold, and will not offer or sell, directly or indirectly, any share of common stock or distribute any prospectus relating to our common stock to any person in Brazil or to any other dealer which does not so agree. Each Brazilian underwriter similarly has agreed that, as part of its distribution of our common stock in the form of BDRs and subject to permitted exceptions, it has not offered or sold, and will not offer to sell, directly or indirectly, any shares of common stock, whether or not in the form of BDRs, or distribute any prospectus relating to our common stock to any person outside Brazil or to any other dealer which does not so agree. These limitations do not apply to stabilization transactions or to transactions between the Brazilian and international underwriters, which have agreed that they may sell common stock or BDRs, as the case may be, between their respective underwriting

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syndicates. The number of common stock or BDRs, as the case may be, actually allocated to each offering may differ from the amount offered due to reallocation between the international and Brazilian offerings.

The international underwriters propose to offer the shares of common stock directly to the public at the initial public offering price set forth on the cover page of this prospectus and to certain dealers at that price less a concession not in excess of $ per share. Any such dealers may resell shares to certain other brokers or dealers at a discount of up to $ per share from the initial public offering price. After the initial public offering of the shares of common stock, the international underwriters may change the offering price and other selling terms. The representatives have advised us that the international underwriters do not intend to confirm discretionary sales in excess of 5% of the common stock offered in the offering.

The international underwriters have an option to buy up to additional shares of common stock from us to cover sales of shares by the international underwriters which exceed the number of shares specified in the table above. The international underwriters have 30 days from the date of this prospectus to exercise this over-allotment option. If any additional shares of common stock are purchased, the international underwriters will offer the additional shares on the same terms as those on which the shares are being offered.

The underwriting fee is equal to the public offering price per share of common stock less the amount paid by the international underwriters to us and the selling stockholder per share of common stock. The underwriting fee in connection with the international offering is $ per share. The following table shows the per share and total underwriting discount to be paid to the international underwriters by us and the selling stockholder assuming both no exercise and full exercise of the international underwriters’ option to purchase additional shares.

Underwriting discount:


	Paid by us		Paid by the selling stockholder
	Without over- allotment exercise	With full over- allotment exercise	Without over- allotment exercise	With full over- allotment exercise


Per share	$	$	$	$
Total	$	$	$	$

We estimate that the total expenses of the international offering, including registration, filing and listing fees, printing fees and legal and accounting expenses, but excluding the underwriting discount, will be approximately $ , which includes expenses of $ incurred by the international underwriters that we have agreed to reimburse.

The international offering of our shares of common stock is made for delivery when and if accepted by the international underwriters and subject to prior sale and to withdrawal, cancellation or modification of this offering without notice. The international underwriters reserve the right to reject an order for the purchase of shares in whole or part.

A prospectus in electronic format may be made available on the websites maintained by one or more international underwriters, or selling group members, if any, participating in the offering. The international underwriters may agree to allocate a number of shares to selling group

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members for sale to their online brokerage account holders. Internet distributions will be allocated by the representatives to international underwriters and selling group members that may make Internet distributions on the same basis as other allocations. In addition, the international underwriters may sell shares to securities dealers who resell shares to online brokerage account holders. The information on any such website is not part of this prospectus.

(1)

(2)

enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of our common stock, including BDRs representing such shares,

The representatives have no current intent or arrangement to release any of the shares subject to the lock-up agreements prior to the expiration of the 180-day lock-up period. There is no contractually specified condition for the waiver of lock-up restrictions, and any waiver is at the discretion of the representatives.

There are no specific criteria for the waiver of lock-up restrictions, and the representatives cannot in advance determine the circumstances under which a waiver might be granted. Any waiver will depend on the facts and circumstances existing at the time. Among the factors that the representatives may consider in deciding whether to release shares may include the length of time before the lock-up expires, the number of shares involved, the reason for the requested release, market conditions, the trading price of our common stock or the BDRs, historical trading volumes of our common stock or the BDRs, and whether the person seeking the release is an officer, director or affiliate of our company. The representatives will not consider their own positions in our securities, if any, in determining whether to consent to a waiver of a lock-up agreement.

We and the selling stockholder have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act.

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We expect to apply to have our common stock approved for listing on The New York Stock Exchange under the symbol “JBS.” We also expect to apply to list the BDRs on the São Paulo Stock Exchange under the symbol “ .”

In connection with the offering, the international underwriters may engage in stabilizing transactions, which involves making bids for, purchasing and selling shares of common stock in the open market for the purpose of preventing or retarding a decline in the market price of the common stock while the offering is in progress. These stabilizing transactions may include making short sales of the common stock, which involve the sale by the international underwriters of a greater number of shares of common stock than they are required to purchase in the offering, and purchasing shares of common stock on the open market to cover positions created by short sales. Short sales may be “covered” shorts, which are short positions in an amount not greater than the international underwriters’ over-allotment option referred to above, or may be “naked” shorts, which are short positions in excess of that amount. The international underwriters may close out any covered short position either by exercising their over-allotment option, in whole or in part, or by purchasing shares in the open market. In making this determination, the international underwriters will consider, among other things, the price of shares available for purchase in the open market compared to the price at which the international underwriters may purchase shares through the over-allotment option. A naked short position is more likely to be created if the international underwriters are concerned that there may be downward pressure on the price of the common stock in the open market that could adversely affect investors who purchase in the international offering. To the extent that the international underwriters create a naked short position, they will purchase shares in the open market to cover the position.

The international underwriters have advised us that, pursuant to Regulation M under the Exchange Act, they may also engage in other activities that stabilize, maintain or otherwise affect the price of the common stock, including the imposition of penalty bids. This means that if the representatives of the international underwriters purchase common stock in the open market in stabilizing transactions or to cover short sales, the representatives can require the international underwriters that sold those shares as part of the offering to repay the underwriting discount received by them.

These activities may have the effect of raising or maintaining the market price of the common stock or preventing or retarding a decline in the market price of the common stock, and, as a result, the price of the common stock may be higher than the price that otherwise might exist in the open market. If the international underwriters commence these activities, they may discontinue them at any time. The international underwriters may carry out these transactions on The New York Stock Exchange, in the over-the-counter market or otherwise.

In connection with the Brazilian offering, , acting through its brokerage house , on behalf of the Brazilian underwriters, may engage in transactions on the São Paulo Stock Exchange that stabilize, maintain or otherwise affect the price of the BDRs. In addition, it may bid for, and purchase, BDRs in the open market to cover syndicate short positions or stabilize the price of the BDRs. These stabilizing transactions may have the effect of raising or maintaining the market price of our common stock, whether or not in the form of BDRs, or preventing or retarding a decline in the market price of our common stock. As a result, the price of our common stock may be higher than the price that might otherwise exist in the absence of these transactions. These transactions, if commenced, may be discontinued at any time. Reports on stabilization activity are required to be furnished to the CVM. Stabilization activities may be

157

carried out for up to 30 days from the day after the date of this prospectus. A stabilization activities agreement, in a form approved by the CVM, has been executed simultaneously with the execution of the Brazilian underwriting agreement.

At our request, the underwriters have reserved for sale as part of the international offering, at the initial offering price, up to shares, or approximately of the total number of shares offered in this prospectus, for our employees and directors, selected business associates and certain related persons. If purchased by these persons, these shares will be subject to a -day lock-up restriction. The number of shares of common stock available for sale to the general public will be reduced to the extent such persons purchase such reserved shares. Any reserved shares which are not so purchased will be offered by the underwriters to the general public on the same basis as the other shares offered in this prospectus.

Prior to the global offering, there has been no public market for our common stock. The initial public offering price will be determined by negotiations between us and the underwriters. In determining the initial public offering price of the common stock, we and the underwriters considered a number of factors including:

•

the information set forth in this prospectus and otherwise available to the underwriters;

•

our prospects and the history and prospects for the industry in which we compete;

•

an assessment of our management;

•

our prospects for future earnings;

•

the general condition of the securities markets, and the initial public offering market in particular, at the time of the global offering;

•

the recent market prices of, and demand for, publicly traded common stock of generally comparable companies; and

•

other factors deemed relevant by the underwriters, the selling stockholder and us.

Neither we, the selling stockholder nor the underwriters can assure investors that an active trading market will develop for our common stock, or that the shares will trade in the public market at or above the initial public offering price.

In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a “Relevant Member State”), with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the “Relevant Implementation Date”), no offer of shares of our common stock to the public in that Relevant Member State may be made prior to the publication of a prospectus in relation to our common stock which has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, all in accordance with the Prospectus Directive, except that, with effect from and including the Relevant Implementation Date, an offer of our common stock may be made to the public in that Relevant Member State at any time:

•

to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities;

158

•

to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than €43,000,000 and (3) an annual net turnover of more than €50,000,000, as shown in its last annual or consolidated accounts; or

•

in any other circumstances which do not require the publication by the issuer of a prospectus pursuant to Article 3 of the Prospectus Directive.

Each purchaser of shares of common stock described in this prospectus located within a relevant member state will be deemed to have represented, acknowledged and agreed that it is a “qualified investor” within the meaning of Article 2(1)(e) of the Prospectus Directive.

For the purposes of this provision, the expression an “offer of shares to the public” in relation to any common stock in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the shares of common stock to be offered so as to enable an investor to decide to purchase or subscribe the shares of common stock, as the same may be varied in that Relevant Member State by any measure implementing the Prospectus Directive in that Relevant Member State, and the expression “Prospectus Directive” means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State.

This prospectus is only being distributed to, and is only directed at, persons in the United Kingdom that are qualified investors within the meaning of Article 2(1)(e) of the Prospectus Directive (“Qualified Investors”) that are also (i) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”) or (ii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as “relevant persons”). This prospectus and its contents are confidential and should not be distributed, published or reproduced (in whole or in part) or disclosed by recipients to any other persons in the United Kingdom. Any person in the United Kingdom that is not a relevant person should not act or rely on this document or any of its contents.

Notice to prospective investors In Switzerland

This document, as well as any other material relating to the common stock offered in the offering, do not constitute an issue prospectus pursuant to Article 652a of the Swiss Code of Obligations. The common stock will not be listed on the SWX Swiss Exchange and, therefore, the documents relating to the sale, including, but not limited to, this document, do not claim to comply with the disclosure standards of the listing rules of SWX Swiss Exchange and corresponding prospectus schemes annexed to the listing rules of the SWX Swiss Exchange.

Our shares are being offered in Switzerland by way of a private placement, i.e., to a small number of selected investors only, without any public offer and only to investors who do not purchase our shares with the intention to distribute them to the public. The investors will be individually approached by us from time to time.

This document, as well as any other material relating to the common stock offered in the global offering, are personal and confidential and do not constitute an offer to any other person. This document may only be used by those investors to whom it has been handed out in connection with the global offering described herein and may neither directly nor indirectly be distributed or made available to other persons without express consent of us. It may not be used in

159

connection with any other offer and shall in particular not be copied and/or distributed to the public in (or from) Switzerland.

Notice to prospective investors in the Dubai International Financial Centre

This document relates to an exempt offer in accordance with the Offered Securities Rules of the Dubai Financial Services Authority. This document is intended for distribution only to persons of a type specified in those rules. It must not be delivered to, or relied on by, any other person. The Dubai Financial Services Authority has no responsibility for reviewing or verifying any documents in connection with exempt offers. The Dubai Financial Services Authority has not approved this document nor taken steps to verify the information set out in it, and has no responsibility for it. The shares of common stock which are the subject of the global offering contemplated by this prospectus may be illiquid and/or subject to restrictions on their resale. Prospective purchasers of the common stock offered in the global offering should conduct their own due diligence on the shares. If you do not understand the contents of this document you should consult an authorized financial adviser.

Relationships with the underwriters

The international underwriters and their affiliates have provided in the past to us and our affiliates, including the selling stockholder, and may provide from time to time in the future certain commercial banking, financial advisory, investment banking and other services for us and such affiliates in the ordinary course of their business, for which they have received and may continue to receive customary fees and commissions. Affiliates of J.P. Morgan Securities Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated are lenders under our senior secured revolving credit facility. In addition, J.P. Morgan Securities Inc. and an affiliate of Merrill Lynch, Pierce, Fenner & Smith Incorporated were initial purchasers of the 11.625% senior unsecured notes due 2014 that were issued in April 2009 by our wholly owned subsidiaries JBS USA, LLC and JBS Finance, Inc., and J.P. Morgan Securities Inc. was an initial purchaser of JBS S.A.’s 10.5% senior notes due 2016.

In addition, from time to time, the international underwriters and their affiliates may effect transactions for their own account or the account of customers, and hold on behalf of themselves or its customers, long or short positions in our debt or equity securities or loans, and may do so in the future.

160

Legal matters

The validity of the shares of common stock offered hereby and certain other matters of United States law will be passed upon for us by White & Case LLP. Certain matters of United States law in connection with this offering will be passed upon for the underwriters by Simpson Thacher & Bartlett LLP. Certain matters of Brazilian law in connection with this offering will be passed upon for us by Pinheiro Neto Advogados. Certain matters of Brazilian law in connection with this offering will be passed upon for the underwriters by Mattos Filho, Veiga Filho, Marrey Jr. e Quiroga Advogados.

Experts

Our consolidated financial statements as of and for the year ended December 28, 2008, have been audited by BDO Seidman, LLP, as stated in their report included elsewhere in this prospectus and have been so included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.

The consolidated financial statements as of and for (1) the 173 days from July 11, 2007 through December 30, 2007, (2) the 198 days from December 25, 2006 through July 10, 2007, and (3) the year ended December 24, 2006, included in this prospectus and elsewhere in the registration statement have been so included in reliance upon the report of Grant Thornton LLP, independent registered public accountants, upon the authority of said firm as experts in giving said reports.

The consolidated financial statements of JBS Packerland Inc. (formerly known as Smithfield Beef Group, Inc.) as of and for the year ended April 27, 2008, appearing in this prospectus and in the registration statement, have been audited by Ernst & Young LLP, independent registered public accounting firm, as set forth in their report thereon appearing elsewhere herein and are included in reliance upon such report given on the authority of said firm as experts in accounting and auditing.

The financial statements of Five Rivers Ranch Cattle Feeding LLC as of and for the year ended March 31, 2008, included in this prospectus have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report appearing elsewhere in this prospectus. Such financial statements are included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.

Our condensed consolidated financial statements as of and for the fiscal quarter ended March 29, 2009 have been reviewed by BDO Seidman, LLP as stated in their report included elsewhere in this prospectus. This report is not considered a “report” or “part” of the prospectus within the meaning of Sections 7 and 11 of the Securities Act of 1933, and Section 11 liability under that Act does not extend to such report.

161

Where you can find more information

We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the shares of common stock we are offering. The registration statement, including the attached exhibits and schedule, contains additional relevant information about us and our common stock. This prospectus does not contain all of the information set forth in the registration statement and the exhibits and schedule thereto. The rules and regulations of the SEC allow us to omit from this prospectus certain information included in the registration statement. When we complete this offering, we will be required to file annual, quarterly and special reports, proxy statements and other information with the SEC.

For further information about us and our common stock, you may inspect a copy of the registration statement and the exhibits and schedule to the registration statement without charge at the offices of the SEC at 100 F Street, N.E., Washington, D.C. 20549. You may obtain copies of all or any part of the registration statement from the Public Reference Section of the SEC, 100 F Street, N.E., Washington, D.C. 20549 upon the payment of the prescribed fees. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains a website at www.sec.gov that contains reports, proxy and information statements and other information regarding registrants like us that file electronically with the SEC. You can also inspect our registration statement on this website.

162

Index to consolidated financial statements


JBS USA Holdings, Inc.

Letter of BDO Seidman, LLP regarding unaudited interim financial information		F-3
Condensed Consolidated Balance Sheets as of December 28, 2008 and March 29, 2009		F-4
Condensed Consolidated Statements of Operations for the Thirteen weeks ended March 30, 2008 and March 29, 2009		F-5
Condensed Consolidated Statements of Cash Flows for the Thirteen weeks ended March 30, 2008 and March 29, 2009		F-6
Condensed Consolidated Statements of Stockholder’s Equity for the Thirteen weeks ended March 30, 2008 and March 29, 2009		F-7
Notes to Condensed Consolidated Financial Statements		F-8

JBS USA Holdings, Inc.
Report of Independent Registered Public Accounting Firm		F-51
Consolidated Balance Sheet as of December 28, 2008		F-52
Consolidated Statement of Operations for the Fifty-two weeks ended December 28, 2008		F-53
Consolidated Statement of Cash Flows for the Fifty-two weeks ended December 28, 2008		F-54
Consolidated Statement of Stockholder’s Equity for the Fifty-two weeks ended December 28, 2008		F-55
Notes to Consolidated Financial Statements		F-56

JBS USA Holdings, Inc.
Report of Independent Certified Public Accountants		F-95
Consolidated Balance Sheets as of December 24, 2006, July 10, 2007 and December 30, 2007		F-96
Consolidated Statements of Operations for the Fiscal Year ended December 24, 2006, the 198 Days ended July 10, 2007 and the 173 Days ended December 30, 2007		F-97
Consolidated Statements of Cash Flows for the Fiscal Year ended December 24, 2006, the 198 Days ended July 10, 2007 and the 173 Days ended December 30, 2007		F-98
Consolidated Statements of Stockholder’s Equity for the Fiscal Year ended December 24, 2006, the 198 Days ended July 10, 2007 and the 173 Days ended December 30, 2007		F-99
Notes to Consolidated Financial Statements		F-100

JBS Packerland, Inc. (formerly known as Smithfield Beef Group, Inc.)
Report of Independent Registered Public Accounting Firm		F-143
Consolidated Balance Sheet as of April 27, 2008		F-144
Consolidated Statement of Operations for the Year ended April 27, 2008		F-145
Consolidated Statement of Changes in Stockholder’s Equity for the Year ended April 27, 2008		F-146
Consolidated Statement of Cash Flows for the Year ended April 27, 2008		F-147
Notes to Consolidated Financial Statements		F-148

Five Rivers Ranch Cattle Feeding LLC
Report of Independent Registered Public Accounting Firm		F-163
Balance Sheet as of March 31, 2008		F-164
Statement of Operations for the Year ended March 31, 2008		F-165

F-1


Statement of Member’s Equity and Comprehensive Income (Loss) for the Year ended March 31, 2008		F-166
Statement of Cash Flows for the Year ended March 31, 2008		F-167
Notes to Financial Statements		F-168

JBS Packerland, Inc. (formerly known as Smithfield Beef Group, Inc.)
Condensed Consolidated Balance Sheet as of July 27, 2008		F-178
Condensed Consolidated Statements of Operations for the Quarters ended July 27, 2008 and July 29, 2007		F-179
Condensed Consolidated Statements of Cash Flows for the Quarters ended July 27, 2008 and July 29, 2007		F-180
Notes to Condensed Consolidated Financial Statements		F-181

JBS Five Rivers Cattle Feeding LLC (formerly known as Five Rivers Ranch Cattle Feeding LLC)
Balance Sheets as of September 30, 2008 and March 31, 2008		F-188
Statements of Operations for the Six months ended September 30, 2008 and September 30, 2007		F-189
Statements of Members’ Equity for the Six months ended September 30, 2008 and September 30, 2007		F-190
Statements of Cash Flows for the Six months ended September 30, 2008 and September 30, 2007		F-191
Notes to Consolidated Financial Statements		F-192

F-2

LOGO

700 North Pearl, Suite 2000

Dallas, Texas 75201

Telephone: 214-969-7007

Fax: 214-953-0722

Accountants’ review report

Board of Directors

JBS USA Holdings, Inc.

1770 Promontory Circle

Greeley, CO 80634

We have reviewed the accompanying condensed consolidated balance sheet of JBS USA Holdings, Inc. and subsidiaries as of March 29, 2009, and the related condensed consolidated statements of operations, stockholder’s equity, and cash flows for the thirteen week period then ended, in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. All information included in these financial statements is the representation of the management of JBS USA Holdings, Inc.

A review consists principally of inquiries of company personnel and analytical procedures applied to financial data. It is substantially less in scope than an audit in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in conformity with generally accepted accounting principles.

The 2008 financial statements of JBS USA Holdings, Inc. (Formerly JBS USA, Inc. and formerly known as Swift Foods Company) were reviewed by other accountants whose report dated May 1, 2008, stated that they were not aware of any material modifications that should be made to those statements in order for them to be in conformity with generally accepted accounting principles.

LOGO

July 21, 2009

F-3

JBS USA HOLDINGS, INC.

An indirect subsidiary of JBS S.A.

Condensed consolidated balance sheets

(dollars in thousands, except per share data)


	December 28, 2008		(Unaudited) March 29, 2009

Assets
Current assets:
Cash and cash equivalents	$ 254,785		$ 156,737
Accounts receivable, net of allowance for doubtful accounts of $4,142 and $3,291, respectively	588,985		514,160
Inventories, net	649,000		650,026
Deferred income taxes, net	5,405		5,125
Other current assets	85,521		72,430

Total current assets	1,583,696		1,398,478

Property, plant, and equipment, net	1,229,316		1,241,055
Goodwill	147,855		149,093
Other intangibles, net	304,967		299,097
Note receivable	1,630		172,771
Deferred income taxes, net	15,500		15,745
Other assets	32,607		32,576

Total assets	$3,315,571		$3,308,815

Liabilities and stockholder’s equity
Current liabilities:
Short-term debt	$ 67,012		$ 71,428
Current portion of long-term debt	4,499		4,103
Current portion of deferred revenue	38,219		23,712
Accounts payable	192,697		152,615
Book overdraft	160,532		120,932
Deferred income taxes, net	8,587		8,723
Accrued liabilities	283,069		271,256

Total current liabilities	754,615		652,769

Long-term debt, excluding current portion	806,808		901,517
Deferred revenue	163,064		158,723
Deferred income taxes, net	150,670		150,774
Other non-current liabilities	52,164		50,093

Total liabilities	1,927,321		1,913,876
Commitments and contingencies

Stockholder’s equity:
Common stock: par value $.01 per share, 500,000,000 authorized, 100 shares issued and outstanding	—		—
Additional paid-in capital	1,400,159		1,400,159
Retained earnings	49,512		51,764
Accumulated other comprehensive loss	(61,421	)	(56,984	)

Total stockholder’s equity	1,388,250		1,394,939

Total liabilities and stockholder’s equity	$3,315,571		$3,308,815

The accompanying notes are an integral part of this condensed consolidated financial statement.

F-4

JBS USA Holdings, Inc.

An Indirect Subsidiary of JBS S.A.

Condensed consolidated statements of operations

(dollars in thousands, except per share data)


	(Unaudited) Thirteen weeks ended
	March 30, 2008		March 29, 2009

Gross sales	$ 2,478,734		$ 3,211,555
Less deductions from sales	(17,077	)	(15,216	)

Net sales	2,461,657		3,196,339
Cost of goods sold	2,451,413		3,123,358

Gross profit	10,244		72,981
Selling, general, and administrative expenses	31,042		61,598
Foreign currency transaction gains	(12,614	)	(5,075	)
Other income, net	(3,782	)	(1,475	)
Loss on sales of property, plant, and equipment	19		180
Interest expense, net	8,108		14,592

Income (loss) before income tax expense	(12,529	)	3,161
Income tax expense	5,613		909

Net income (loss)	$ (18,142	)	$ 2,252


Income per common share:
Basic	$ (181,420.00)		$ 22,520.00
Diluted	$ (181,420.00)		$ 22,520.00

Weighted average shares:
Basic	100		100
Diluted	100		100

The accompanying notes are an integral part of this condensed consolidated financial statement.

F-5

JBS USA Holdings, Inc.

An Indirect Subsidiary of JBS S.A.

Condensed consolidated statements of cash flows

(dollars in thousands)


	(Unaudited) Thirteen weeks ended
	March 30, 2008		March 29, 2009


Cash flows from operating activities:
Net income (loss)	$ (18,142)		$ 2,252
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation	16,472		27,407
Amortization of intangibles	2,667		5,945
Amortization of debt issuance costs	606		1,123
Loss on sale of property, plant, and equipment	233		180
Deferred income taxes	175		104
Foreign currency transaction gains	(11,869	)	(3,311	)
Change in operating assets and liabilities:
Restricted cash	30,566		—
Accounts receivable, net	(12,767	)	64,815
Inventories	(67,030	)	2,696
Other current assets	(7,198	)	3,467
Accounts payable and accrued liabilities	(62,632	)	(39,845	)
Noncurrent assets	8		(9,975	)
Noncurrent liabilities	—		(3,855	)

Net cash flows provided by (used in) operating activities	(128,911	)	51,003


Cash flows from investing activities:
Purchases of property, plant, and equipment	(11,676	)	(35,189	)
Proceeds from sales of property, plant, and equipment	40		15
Investment in bonds	(4,900	)	—
Proceeds from sale of nonoperating real property	1,160		—
Notes receivable and other	—		(171,266	)

Net cash flows used in investing activities	(15,376	)	(206,440	)


Cash flows from financing activities:
Net borrowings of revolver	—		96,806
Payments of short-term debt	(416,980	)	(334	)
Payments of long-term debt and capital lease obligations	(368	)	(1,182	)
Change in overdraft balances	(10,517	)	(39,601	)
Investment from parent	450,000		—

Net cash flows provided by financing activities	22,135		55,689

Effect of exchange rate changes on cash	634		1,700

Net change in cash and cash equivalents	(121,518	)	(98,048	)
Cash and cash equivalents, beginning of period	198,883		254,785

Cash and cash equivalents, end of period	$ 77,365		$ 156,737


Non-cash investing and financing activities:
Construction in progress under deemed capital lease	$ 8,178		$ 135


Supplemental information:
Cash paid for interest	$ 24,173		$ 2,393

Cash paid for income taxes	$ 385		$ 3,309

The accompanying notes are an integral part of this condensed consolidated financial statement.

F-6

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Condensed consolidated statements of stockholder’s equity

(dollars in thousands)

(Unaudited)

For the thirteen weeks ended March 30, 2008 and March 29, 2009


	Common stock issued/ outstanding	Common stock	Additional paid-in capital	Retained earnings (accumulated deficit)		Accumulated other comprehensive income/(loss)	Total stockholder’s equity


Balance at December, 30, 2007	100	$—	$ 950,159	$(111,592	)	$ 251	$ 838,818
Capital contributions	—	—	450,000	—		—	450,000

Comprehensive income (loss):
Net income	—	—	—	(18,142)		—	(18,142)
Derivative financial instrument adjustment, net of tax of $143	—	—	—	—		446	446
Foreign currency translation adjustment	—	—	—	—		9,953	9,953

Total comprehensive loss							(7,743)

Balance at March 30, 2008	100	$—	$1,400,159	$(129,734	)	$10,650	$1,281,075


	Common stock issued/ outstanding	Common stock	Additional paid-in capital	Retained earnings (accumulated deficit)	Accumulated other comprehensive income/(loss)		Total stockholder’s equity


Balance at December, 28, 2008	100	$—	$1,400,159	$49,512	$(61,421	)	$1,388,250

Comprehensive income (loss):
Net income	—	—	—	2,252	—		2,252
Derivative financial instrument adjustment, net of tax of $280	—	—	—	—	457		457
Foreign currency translation adjustment	—	—	—	—	3,980		3,980

Total comprehensive income							6,689

Balance at March 29, 2009	100	$—	$1,400,159	$51,764	$(56,984	)	$1,394,939

The accompanying notes are an integral part of this condensed consolidated financial statement.

F-7

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to condensed consolidated financial statements

Note 1. Description of business

JBS USA Holdings, Inc. (“JBS USA Holdings” or the “Company”), formerly known as JBS USA, Inc. is a Delaware corporation. The operations of the Company and its subsidiaries constitute the operations of JBS USA Holdings as reported under accounting principles generally accepted in the United States of America (“GAAP”). JBS USA Holdings, Inc. is an indirect subsidiary of JBS S.A., a Brazilian company (“JBS”). The accompanying interim consolidated financial statements have not been audited by independent certified public accountant but in the opinion of management, reflect all normal and recurring adjustments considered necessary for a fair presentation of the financial position and results of operations. The results of operations for thirteen weeks ended March 29, 2009 are not necessarily indicative of results to be expected for the full year.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information. In addition, the Company’s condensed consolidated financial statements and footnotes contained herein do not include all of the information and footnotes required by GAAP to be considered “complete financial statements”. Therefore, these unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements of the Company as of and for the fifty-two weeks ended December 28, 2008.

JBS USA Holdings processes, prepares, packages, and delivers fresh, further processed and value-added beef, pork and lamb products for sale to customers in the United States and international markets. JBS USA Holdings sells its meat products to customers in the foodservice, international, further processor, and retail distribution channels. The Company also produces and sells by-products that are derived from its meat processing operations, such as hides and variety meats, to customers in various industries.

JBS USA Holdings conducts its domestic beef and pork processing businesses through its wholly owned subsidiaries Swift Beef Company (“Swift Beef”), Swift Pork Company (“Swift Pork”) and JBS Packerland (“JBS Packerland”), formerly known as Smithfield Beef Group and its Australian beef business through Swift Australia Pty. Ltd. (“Swift Australia”). We have two reportable segments comprised of Beef and Pork which, for the thirteen weeks ended March 30, 2008, represented approximately 78.5% and 21.5% of net sales and for the thirteen weeks ended March 29, 2009, represented approximately 83.6% and 16.4% of net sales, respectively. The Company operates eight beef processing facilities, three pork processing facilities, one lamb slaughter facility, one value-added facility, and eleven feedlots in the United States and ten processing facilities and five feedlots in Australia. Three of the processing facilities in Australia process lamb, mutton and veal along with beef and a fourth processes only lamb, mutton and veal.

F-8

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to condensed consolidated financial statements

The aggregate purchase price for the Acquisition was $1,470.6 million (including approximately $48.5 million of transaction costs). The Company also refinanced its debt, the debt of its subsidiaries, and the outstanding debt assumed in the Acquisition which collectively were paid off using proceeds from $750 million of various debt instruments (see Note 7) and additional equity contributions from JBS. As a result of the Acquisition, the consolidated financial statements of JBS USA Holdings provided herein reflect the acquisition being accounted for as a purchase in accordance with Statement of Financial Accounting Standard (“SFAS”) No. 141, Business Combinations (“SFAS No. 141”) and push down accounting was applied in accordance with the guidance in Staff Accounting Bulletin (“SAB”) No. 54 to the consolidated financial statements.

Note 2. Acquisition of Tasman Group

On March 4, 2008, JBS Southern Australia Pty. Ltd (“JBS Southern”), an indirect subsidiary of JBS USA Holdings entered into an agreement with Tasman Group Services, Pty. Ltd. (“Tasman Group”) to purchase substantially all of the assets of Tasman Group in an all cash transaction (“Tasman Acquisition”) and the purchase was completed on May 2, 2008. The assets acquired include six processing facilities and one feedlot located in Southern Australia. This acquisition provides additional capacity to continue to meet customer demand. The aggregate purchase price for the Tasman Acquisition was $117.3 million (including approximately $8.6 million of transaction costs), as shown below. JBS Southern also assumed approximately $52.1 million of outstanding debt (see Note 7). The consolidated financial statements of the Company provided herein reflect the Tasman Acquisition being accounted for as a purchase in accordance with SFAS No. 141. The results of the Tasman Group are included in the Company’s statement of operations from the date of acquisition.

The purchase price allocation is preliminary pending completion of independent valuations of assets and liabilities acquired in the area of identified intangibles and certain liabilities including, but not limited to deferred taxes. As such, the allocation of purchase price presented below is preliminary and subject to change. The allocation presented below reflects the estimated fair value of the individual assets and liabilities as of May 2, 2008 (in thousands).


Purchase price paid to previous shareholders	$ 108,786
Fees and direct expenses	8,555

Total purchase price	$117,341


Purchase price allocation:
Current assets and liabilities	$ (27,942	)
Property, plant, and equipment	157,396
Deferred tax liability	(3,539	)
Goodwill	—
Other noncurrent assets and liabilities, net	(8,574	)

Total purchase price allocation	$117,341

F-9

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to condensed consolidated financial statements

Note 3. Acquisition of Smithfield Beef Group & Five Rivers Cattle Feeding

On March 4, 2008, JBS and Smithfield Foods, Inc (“Smithfield Foods”) entered into a Stock Purchase Agreement (“Smithfield Agreement”). Pursuant to the Smithfield Agreement, JBS executed through the Company the acquisition of Smithfield Beef Group, Inc. (“Smithfield Beef”) for $563.2 million in cash (including $26.1 million of transaction related costs) and contributed its ownership in Smithfield Beef to the Company (Smithfield Acquisition). The purchase included 100% of Five Rivers Ranch Cattle Feeding LLC (“Five Rivers”), which was held by Smithfield Beef in a 50/50 joint venture with Continental Grain Company (“CGC,” formerly ContiGroup Companies, Inc.). On October 23, 2008, the acquisition of Smithfield Beef was completed. In conjunction with the closing of this purchase Smithfield Beef was renamed JBS Packerland and Five Rivers was renamed JBS Five Rivers Cattle Feeding LLC (“JBS Five Rivers”). The assets acquired include four processing plants and eleven feedlots. This acquisition provides additional capacity to continue to meet customer demand.

The purchase excluded substantially all live cattle inventories held by Smithfield Beef and Five Rivers as of the closing date, together with the associated debt. The excluded live cattle were raised by JBS Five Rivers after closing for a negotiated fee.

The consolidated financial statements of the Company reflect the acquisition being accounted for as a purchase in accordance with SFAS No. 141. The acquired goodwill is treated as non-deductible for tax purposes. The results of JBS Packerland and JBS Five Rivers are included in the Company’s statement of operations from the date of acquisition.

The purchase price allocation is preliminary pending completion of independent valuations of assets and liabilities acquired including, but not limited to deferred taxes. As such, the allocation of purchase price presented below is preliminary and subject to change. The allocation presented below reflects the estimated fair value of the individual assets and liabilities as of October 23, 2008 (in thousands).


Purchase price paid to previous shareholders	$ 537,068
Fees and direct expenses	26,134

Total purchase price	$563,202


Purchase price allocation:
Current assets and liabilities	$ 43,052
Property, plant, and equipment	423,955
Deferred tax liability	(142,997	)
Goodwill	95,998
Intangible assets (see Note 4)	138,023
Other noncurrent assets and liabilities, net	5,171

Total purchase price allocation	$563,202

F-10

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to condensed consolidated financial statements

Had the Smithfield Acquisition occurred at the beginning of fiscal 2008, the unaudited pro forma net sales, net loss and net loss per share would have been $3.3 billion, $(8.5) million, and $(85,410.00), respectively for the first quarter of 2008.

Note 4. Basis of presentation and accounting policies

Consolidation

The consolidated financial statements include the accounts of the Company and its direct and indirect wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated.

Use of estimates

The consolidated financial statements have been prepared in conformity with GAAP using management’s best estimates and judgments where appropriate. These estimates and judgments affect the reported amounts of assets and liabilities and disclosure of the contingent assets and liabilities at the date of the financial statements. The estimates and judgments will also affect the reported amounts for certain revenues and expenses during the reporting period. Actual results could differ materially from these estimates and judgments. Significant estimates made by the Company include the allowance for doubtful accounts, reserves related to inventory obsolescence or valuation, insurance accruals, and income tax accruals.

Fiscal year

The Company’s fiscal year consists of 52 or 53 weeks, ending on the last Sunday in December. The consolidated financial statements have been prepared for the thirteen weeks ended March 30, 2008 and March 29, 2009.

Cash and cash equivalents

The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. The carrying value of these assets approximates their fair market value. Financial instruments which potentially subject JBS USA Holdings to concentration of credit risk consist principally of cash and temporary cash investments. At times, cash balances held at financial institutions were in excess of Federal Deposit Insurance Corporation insurance limits. JBS USA Holdings places its temporary cash investments with high quality financial institutions. The Company believes no significant credit risk exists with respect to these cash investments.

Accounts receivable and allowance for doubtful accounts

The Company has a diversified customer base which includes some customers who are located in foreign countries. The Company controls credit risk related to accounts receivable through credit worthiness reviews, credit limits, letters of credit, and monitoring procedures.

F-11

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to condensed consolidated financial statements

The Company evaluates the collectability of its accounts receivable based on a general analysis of past due receivables, and a specific analysis of certain customers which management believes will be unable to meet their financial obligations due to economic conditions, industry-specific conditions, historic or anticipated performance, and other relevant circumstances. The Company continuously performs credit evaluations and reviews of its customer base. The Company will provide an allowance for an account when collectability is not reasonably assured. The Company believes this process effectively mitigates its exposure to bad debt write-offs; however, if circumstances related to changes in the economy, industry, or customer conditions change, the Company may need to subsequently adjust the allowance for doubtful accounts.

The Company adheres to customary industry terms of net seven days. The Company considers all domestic accounts over 14 days as past due and all international accounts over 30 days past due. Activity in the allowance for doubtful accounts is as follows (in thousands):


	March 28, 2008	March 29, 2009

Balance, beginning of period	$1,389	$4,142
Bad debt expense	155	(379	)
Change to purchase accounting allowance for doubtful accounts	—	(462	)
Write-offs	1	—
Effect of exchange rates	5	(10	)

Balance, end of period	$1,550	$3,291

The $462 thousand of the change to purchase accounting allowance for doubtful accounts represents the resolution of a receivable which has been fully reserved on the opening balance sheet at the October 23, 2008 Smithfield Beef acquisition date.

F-12

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to condensed consolidated financial statements

Inventories

Inventories consist primarily of product, livestock, and supplies. Product inventories are considered commodities and are primarily valued based on quoted commodity prices, which approximate net realizable value less cost to complete. Due to a lack of equivalent commodity market data Australian product inventories are valued based on the lower of cost or net realizable value less cost to sell. Livestock inventories are valued on the basis of the lower of first-in, first-out cost or market. Costs capitalized into livestock inventory include cost of feeder livestock, direct materials, supplies, and feed. Cattle and hogs are reclassified from livestock to work in progress at time of slaughter. Supply inventories are carried at historical cost. The components of inventories are as follows (in thousands):


	December 28, 2008	March 29, 2009

Livestock	$106,288	$104,004

Product inventories:
Raw material	16,599	11,539
Work in progress	53,115	46,058
Finished goods	386,399	408,008
Supplies	86,599	80,417

	$649,000	$650,026

Other current assets

Other current assets include prepaid expenses which are amortized over the period the Company expects to receive the benefit.

Property, plant and equipment

Property, plant and equipment was recorded at fair value at the respective dates of the Acquisition, the Tasman Acquisition and the Smithfield Acquisition. Subsequent additions are recorded at cost. Depreciation and amortization is recorded using the straight-line method over the estimated useful lives of the assets as follows:


Furniture, fixtures, office equipment and other		5 to 7 years
Machinery and equipment		5 to 15 years
Buildings and improvements		15 to 40 years
Leasehold improvements		shorter of useful life or the lease term

F-13

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to condensed consolidated financial statements

The costs of developing internal-use software are capitalized and amortized when placed in service over the expected useful life of the software. Major renewals and improvements that extend the useful life of the asset are capitalized while maintenance and repairs are expensed as incurred. The Company has historically and currently accounts for planned major maintenance activities as they are incurred in accordance with the guidance in the Financial Accounting Standards Board, (“FASB”) Staff Position (“FSP”) AUG Air-1: Accounting for Planned Major Maintenance Activities. Upon the sale or retirement of assets, the cost and related accumulated depreciation or amortization are eliminated from the respective accounts and any resulting gains or losses are reflected in earnings. Applicable interest charges incurred during the construction of assets are capitalized as one of the elements of cost and are amortized over the assets’ estimated useful lives. The Company capitalized $0.1 million and $0.2 million of interest charges during the thirteen weeks ended March 30, 2008 and March 29, 2009, respectively. Assets held under capital lease are classified in property, plant, and equipment and amortized over the lease term. Capital lease amortization is included in depreciation expense. As of March 29, 2009, JBS USA Holdings had $22.8 million in commitments outstanding for capital projects including $14.5 million related to the Installment Bond Purchase Agreement, as discussed in Other Assets.

In accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, the Company assesses the recoverability of long-lived assets whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. When future undiscounted cash flows of assets are estimated to be insufficient to recover their related carrying value, the Company compares the asset’s estimated future cash flows, discounted to present value using a risk-adjusted discount rate, to its current carrying value and records a provision for impairment as appropriate.

Property, plant, and equipment, net are comprised of the following (in thousands):


	December 28, 2008		March 29, 2009

Land	$ 143,253		$ 145,659
Buildings, machinery, and equipment	1,022,324		1,066,885
Property and equipment under capital lease	17,339		17,349
Furniture, fixtures, office equipment, and other	38,867		39,468
Construction in progress	88,732		80,383


	1,310,515		1,349,744
Less accumulated depreciation and amortization	(81,199	)	(108,689	)


	$ 1,229,316		$ 1,241,055

Accumulated depreciation includes accumulated amortization on capitalized leases of approximately $3.1 million and $3.9 million as of December 28, 2008 and March 29, 2009, respectively. For the thirteen weeks ended March 30, 2008, the Company recognized $12.9 million and $3.6 million of depreciation and capital lease amortization expense in cost of goods sold and selling, general, and administrative expenses in the statement of operations,

F-14

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to condensed consolidated financial statements

respectively. For the thirteen weeks ended March 29, 2009, the Company recognized $25.6 million and $1.8 million of depreciation and capital lease amortization expense in cost of goods sold and selling, general, and administrative expenses in the statement of operations, respectively.

JBS USA Holdings monitors certain asset retirement obligations in connection with its operations. These obligations relate to clean-up, removal or replacement activities and related costs for “in-place” exposures only when those exposures are moved or modified, such as during renovations of its facilities. These in-place exposures include asbestos, refrigerants, wastewater, oil, lubricants and other contaminants common in manufacturing environments. Under existing regulations, JBS USA Holdings is not required to remove these exposures and there are no plans or expectations of plans to undertake a renovation that would require removal of the asbestos, nor the remediation of the other in place exposures at this time. The facilities are expected to be maintained and repaired by activities that will not result in the removal or disruption of these in place exposures. As a result, there is an indeterminate settlement date for these asset retirement obligations because the range of time over which JBS USA Holdings may incur these liabilities is unknown and cannot be reasonably estimated. Therefore, JBS USA Holdings cannot reasonably estimate and has not recorded the fair value of the potential liability.

Other assets

Prior to the Acquisition, Swift Beef entered into an Installment Bond Purchase Agreement (the “Purchase Agreement”) with the City of Cactus, Texas (the “City”) effective as of May 15, 2007. Under the Purchase Agreement, Swift Beef agreed to purchase up to $26.5 million of the “City of Cactus, Texas Sewer System Revenue Improvement and Refunding Bonds, Taxable Series 2007” to be issued by the City (the “Bonds”) . The Bonds are being issued by the City to finance improvements to its sewer system (the “System”) which is utilized by Swift Beef’s processing plant located in Cactus, Texas (the “Plant”) as well as other industrial users and the citizens of the community of Cactus. Swift Beef will purchase the Bonds in installments upon receipt of Bond installment requests from the City as the System improvements are completed through an anticipated completion date of June 2010. The interest rate on the Bonds is the six-month LIBOR plus 350 basis points, or 6.04% at March 29, 2009. The Bonds mature on June 1, 2032 and are subject to annual mandatory sinking fund redemption beginning on June 1, 2011. The principal and interest on the Bonds will be paid by the City from the net revenues of the System. At March 29, 2009, Swift Beef held $12.0 million of the Bonds, which fall within Level 3 of the value hierarchy in accordance with SFAS No. 157, Fair Value Measurements (“SFAS No. 157”).

On May 21, 2007, in connection with the purchase of the Bonds, Swift Beef entered into a Water & Wastewater Services Agreement (the “Wastewater Agreement”) with the City under which the City will provide water and wastewater services for the Plant at the rates set forth in the Wastewater Agreement. Swift Beef’s payments for the City’s treatment of wastewater from the Plant will include a capacity charge in the amount required to be paid by the City to pay the principal of, and interest on, the Bonds.

F-15

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to condensed consolidated financial statements

The Company has evaluated the impact of the FASB Emerging Issues Task Force (“EITF”) No. 01-08, Determining Whether an Arrangement Contains a Lease, as well as EITF No. 97-10, The Effect of Lessee Involvement in Asset Construction, and has determined that it will be required to reflect the wastewater treatment facility as a capital asset (similar to a capital leased asset) as it will be the primary user of the wastewater facility based on projections of volume of throughput. As the City spends funds to construct the facility, the Company will record construction in progress and the related construction financing. At March 29, 2009, $9.0 million had been recognized as construction in progress and construction financing by the Company.

Debt issuance costs

Costs related to the issuance of debt are capitalized and amortized using the straight-line method to interest expense over the period the debt is outstanding. In conjunction with the Acquisition of JBS USA Holdings, $1.8 million of fees were capitalized and included in other assets. JBS USA Holdings amortized $0.3 million of these costs during the thirteen weeks ended March 30, 2008 and none as of March 29, 2009 as the amount under the related loan agreement was repaid in full during fiscal year ended December 28, 2008 (see Note 7).

On November 5, 2008, JBS USA Holdings entered into a $400.0 million revolving credit facility (see Note 7). The $13.4 million in debt issuance cost associated with this facility is being amortized as interest expense using the straight-line method over the life of the agreement. During the thirteen weeks ended March 29, 2009, the Company amortized $1.1 million related to these costs.

Goodwill and other intangibles

Goodwill and other intangible assets with indefinite lives are not amortized but are tested for impairment at least on an annual basis or more frequently if impairment indicators arise, as required by SFAS No. 142, Goodwill and Other Intangible Assets. Identifiable intangible assets with definite lives are amortized over their estimated useful lives.

Goodwill represents the excess of the aggregate purchase price over the fair value of the net identifiable assets acquired in a purchase business combination. The goodwill impairment test is a two-step test. Under the first step, the fair value of the reporting unit is compared with its carrying value (including goodwill). If the fair value of the reporting unit is less than its carrying value, an indication of goodwill impairment exists for the reporting unit and the enterprise must perform step two of the impairment test. Under step two, an impairment loss is recognized for any excess of the carrying amount of the reporting unit’s goodwill over the implied fair value of that goodwill. The implied fair value of goodwill is determined by allocating the fair value of the reporting unit in a manner similar to a purchase price allocation, in accordance with SFAS No. 141, Business Combinations, and after December 15, 2008 in accordance with SFAS No. 141R as discussed in Recently Issued Accounting Pronouncements. The residual fair value after this allocation is the implied fair value of the reporting unit goodwill. The Company estimates the

F-16

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to condensed consolidated financial statements

fair value of its reporting units using a discounted cash flow analysis. If the fair value of the reporting unit exceeds its carrying value, step two does not need to be performed.

The following is a rollforward of goodwill by segment for the thirteen weeks ended March 29, 2009 (in thousands):


	December 28, 2008	Adjustments	Translation gain	March 29, 2009

Beef	$133,825	$1,094	$144	$135,063
Pork	14,030	—	—	14,030

Total	$147,855	$1,094	$144	$149,093

The adjustments to goodwill are a result of the change in purchase price allocation for the Smithfield Acquisition.

Other identifiable intangible assets consist of the following (in thousands):


	December 28, 2008
	Initial gross carrying amount	Adjustments		Accumulated amortization		Net carrying amount


Amortizing:
Customer relationships	$129,000	$ 69,000		$(18,104	)	$179,896
Customer contracts	15,400	6,078		(2,004	)	19,474
Patents	5,200	(2,300	)	(282	)	2,618
Rental contract	3,507	—		(573	)	2,934
Deferred revenue	1,483	—		(459	)	1,024
Mineral rights	742	—		(65	)	677

Subtotal amortizing intangibles	155,332	72,778		(21,487	)	206,623

Non-amortizing:
Trademark	$ 33,300	$ 50,800		$ —		$ 84,100
Water rights	2,100	12,144		—		14,244

Subtotal non-amortizing intangibles	35,400	62,944		—		98,344

Total intangibles	$190,732	$135,722		$(21,487	)	$304,967

F-17

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to condensed consolidated financial statements

The adjustments to intangible assets result primarily from the Smithfield Acquisition (see Note 3). The adjustment to patents of $2.3 million reflects the impairment of a patent that has no future use.


	March 29, 2009
	Initial gross carrying amount	Adjustments	Accumulated amortization		Net carrying amount


Amortizing:
Customer relationships	$198,000	$ —	$(23,126	)	$174,874
Customer contracts	21,478	—	(2,619	)	18,859
Patents	2,900	—	(330	)	2,570
Rental contract	3,507	—	(670	)	2,837
Deferred revenue	1,483	—	(537	)	946
Mineral rights	742	—	(75	)	667

Subtotal amortizing intangibles	228,110	—	(27,357	)	200,753

Non-amortizing:
Trademark	$ 84,100	$ —	$ —		$ 84,100
Water rights	14,244	—	—		14,244

Subtotal non-amortizing intangibles	98,344	—	—		98,344

Total intangibles	$326,454	$ —	$(27,357	)	$299,097

The customer relationships intangible and customer contracts intangible resulting from the Acquisition are amortized on an accelerated basis over 12 and 7 years, respectively. The customer relationships and customer contracts intangibles resulting from the Smithfield Acquisition are amortized on an accelerated basis over 21 and 10 years, respectively. These represent management’s estimates of the period of expected economic benefit and annual customer profitability. Patents consist of exclusive marketing rights and are being amortized over the life of the related agreements on a straight line basis, which range from 6 to 20 years. For the thirteen weeks ended March 30, 2008 and March 29, 2009, the Company recognized $2.7 million and $5.9 million of amortization expense, respectively.

Based on amortizing intangible assets recognized in JBS USA Holdings balance sheet as of March 29, 2009, amortization expense for each of the next five years is estimated as follows (in thousands):


For the fiscal years ending:
2009 (remaining)		$15,325
2010		19,879
2011		18,964
2012		17,400
2013		15,299

F-18

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to condensed consolidated financial statements

Overdraft balances

The majority of JBS USA Holdings bank accounts are zero balance accounts where cash needs are funded as checks are presented for payment by the holder. Checks issued pending clearance that result in overdraft balances for accounting purposes are classified as current liabilities, and the change in the related balance is reflected in financing activities on the statement of cash flows.

Insurance

JBS USA Holdings is self-insured for employee medical and dental benefits and purchases insurance policies with deductibles for certain losses relating to worker’s compensation and general liability. The Company has purchased stop-loss coverage in order to limit its exposure to any significant levels of certain claims. Self-insured losses are accrued based upon periodic assessments of estimated settlements for known and anticipated claims, any resulting adjustments to previously recorded reserves are reflected in current period earnings. JBS USA Holdings has recorded a prepaid asset with an offsetting liability to reflect the amounts estimated as due for insured claims incurred and accrued but not yet paid to the claimant by the third party insurance company in accordance with SFAS No. 140 Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities.

Environmental expenditures and remediation liabilities

Environmental expenditures that relate to current or future operations and which improve operational capabilities are capitalized at time of incurrence. Expenditures that relate to an existing or prior condition caused by past operations, and which do not contribute to current or future revenue generation, are expensed. Liabilities are recorded when environmental assessments and/or remediation efforts are probable and the costs can be reasonably estimated.

Foreign currency

For foreign operations, the local currency is the functional currency. Translation into US dollars is performed for assets and liabilities at the exchange rates as of the balance sheet date. Income and expense accounts are translated at average exchange rates for the period. Adjustments resulting from the translation are reflected as a separate component of other comprehensive income (loss). Transaction gains and losses on US dollar denominated intercompany borrowings between the Australian subsidiaries and the Australian parent are recorded in earnings. Translation gains and losses on US dollar denominated intercompany borrowings between the Australian subsidiaries and the US parent and which are deemed to be part of the investment in the subsidiary are recorded in other comprehensive income. The balance of foreign currency translation adjustment in accumulated other comprehensive income at December 28, 2008 and March 29, 2009 was a loss of $(61.1) million and a gain of $4.0 million, respectively.

F-19

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to condensed consolidated financial statements

Income taxes

JBS USA Holdings calculates its interim income tax provision in accordance with Statement of Financial Accounting Standards No. 109, (“FAS 109”), Accounting for Income Taxes, and Accounting for Income Taxes in Interim Periods (“FIN 18”). The tax expense recognized for the thirteen weeks ended March 29, 2009 primarily relates to foreign taxes, US federal taxes and other state and local tax expenses in the US. Beginning with the adoption of FASB Interpretation No. 48 Accounting for Uncertainty in Income Taxes (“FIN 48”) as of May 28, 2007, the Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. Prior to the adoption of FIN 48, the Company recognized the effect of income tax positions only if such positions were probable of being sustained. JBS USA Holdings recognizes both interest and penalties related to uncertain tax positions as part of the income tax provision.

Fair value of financial instruments

The carrying amounts of JBS USA Holdings’ financial instruments, including cash and cash equivalents, short-term trade receivables, and payables, approximate their fair values due to the short-term nature of the instruments. Existing long-term debt was recorded at fair value as of the date of the Acquisition and the Company believes this approximates its fair value at March 29, 2009. Long-term debt incurred since the Acquisition was recorded at fair value at the date of incurrence and is considered to be fair value at March 29, 2009 due to the proximity of the balance sheet date to the issuance of the debt and its variable interest rate (see Note 7).

Revenue recognition

The Company’s revenue recognition policies are based on the guidance in Staff Accounting Bulletin (“SAB”) No. 104, Revenue Recognition in Financial Statements. Revenue on product sales is recognized when title and risk of loss are transferred to customers (upon delivery based on the terms of sale), when the price is fixed or determinable, and when collectability is reasonably assured, and pervasive evidence of an arrangement exists. The Company recognizes sales net of applicable provisions for discounts, returns and allowances which are accrued as product is invoiced to customers who participate in such programs based on contract terms and historical and current purchasing patterns.

Advertising costs

Advertising costs are expensed as incurred. Advertising costs were $1.3 million and $1.0 million for the thirteen weeks ended March 30, 2008 and March 29, 2009, respectively.

Research and development

The Company incurs costs related to developing new beef and pork products. These costs include developing improved packaging, manufacturing, flavor enhancing, and improving consumer

F-20

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to condensed consolidated financial statements

friendliness of meat products. The costs of these research and development activities are less than 1% of total consolidated net sales for the thirteen weeks ended March 30, 2008 and March 29, 2009 and are expensed as incurred.

Shipping costs

Pass-through finished goods delivery costs reimbursed by customers are reported in net sales while an offsetting expense is included in cost of goods sold.

Comprehensive income

Comprehensive income consists of net income, foreign currency translation, and adjustments from derivative financial instruments.

Net income per share

We present dual computations of net income (loss) per share. The basic computation is based on weighted average common shares outstanding during the period. The diluted computation reflects the same calculation as the basic computation as the Company does not have potentially dilutive common stock equivalents.

Derivatives and hedging activities

JBS USA Holdings accounts for its derivatives and hedging activities in accordance with SFAS No. 133, Accounting for Derivative Financial Instruments and Hedging Activities, (“SFAS No. 133”), and its related amendment, SFAS No. 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities. The Company uses derivatives (e.g., futures and options) for the purpose of mitigating exposure to changes in commodity prices and foreign currency exchange rates. The fair value of each derivative is recognized in the balance sheet within current assets or current liabilities. Changes in the fair value of derivatives are recognized immediately in the statement of operations for derivatives that do not qualify for hedge accounting. For derivatives designated as a hedge and used to hedge an existing asset or liability, both the derivative and hedged item are recognized at fair value within the balance sheet with the changes in both of these fair values being recognized immediately in the statement of operations. For derivatives designated as a hedge and used to hedge an anticipated transaction, changes in the fair value of the derivatives are deferred in the balance sheet within accumulated other comprehensive income to the extent the hedge is effective in mitigating the exposure to the related anticipated transaction. Any ineffectiveness is recognized immediately in the statement of operations. Amounts deferred within accumulated other comprehensive income are recognized in the statement of operations upon the completion of the related underlying transaction.

F-21

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to condensed consolidated financial statements

designated and accounted for as hedges under SFAS No. 133 as a result of the extensive recordkeeping requirements of this statement. Gains and losses from foreign currency derivatives and livestock derivatives related to future sales are recognized in the statement of operations as a component of net sales or as a component of other comprehensive income upon change in fair value.

Adoption of new accounting pronouncements

In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities—an amendment of FASB Statement No. 133 (“SFAS No. 161”), which provides for enhanced disclosures about the use of derivatives and their impact on a Company’s financial position and results of operations. JBS USA Holdings, Inc. adopted SFAS No. 161 in the thirteen weeks ended March 29, 2009. The adoption did not have a material impact on its financial position, results of operations, or cash flows (see Note 6).

In December 2007, the FASB issued SFAS No. 141(R), Business Combinations (“SFAS No. 141(R)”). SFAS No. 141(R) is intended to provide greater consistency in the accounting and reporting of business combinations. SFAS 141(R) requires the acquiring entity in a business combination to recognize all assets acquired and liabilities assumed in the transaction and any non-controlling interest in the acquiree at the acquisition date, measured at fair value at that date. This includes the measurement of the acquirer’s shares issued as consideration in a business combination, the recognition of contingent consideration, the accounting for pre-acquisition gains and loss contingencies, the recognition of capitalized in–process research and development, the accounting for acquisition related restructuring cost accruals, the treatment of acquisition related transaction costs and the recognition of changes in the acquirer’s income tax valuation allowance and deferred taxes. One significant change in this statement is the requirement to expense direct costs of the transaction, which under existing standards are included in the purchase price of the acquired company. This statement also established disclosure requirements to enable the evaluation of the nature and financial effect of the business combination. SFAS No. 141(R) is effective for business combinations consummated after December 31, 2008. Also effective, as a requirement of the statement, after December 31, 2008 any adjustments to uncertain tax positions from business combinations consummated prior to December 31, 2008 will no longer be recorded as an adjustment to goodwill, but will be reported in income. SFAS No. 141(R) is effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008; therefore, we expect to adopt SFAS No. 141(R) for any business combinations entered into beginning in fiscal year 2009.

Recently issued accounting pronouncements

In February 2008, the FASB issued FASB Staff Position (FSP) No. 157-2 which defers the effective date of SFAS No. 157, Fair Value Measurements (SFAS 157), for nonfinancial assets and nonfinancial liabilities, except for items that are recognized or disclosed at fair value in an entity’s financial statements on a recurring basis, at least annually. The Company will be required

F-22

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to condensed consolidated financial statements

to adopt for these nonfinancial assets and nonfinancial liabilities as of December 29, 2008. The Company believes the adoption of SFAS 157 deferral provisions will not have a material impact on the Company’s financial position results of operations or cash flows.

In June 2009, the FASB issued SFAS No. 167, Amendments to FASB Interpretation No. 46(R) (“SFAS No. 167”). SFAS No. 167 provides for enhanced financial reporting by enterprises involved with variable interest entities and is effective for fiscal years beginning after November 15, 2009. We are currently evaluating the impact, if any, of SFAS No. 167 on our financial position, results of operations, and cash flows.

NOTE 5. Accrued liabilities

Accrued liabilities consist of the following (in thousands):


	December 28, 2008	March 29, 2009

Salaries	$ 74,528	$ 66,165
Self insurance reserves	24,265	27,475
Taxes	15,825	12,884
Freight	38,645	35,406
Interest	19,672	29,930
Other	110,134	99,396

Total	$283,069	$271,256

Other accrued liabilities consist of items that are individually less than 5% of total current liabilities.

NOTE 6. Derivative financial instruments

The Company adopted SFAS No. 157, Fair Value Measurements (“SFAS No. 157”) which defines fair value, establishes a framework for measuring fair value and requires additional disclosures about fair value measurements. The criterion that is set forth in this standard is applicable to the fair value measurement where it is permitted or required under other accounting pronouncements.

SFAS No. 157 defines fair value as the exit price, which is the price that would be received to sell an asset or paid to transfer a liability in a transaction between market participants at the measurement date. SFAS No. 157 establishes a three-tier fair value hierarchy that prioritizes inputs to valuation techniques used for fair value measurement.

•

Level 1 consists of observable market data in an active market for identical assets or liabilities.

•

Level 2 consists of observable market data, other than that included in Level 1, that is either directly or indirectly observable.

F-23

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to condensed consolidated financial statements

•

Level 3 consists of unobservable market data. The input may reflect the assumptions of the Company, not a market participant, if there is little available market data and the Company’s own assumptions are considered by management to be the best available information.

The adoption of SFAS No. 157 has not resulted in any significant changes to the methodologies used for fair value measurement. The Company uses derivatives for the purpose of mitigating exposure to market risk, such as changes in commodity prices and foreign currency exchange rates. The Company uses exchange-traded futures and options to hedge livestock commodities. The Company uses foreign currency positions, which are actively quoted by an independent financial institution, to mitigate the risk of foreign currency fluctuations in the markets in which it conducts business.

The fair value of derivative assets is recognized within other current assets while the fair value of derivative liabilities is recognized within accrued liabilities. The fair value measurements that are performed on a recurring basis fall within the level 1 of the fair value hierarchy. The amounts are as follows:


	Level 1
	December 28, 2008	March 29, 2009


Assets:
Commodity derivatives	$42,087	$23,582
Foreign currency rate derivatives	12,002	14,463

Total	$54,089	$38,045


Liabilities:
Commodity derivatives	$16,392	$7,056
Foreign currency rate derivatives	592	5,246

Total	$16,984	$12,302

The Company utilizes various raw materials in its operations, including cattle, hogs, and energy, such as natural gas, electricity, and diesel fuel, which are all considered commodities. The Company considers these raw materials generally available from a number of different sources and believes it can obtain them to meet its requirements. These commodities are subject to price fluctuations and related price risk due to factors beyond its control, such as economic and political conditions, supply and demand, weather, governmental regulation, and other circumstances. Generally, the Company purchases derivatives in an attempt to mitigate price risk related to its anticipated consumption of commodity inputs for periods of up to 12 months. The Company may enter into longer-term derivatives on particular commodities if deemed appropriate. As of March 29, 2009, the Company had derivative positions in place covering 2.5% and 14% of anticipated cattle and hog needs, respectively, through December 2009.

F-24

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to condensed consolidated financial statements

The following table presents the impact of derivative instruments on the Consolidated Statement of Operations for the thirteen weeks ended March 30, 2008 and March 29, 2009 (in thousands):


Derivatives not designated as hedging instruments	Location of gain/(loss) recognized in income	Amount of gain/(loss) recognized in income thirteen weeks ended
Derivatives not designated as hedging instruments	Location of gain/(loss) recognized in income	March 30, 2008		March 29, 2009

Commodity contracts	Net Sales	$(9,923	)	$6,114
Foreign exchange contracts	Net Sales	(1,364	)	17,651
Commodity contracts	Cost of Goods Sold	$22,618		$47,558
Foreign exchange contracts	Cost of Goods Sold	—		—

Total derivative gain		$ 11,331		$71,323

As of March 29, 2009, the net deferred amount of derivative gains recognized in accumulated other comprehensive income was $90 thousand, net of tax. The company estimates these amounts will be transferred out of accumulated other comprehensive income and recognized within earnings over the next twelve months.

NOTE 7. Long-term debt and loan agreements

JBS USA Holdings and its direct and indirect subsidiaries have entered into various debt agreements in order to provide liquidity to operate the business on a go forward basis and, through the loan payable to JBS to fund the Acquisition of Smithfield. As of December 28, 2008 and March 29, 2009, debt outstanding consisted of the following (in thousands):


	December 28, 2008	March 29, 2009


Short-term debt
Secured credit facilities	$ 36,186	$ 36,828
Unsecured credit facilities	30,826	34,600

Total short-term debt	67,012	71,428


Current portion of long-debt:
Installment note payable	1,264	1,008
Capital lease obligations	3,235	3,095

Total current portion of long-term debt	4,499	4,103


Long-term debt:
Loans payable to JBS	658,588	658,597
Installment note payable	10,025	9,793
Senior credit facilities	114,673	210,187
Capital lease obligations	23,522	22,940

Long-term debt, less current portion	806,808	901,517

Total debt	$878,319	$977,048

F-25

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to condensed consolidated financial statements

The aggregate minimum principal maturities of debt for each of the five fiscal years and thereafter following March 29, 2009, are as follows (in thousands):


For the fiscal years ending December		Minimum principal maturities


2009 (remaining)		$ 74,792
2010		662,898
2011		213,791
2012		3,186
2013		8,990
Thereafter		13,391

Total minimum principal maturities		$977,048

As of March 29, 2009, JBS USA Holdings had approximately $283.7 million of secured debt outstanding and approximately $26.7 million of outstanding letters of credit. The availability under our revolving credit facilities was $120.3 million as of March 29, 2009.

A summary of the components of interest expense, net is presented below (in thousands):


	Thirteen weeks ended
	March 30, 2008		March 29, 2009


Interest on:
Unsecured bank loans (approximately, 5.4% and -%)	$8,175		$ —
Unsecured credit facility (approximately, 7.4% and 5.1%)	209		42
Loans payable to JBS (approximately, -% and 6.4%)	—		10,621
Capital lease interest	227		381
Bank fees	98		383
Other miscellaneous interest charges (i)	185		1,973
Debt issuance cost amortization	606		1,123
Secured credit facility (US) (approximately, -% and 4.2%)	—		1,763
Secured credit facility (AU) (approximately, -% and 5.6%)	—		445

Less:
Capitalized interest	(114	)	(176	)
Interest income	(1,278	)	(1,963	)

Total interest expense, net	$8,108		$14,592

(i)

Includes installment note interest expense of $0.20 million and $0.06 million as of March 30, 2008 and March 29, 2009, respectively.

Description of indebtedness

Senior Credit Facilities—On November 5, 2008, JBS USA, LLC (“JBS USA”), an indirect wholly owned subsidiary of JBS USA Holdings entered into a secured revolving loan credit agreement

F-26

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to condensed consolidated financial statements

(the “Credit Agreement”) that allows borrowings up to $400.0 million, and terminates on November 5, 2011. Up to $75.0 million of the revolving credit facility is available for the issuance of letters of credit. Borrowings that are index rate loans will bear interest at the prime rate plus a margin of 2.25%, the all-in rate as of March 29, 2009 was 5.50%, while LIBOR rate loans will bear interest at the applicable LIBOR rate, plus a margin of 3.25%, the all-in rate as of March 29, 2009 was 3.75%. At March 29, 2009, the borrowings totaled $210.2 million. Upon approval by the lender, LIBOR rate loans may be taken for one, two, or three month terms, (or six months at the discretion of the Agent).

Availability. Availability under the Credit Agreement is subject to a borrowing base. The borrowing base is based on certain of JBS USA domestic wholly owned subsidiaries’ assets as described below, with the exclusion of JBS Five Rivers Cattle Feeding. The borrowing base consists of percentages of eligible accounts receivable, inventory, and supplies and less certain eligibility and availability reserves. As of March 29, 2009, our borrowing base totaled $303.6 million.

Security and guarantees. Borrowings made by JBS USA are guaranteed by JBS Holdings and all domestic subsidiaries except Fiver Rivers are collateralized by a first priority perfected lien and interest in accounts receivable, inventory, and supplies.

Covenants. The Credit Agreement contains customary representations and warranties and a financial covenant that requires a minimum fixed charge coverage ratio of not less than 1.15 to 1.00. This ratio is only applicable if borrowing availability falls below the minimum threshold which is the greater of 20% of the aggregate commitments or $70.0 million. The Credit Agreement also contains negative covenants that limit the ability of JBS USA and its subsidiaries to, among other things:

•

have capital expenditures greater than $175 million per year;

•

incur additional indebtedness;

•

create liens on property, revenue, or assets;

•

make certain loans or investments;

•

sell or dispose of assets;

•

pay certain dividends and other restricted payments;

•

prepay or cancel certain indebtedness;

•

dissolve, consolidate, merge, or acquire the business or assets of other entities;

•

enter into joint ventures other than certain permitted joint ventures or create certain other subsidiaries;

•

enter into new lines of business;

•

enter into certain transactions with affiliates and certain permitted joint ventures;

F-27

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to condensed consolidated financial statements

•

agree to restrictions on the ability of the subsidiaries to make dividends;

•

agree to enter into negative pledges in favor of any other creditor; and

•

enter into sale/leaseback transactions and operating leases.

The Credit Agreement also contains customary events of default, including failure to perform or observe terms, covenants or agreements included in the Credit Agreement, payment of defaults on other indebtedness, defaults on other indebtedness if the effect is to permit acceleration, entry of unsatisfied judgments or orders against a loan party or its subsidiaries, failure of any collateral document to create or maintain a priority lien, and certain events related to bankruptcy and insolvency or environmental matters. If an event of default occurs the lenders may, among other things, terminate their commitments, declare all outstanding borrowings to be immediately due and payable together with accrued interest, and fees and exercise remedies under the collateral documents relating to the Credit Agreement. At March 29, 2009, JBS USA was in compliance with all covenants.

Certain covenants of our indebtedness and debt guarantee terms include restrictions on our ability to pay dividends. As of December 28, 2008 and March 29, 2009, the Company had $22.7 million and $17.7 million, respectively, of retained earnings available to pay dividends.

Installment note payable—The installment note payable relates to JBS USA Holdings’ financing of a capital investment. The note bears interest at LIBOR, the rate as of March 29, 2009 was 0.49% plus a fixed margin of 1.75% per annum with payments due on the first of each month and matures on August 1, 2013.

Unsecured credit facility—Swift Australia entered into an Australian dollar (“A”) denominated $120 million unsecured credit facility on February 26, 2008 to fund working capital and letter of credit requirements. Under this facility A$80 million can be borrowed for cash needs and A$40 million is available to fund letters of credit. Borrowings are made at the cash advance rate (BBSY) plus a margin of 2.00% (includes commitment fee of 1.40%), the all-in rate as of March 29, 2009 was 5.10%. The credit facility contains certain financial covenants which require the Company to maintain predetermined ratio levels related to interest coverage, debt coverage and tangible net worth. As of March 29, 2009, the Company is in compliance with all covenants and has USD $34.6 million outstanding. This facility will terminate on October 1, 2009. We intend to seek to refinance this facility.

Secured credit/ multi-option bridge facility—JBS Southern entered into an Australian dollar denominated $80 million secured multi-option bridge facility on July 2, 2008 to fund working capital and letter of credit requirements. JBS Southern property and plant assets secure this bridge facility. Under this facility A$65 million can be borrowed for cash needs and to fund letters of credit. The remaining A$15 million is used to facilitate daily transactional limits. Borrowings are made at the cash advance rate (BBSY) plus a margin of 1.60%, the all-in rate as of March 29, 2009 was 5.60%. The multi-option bridge facility contains covenants and obligations which require the company to comply. As of March 29, 2009, the Company is in compliance with

F-28

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to condensed consolidated financial statements

all covenants and has USD $36.8 million outstanding. This facility originally had a fixed term and was set to expire on December 31, 2008. This facility’s term has been extended to September 30, 2009. We intend to seek to renew this facility.

The following four loan agreements sum to the $750 million described as debt related to the Acquisition in Note 2. As indicated below, as of March 29, 2009, there were no outstanding balances with respect to these four loan agreements.

$250 million loan agreement—In connection with the Acquisition, JBS USA Holdings entered into a one year unsecured loan agreement with interest payable semi-annually based on six month LIBOR plus a margin of 1.50% with a maturity date of June 30, 2008. The loan agreement contained customary representations and warranties. The loan agreement was guaranteed by JBS SA. On February 22, 2008, this debt was repaid by the Company using cash received from its parent which has been reflected as an additional capital contribution.

$150 million loan agreement—In connection with the Acquisition, JBS USA Holdings entered into a one year unsecured loan agreement with interest payable semi-annually based on six month LIBOR plus a margin of 0.75%. The loan matured on June 30, 2008. The loan agreement contained customary representations, warranties and covenants. The loan agreement was guaranteed by JBS. On February 27, 2008 this debt was repaid by the Company using cash received from its parent which has been reflected as an additional capital contribution.

$250 million credit agreement—In connection with the Acquisition, JBS USA Holdings entered into a one year unsecured credit agreement with interest payable quarterly based on three month LIBOR plus a margin of 0.75%. The agreement matured on July 7, 2008. The credit agreement contained customary representations, warranties and negative covenants. There were no maintenance financial covenants but the agreement contained an incurrence Consolidated Net Indebtedness to EBITDA ratio of 3.75 to 1.00 prior to December 31, 2007 and 3.60 to 1.00 commencing on January 1, 2008 and ending on the Maturity Date. The credit agreement was guaranteed by JBS. On July 3, 2008 this credit agreement was repaid with funds received from JBS through a loan repayable to JBS.

$100 million loan agreement—In connection with the Acquisition, JBS USA Holdings entered into a one year unsecured loan agreement. The original 182 day loan agreement with interest payable at maturity based on six month LIBOR plus a margin of 0.8% matured on January 7, 2008. On January 3, 2008, an extension and modification agreement was signed changing the maturity date to July 7, 2008 and increasing the margin to 1.50%. The loan agreement contained customary representations, warranties and covenants. The loan agreement was guaranteed by JBS. On July 7, 2008 this loan agreement was repaid with funds received from JBS through a loan repayable to JBS.

The five loan agreements listed below sum to $750 million and are reflected in the line item “Loans Payable to JBS” in the table at the beginning of this footnote. After issuance, the Company repaid $91.4 million leaving a remaining balance owed as of March 29, 2009 of $658.6 million.

F-29

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to condensed consolidated financial statements

$100 million loan payable to JBS HU Liquidity—On April 28, 2008, the Company entered into an unsecured loan agreement with its parent, JBS, for $100 million with a maturity date of April 28, 2011. Interest payments are due semi-annually at a rate of six month LIBOR plus a margin of 3%, the all-in rate as of March 29, 2009 was 6.08%; however the parties have reached an agreement to defer the 2008 interest payment. The funds received from this loan were used to fund the purchase of Tasman Group (see Note 2). On March 27, 2009, this loan was assigned to JBS HU Liquidity Management LLC, a subsidiary of JBS, which is organized in the country of Hungary.

$25 million loan payable to JBS HU Liquidity—On May 5, 2008, the Company entered into an unsecured loan agreement with JBS for $25 million with a maturity date of May 5, 2011. Interest payments are due semi-annually at a rate of six month LIBOR plus a margin of 3%, the all-in rate of as of March 29, 2009 was 6.15%; however the parties have reached an agreement to defer the 2008 interest payment. The funds received were used to fund operations. On March 27, 2009, this loan was assigned to JBS HU Liquidity Management LLC, a subsidiary of JBS, which is organized in the country of Hungary.

$25 million loan payable to JBS HU Liquidity—On June 10, 2008, the Company entered into an unsecured loan agreement with JBS for $25 million with a maturity date of June 10, 2011. Interest payments are due semi-annually at a rate of six month LIBOR plus a margin of 3%, the all-in rate as of March 29, 2009 was 5.94%; however the parties have reached an agreement to defer the 2008 interest payment. The funds received from this loan were used to fund operations. On March 27, 2009, this loan was assigned to JBS HU Liquidity Management LLC, a subsidiary of JBS, which is organized in the country of Hungary.

$350 million loan payable to JBS HU Liquidity—On June 30 2008, the Company entered into an unsecured loan agreement with JBS totaling $350 million with a maturity date of June 30, 2011. Interest payments are due semi-annually at a rate of six month LIBOR plus a margin of 3%, for $250 million the all-in rate as of March 29, 2009 was 6.12% and for $100 million the rate as of March 29, 2009 was 6.13%. The funds received were used to pay outstanding unsecured bank debt. On March 27, 2009, this loan was assigned to JBS HU Liquidity Management LLC, a subsidiary of JBS, which is organized in the country of Hungary.

$250 million loan payable to JBS HU Liquidity—On October 21, 2008, the Company entered into an unsecured loan agreement with JBS for $250 million with a maturity date of October 21, 2011. Interest payments are due semi-annually at a rate of six month LIBOR plus a margin of 3%. As of March 29, 2009 the all-in rate was 7.13%. The funds received were used for the acquisition of Smithfield Beef and Five Rivers (see Note 3). On March 27, 2009, this loan was assigned to JBS HU Liquidity Management LLC, a subsidiary of JBS, which is organized in the country of Hungary.

See Note 16 regarding subsequent event issuance of $700 million 11.625% senior unsecured notes by a subsidiary in April 2009.

F-30

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to condensed consolidated financial statements

Capital and operating leases—JBS USA Holdings and certain of its subsidiaries lease the corporate headquarters in Greeley, Colorado under capital lease; six distribution facilities located in New Jersey, Florida, Nebraska, Arizona, Colorado and Texas; marketing liaison offices in the US, Korea, Japan, Mexico, China, and Taiwan; its distribution centers and warehouses in Australia; and a variety of equipment under operating lease agreements that expire in various years between 2008 and 2019. Future minimum lease payments at March 29, 2009, under capital and non-cancelable operating leases with terms exceeding one year are as follows (in thousands):


	Capitalized lease obligations		Noncancellable operating lease obligations


For the fiscal years ending December
2009 (remaining)	$ 3,311		$13,063
2010	4,190		13,813
2011	3,585		11,402
2012	2,957		5,129
2013	2,874		4,355
Thereafter	13,618		5,415

Net minimum lease payments	30,535		$53,177

Less: Amount representing interest	(4,500	)

Present value of net minimum lease payments	$26,035

Rent expense associated with operating leases was $4.9 million and $10.4 million for the thirteen weeks ended March 30, 2008 and March 29, 2009, respectively.

Note 8. Defined contribution plans

Defined contribution plans

The Company sponsors two tax-qualified employee savings and retirement plans (the “401(k) Plans”) covering its US based employees, both union and non-union. Pursuant to the 401(k) Plans, eligible employees may elect to reduce their current compensation by up to the lesser of 75% of their annual compensation or the statutorily prescribed annual limit and have the amount of such reduction contributed to the 401(k) Plans. The 401(k) Plans provide for additional matching contributions by the Company, based on specific terms contained in the 401(k) Plans. On July 8, 2008, the Company amended its 401(k) Plans described above by eliminating the immediate vesting and instituting a five year vesting schedule for all non-production employees and reducing the maximum Company match to an effective 2% from the former rate of 5%. The trustee of the 401(k) Plans, at the direction of each participant, invests the assets of the 401(k) Plans in participant designated investment options. The 401(k) Plans are intended to qualify under Section 401 of the Internal Revenue Code. The Company’s expenses related to the matching provisions of the 401(k) Plans totaled approximately $1.9 million and $1.2 million for

F-31

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to condensed consolidated financial statements

the thirteen weeks ended March 30, 2008 and March 29, 2009, respectively. One of the Company’s facilities participates in a multi-employer pension plan. The Company’s contributions to this plan, which are included in cost of goods sold in the statement of operations, were $81 thousand and $72 thousand for the thirteen weeks ended March 30, 2008 and March 29, 2009, respectively. The Company also made contributions totaling $14 thousand and $28 thousand for the thirteen weeks ended March 30, 2008 and March 29, 2009, respectively, to a multiemployer pension related to former employees at the former Nampa, Idaho plant pursuant to a settlement agreement. As these payments are made, they are recorded as a reduction of the pre-acquisition contingency.

Employees of Swift Australia do not participate in the Company’s 401(k) Plans. Under Australian law, Swift Australia contributes a percentage of employee compensation to a superannuation fund. This contribution approximates 9% of employee cash compensation as required under the Australian “Superannuation Act of 1997”. As the funds are administered by a third party, once this contribution is made to the Superannuation fund, Swift Australia has no obligation for payments to participants or oversight of the fund. The Company’s expenses related to contributions to this fund totaled $3.1 million and $3.8 million for the thirteen weeks ended March 30, 2008 and March 29, 2009, respectively.

Note 9. Deferred revenue

On October 22, 2008 we received a deposit in cash from a customer of $175 million for the customer to secure an exclusive right to collect a certain byproduct of the beef fabrication process in all of our US beef plants. This agreement was formalized in writing as the Raw Material Supply agreement on February 27, 2008. The customer advance payment was recorded as deferred revenue. As byproduct is delivered to the customer over the term of the agreement the deferred revenue is recognized as revenue in the statement of operations. To provide customers with security, in the unlikely event the Company was to default on our commitment, the payment is evidenced by a note which bears interest at 2 month LIBOR plus 200 basis points. In the event of default the note provides for a conversion into shares of common stock of JBS USA Holdings based on a formula stipulated in the note agreement. Assuming default had occurred on March 29, 2009 the conversion right under the promissory note would have equaled 11.34% of the outstanding common stock, equal to 11.34 shares. The note contains affirmative and negative covenants which require the Company to among other things: maintain defined market share; maintain certain tangible net worth levels; and comply in all material respects with the raw material supply agreement. The unamortized balance at March 29, 2009 was approximately $168.8 million.

Note 10. Related party transactions

JBS USA Holdings enters into transactions in the normal course of business with affiliates of JBS. Sales to affiliated companies included in net sales in the statement of operations for the thirteen weeks ended March 30, 2008 and March 29, 2009 were $5.4 million and $109.4 million, respectively. Amounts owed to JBS USA Holdings by affiliates as of March 30, 2008 and March 29,

F-32

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to condensed consolidated financial statements

2009 totaled approximately $5.8 million and $219.4 million, respectively. Purchases from affiliated companies included in the statement of operations for the thirteen weeks ended March 30, 2008 and March 29, 2009 were $0.4 million and $16.6 thousand, respectively. No amounts were due to affiliates by JBS USA Holdings at December 28, 2008 and March 29, 2009 related to these purchases.

The Company had a $0.6 million receivable from an unconsolidated affiliate at December 28, 2008 related to the funding of debt issuance costs on behalf of the affiliate, which was repaid in January 2009.

For the thirteen weeks ended March 30, 2008, the Company recorded $22 thousand of rental income related to real property leased to two of its executive officers. For the thirteen weeks ended March 29, 2009, the Company had no rental income related to real property leased to executive officers. At December 28, 2008 and at March 29, 2009, no balances were due to the Company related to these transactions.

The Company had a $25 thousand receivable from an executive officer at December 28, 2008, which was repaid on January 12, 2009.

The Company has a $50 thousand receivable from an executive officer at March 29, 2009 (see Note 16).

JBS USA Holdings received capital contributions from its parent of $450.0 million during the fifty-two weeks ended December 28, 2008, $50 million was used to fund operations and $400.0 million was used to repay debt. During the fifty-two weeks ended December 28, 2008, the Company entered into various intercompany loans with JBS. These were contributed to JBS USA and used to fund operations and complete the Tasman Acquisition and Smithfield Acquisition (see Notes 3, 4, and 7).

Guarantees—JBS SA has notes payable outstanding of approximately $300 million at March 29, 2009 that are due in 2016. The indenture governing the 2016 Notes requires any significant subsidiary (any subsidiary constituting at least 20% of JBS S.A.’s total assets or annual gross revenues, as shown on the latest financial statements of JBS S.A.) to guarantee all of JBS S.A.’s obligations under the 2016 Notes. The 2016 Notes are guaranteed by JBS Hungary Holdings Kft. (a wholly owned, indirect subsidiary of JBS S.A.), our company and our subsidiaries, JBS USA Holdings, Inc., JBS USA, LLC and Swift Beef Company. Additional subsidiaries of JBS S.A. (including our subsidiaries) may be required to guarantee the 2016 Notes in the future.

Covenants. The indentures for the 2016 Notes contain customary negative covenants that limit the ability of JBS S.A. and its subsidiaries (including us) to, among other things:

•

incur additional indebtedness;

•

incur liens;

•

sell or dispose of assets;

•

pay dividends or make certain payments to JBS S.A.’s shareholders;

F-33

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to condensed consolidated financial statements

•

permit restrictions on dividends and other restricted payments by its subsidiaries;

•

enter into related party transactions;

•

enter into sale/leaseback transactions; and

•

undergo changes of control without making an offer to purchase the notes.

Events of default. The indentures for the 2016 Notes also contain customary events of default, including for failure to perform or observe terms, covenants or other agreements in the indenture, defaults on other indebtedness if the effect is to permit acceleration, failure to make a payment on other indebtedness waived or extended within the applicable grace period, entry of unsatisfied judgments or orders against the issuer or its subsidiaries, and certain events related to bankruptcy and insolvency matters. If an event of default occurs, the trustee or the holders of at least 25% in aggregate principal amount of the notes then outstanding may declare such principal and accrued interest on the notes to be immediately due and payable.

Cattle supply and feeding agreement—Five Rivers is party to a cattle supply and feeding agreement with an unconsolidated affiliate (“the Unconsolidated Affiliate”). Five Rivers feeds and takes care of cattle owned by the Unconsolidated Affiliate. The Unconsolidated Affiliate pays Five Rivers for the cost of feed and medicine at cost plus a yardage fee on a per head per day basis. Beginning on June 23, 2009 or such earlier date on which Five Rivers’ feed yards are at least 85% full of cattle and ending on October 23, 2011, the Unconsolidated Affiliate agrees to maintain sufficient cattle on Five Rivers’ feed yards so that such feed yards are at least 85% full of cattle at all times. The agreement commenced on October 23, 2008 and continues until the last of the cattle on Five Rivers’ feed yards as of October 23, 2011 are shipped to the Unconsolidated Affiliate, a packer or another third party.

Cattle purchase and sale agreement—On October 7, 2008 JBS USA, LLC became party to a cattle purchase and sale agreement with the Unconsolidated Affiliate. Under this agreement, the Unconsolidated Affiliate agrees to sell to JBS USA, LLC, and JBS USA, LLC agrees to purchase from the Unconsolidated Affiliate, at least 500,000 cattle during each year from 2009 through 2011. The price paid by JBS USA, LLC is determined pursuant to JBS USA, LLC’s pricing grid in effect on the date of delivery. The grid used for the Unconsolidated Affiliate is identical to the grid used for unrelated third parties. If the cattle sold by the Unconsolidated Affiliate in a quarter result in a breakeven loss (selling price below accumulated cost to acquire the feeder animal and fatten it to delivered weight) then JBS USA, LLC will reimburse 40% of the average per head breakeven loss incurred by the Unconsolidated Affiliate on up to 125,000 head delivered to JBS USA, LLC in that quarter. If the cattle sold by the Unconsolidated Affiliate in a quarter result in a breakeven gain (selling price above the accumulated cost to acquire the feeder animal and fatten it to delivered weight), then JBS USA, LLC will receive from the Unconsolidated Affiliate an amount of cash equal to 40% of that per head gain on up to 125,000 head delivered to JBS USA, LLC in that quarter. There were no payments under the loss/profit sharing provisions of this agreement for the thirteen weeks ended March 29, 2009.

F-34

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to condensed consolidated financial statements

Guarantee of unconsolidated affiliate’s revolving credit facility—The Unconsolidated Affiliate has a $600.0 million secured revolving credit facility with a commercial bank. Its parent company has entered into a keep-well agreement with its subsidiary (the Unconsolidated Affiliate) whereby it will make contributions to the Unconsolidated Affiliate if the Unconsolidated Affiliate is not in compliance with its financial covenants under this credit facility. If the Unconsolidated Affiliate defaults on its obligations under the credit facility and such default is not cured by its parent under the keep-well agreement, Five Rivers is obligated for up to $250.0 million of guaranteed borrowings plus certain other obligations and costs under this credit facility. This credit facility and the guarantee thereof are secured solely by the assets of the Unconsolidated Affiliate and the net assets of Five Rivers. This credit facility matures on October 7, 2011. This credit facility is used to acquire cattle which are then fed in the Five Rivers feed yards pursuant to the cattle supply and feeding agreement described above. The finished cattle are sold to JBS USA, LLC under the cattle purchase and sale agreement discussed above.

Credit facility to the unconsolidated affiliate—Five Rivers is party to an agreement with the Unconsolidated Affiliate pursuant to which Five Rivers has agreed to loan up to $200.0 million in revolving loans to the Unconsolidated Affiliate. The loans are used by the Unconsolidated Affiliate to acquire feeder animals which are placed in Five Rivers feed yards for finishing. Borrowings accrue interest at a per annum rate of LIBOR plus 2.25% or base rate plus 1.0% and interest is payable at least quarterly. This credit facility matures October 7, 2011. During the thirteen weeks ended March 29, 2009, average borrowings were approximately $149.0 million and total interest accrued was approximately $1.6 million which was recognized as interest income on the statement of operations. As of March 29, 2009 the balance of the note was $171.4 million including accrued interest of $40 thousand.

Variable interest entities—As of March 29, 2009 the Company holds variable interests in the Unconsolidated Affiliate, which is considered a variable interest entity under FASB Interpretation No. 46(R), Consolidation of Variable Interest Entities. The Company has determined that it is not the primary beneficiary of the Unconsolidated Affiliate but has significant variable interests in the entity. The Company’s significant variable interests are listed below and discussed further above:

•

Five Rivers has agreed to provide up to $200 million in loans to the Unconsolidated Affiliate;

•

Five Rivers’ guarantee of up to $250 million of the Unconsolidated Affiliate’s borrowings under its revolving credit facility plus certain other obligations and costs, which is secured by and limited to the net assets of Five Rivers; and

•

JBS USA, LLC’s rights and obligations under the cattle purchase and sale agreement.

The Company’s maximum exposure to loss related to these variable interests is limited to the lesser of the net assets of Five Rivers (including loans made to the Unconsolidated Affiliate) or $250 million plus certain other obligations and costs. As of March 29, 2009, the carrying value of Five Rivers’ net assets is $334.8 million. Potential losses under the terms of the cattle purchase and sale agreement depend on future market conditions.

F-35

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to condensed consolidated financial statements

Note 11. Income taxes

The pre-tax income (loss) on which the provision for income taxes was computed is as follows (in thousands):


	Thirteen weeks ended
	March 30, 2008		March 29, 2009

Domestic	$(28,962	)	$2,720
Foreign	16,433		441

Total	$(12,529	)	$3,161

Income tax expense includes the following current and deferred provisions (in thousands):


	Thirteen weeks ended
	March 30, 2008	March 29, 2009


Current provision:
Federal	$ —	$211
State	183	93
Foreign	5,255	501

Total current tax expense	5,438	805


Deferred provision:
Federal	161	104
State	14	—
Foreign	—	—

Total deferred tax expense	175	104

Total income tax expense	$5,613	$909

Temporary differences that gave rise to a significant portion of the deferred tax assets (liabilities) include federal and state net operating loss carryforwards, foreign capital loss carryforwards, foreign exchange gain and depreciable and amortizable assets.

The total amount of the deferred tax assets (liabilities) are as follows (in thousands):


	December 28, 2008		March 29, 2009

Total deferred tax liability	$(305,915	)	$(306,505	)

Total deferred tax asset	210,389		210,704
Valuation allowance	(42,826	)	(42,826	)

Net deferred tax assets	167,563		167,878

Net deferred tax liability	$(138,352	)	$(138,627	)

F-36

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to condensed consolidated financial statements

At December 28, 2008, JBS USA Holdings has recorded deferred tax assets of $141.0 million for loss carryforwards expiring in the years 2009 through 2029. In addition, JBS USA Holdings has $14.3 million of tax credits of which $10.3 million will expire in the years 2009 through 2028 and $4.0 million will carryforward indefinitely.

Section 382 of the Internal Revenue Code of 1986, as amended, imposes an annual limit on the ability of a corporation that undergoes an “ownership change” to use its net operating losses to reduce its tax liability. JBS USA Holdings experienced an ownership change in January of 2007 and July of 2007. JBS USA Holdings believes that its net operating losses exceed the Section 382 limitation in the amount of $14 million.

The valuation allowance as of December 28, 2008 and March 29, 2009 was primarily related to loss and credit carryforwards that, in the judgment of management, will not be realized. Subsequently recognized tax benefits relating to the valuation allowance for deferred tax assets as of December 28, 2008 and March 29, 2009 will be allocated to income tax expense, pursuant to FAS 141R.

JBS USA Holdings deems all of its foreign investments to be permanent in nature and does not provide for taxes on permanently reinvested earnings. It is not practicable to determine the amount of incremental taxes that might arise were these earnings to be remitted.

JBS USA Holdings follows the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes (“FIN 48”). JBS USA Holdings’ unrecognized tax benefits are $8.1 million, the recognition of which would not have a material impact on the effective rate.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):


Balance at December 28, 2008	$8,100
Additions based on tax positions related to the current period	—
Additions for tax positions of prior years	—
Reductions for tax positions of prior years	—
Settlements	(40	)

Balance at March 29, 2009	$8,060

JBS USA Holdings recognizes both interest and penalties related to uncertain tax positions as part of the income tax provision. As of December 28, 2008, accrued interest and penalties were $5 thousand. As of March 29, 2009, accrued interest and penalty amounts related to uncertain tax positions were reduced to zero as a result of a settlement. The unrecognized tax benefit and related penalty and interest balances at March 29, 2009 are not expected to change within the next twelve months.

JBS USA Holdings files income tax returns in the U.S. and in various states and foreign countries. JBS USA Holdings has been audited for US Federal income tax purposes through the May 2004 tax year. No other major jurisdictions where JBS USA Holdings operates have been under audit.

F-37

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to condensed consolidated financial statements

Note 12. Commitments and contingencies

Swift Beef is a defendant in a lawsuit entitled United States of America, ex rel, Ali Bahrani v. ConAgra, Inc., ConAgra Foods, Inc., ConAgra Hide Division, ConAgra Beef Company and Monfort, Inc., filed in the United States District Court for the District of Colorado in May 2000 by the relator on behalf of the United States of America and himself for alleged violations of the False Claims Act. Under the False Claims Act, a private litigant, termed the “relator,” may file a civil action on the United States government’s behalf against another party for violation of the statute, which, if proven, would entitle the relator to recover a portion of any amounts recovered by the government. The lawsuit alleges that the defendants violated the False Claims Act by forging and/or improperly altering USDA export certificates used from 1991 to 2002 to export beef, pork, poultry and bovine hides to foreign countries. The lawsuit seeks to recover three times the actual damages allegedly sustained by the government, plus per-violation civil penalties.

On December 30, 2004, the United States District Court granted the defendants’ motions for summary judgment on all claims. The United States Court of Appeals for the Tenth Circuit reversed the summary judgment on October 12, 2006 and remanded the case to the trial court for further proceedings consistent with the court’s opinion. Defendants filed a Motion for Rehearing En Banc on October 26, 2006. On May 10, 2007, the Tenth Circuit denied that motion.

Issues in the case were bifurcated and two separate jury trials were held, the first trial centering on beef certificates was held from April 28, 2008, to April 29, 2008 and the second trial centering on bovine hide certificates was held from March 9 to March 19, 2009. Following the April trial, a verdict with respect to the beef certificates was returned ruling in favor of the Company on all counts. Following the March trial, a verdict with respect to the bovine hide certificates was returned ruling in favor of Company on 99.5% of the claims. Specifically, Company prevailed with respect to approximately 995 bovine hide certificates and the relator prevailed with respect to only 5 certificates. Based on the False Claims Act, this verdict resulted in a judgment against Company of $28 thousand. The relator’s right to appeal the March trial verdict lapses in the second fiscal quarter of 2009.

The Company is also a party to a number of other lawsuits and claims arising out of the operation of its businesses. Management believes the ultimate resolution of such matters should not have a material adverse effect on the Company’s financial condition, results of operations, or liquidity. Attorney fees are expensed as incurred.

Commitments

F-38

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to condensed consolidated financial statements

contracts and applied those to either the minimum quantities required per the contract or management’s estimates of livestock to be purchased under certain contracts to determine its estimated commitments for the purchase of livestock, which are as follows (in thousands):


Estimated livestock purchase commitments for fiscal years ended:
2009 (remaining)		$3,178,822
2010		1,088,085
2011		808,777
2012		722,241
2013		489,297
Thereafter		98,176

Through use of these contracts, the Company purchased approximately 69% of its hog slaughter needs during the thirteen weeks ended March 29, 2009.

Note 13. Business segments

JBS USA Holdings is organized into two operating segments, which are also the Company’s reportable segments: Beef and Pork. In the Beef segment, we conduct our domestic and international beef processing business, including the beef operations we acquired in the JBS Packerland Acquisition in 2008 and the beef, lamb, and sheep operations we acquired in the Tasman Acquisition in 2008. In the Pork segment, we conduct our domestic pork and lamb processing business. Segment operating performance is evaluated by the Chief Operating Decision Maker (“CODM”), as defined in SFAS No. 131, Disclosure about Segments of an Enterprise and Related Information, based on Earnings Before Interest, Taxes, Depreciation, and Amortization (“EBITDA”). EBITDA is not intended to represent cash from operations as defined by GAAP and should not be considered as an alternative to cash flow or operating income as measured by GAAP. JBS USA believes EBITDA provides useful information about operating performance, leverage, and liquidity. The accounting policies of the segments are consistent with those described in Note 4. All intersegment sales and transfers are eliminated in consolidation.

On November 5, 2008, the Company entered into a new asset based revolving credit facility (see Note 7). The definition of EBITDA contained in that agreement requires EBITDA to be calculated as net income adding back taxes, depreciation, amortization and interest and excluding certain non-cash items which affect net income. The Company has changed its definition of EBITDA to align with the definition contained in that agreement and as such the amounts below reflect the new definition.

Beef—The majority of Beef’s revenues are generated from US and Australian sales of fresh meat, which include chuck cuts, rib cuts, loin cuts, round cuts, thin meats, ground beef, and other products. In addition, Beef also sells beef by-products to the variety meat, feed processing, fertilizer, automotive, and pet food industries. Furthermore, Australia’s Foods Division produces value-added meat products including toppings for pizzas. On May 2, 2008, JBS Southern completed the Tasman Acquisition and now operates six processing facilities and one feedlot which are reported in the Beef segment (see Note 2). On October 23, 2008, the Company

F-39

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to condensed consolidated financial statements

completed the Smithfield Acquisition adding four plants and eleven feedlots which are reported in the Beef segment (see Note 3).

Pork—A significant portion of Pork’s revenues are generated from the sale of products predominantly to retailers of fresh pork including trimmed cuts such as loins, roasts, chops, butts, picnics, and ribs. Other pork products, including hams, bellies, and trimmings are sold predominantly to further processors who, in turn, manufacture bacon, sausage, and deli and luncheon meats. The remaining sales are derived from by-products and from further-processed, higher-margin products. The lamb slaughter facility is included in Pork and accounts for less than 1% of total net sales.

Corporate and other—Includes certain revenues, expenses, and assets not directly attributable to the primary segments, as well as eliminations resulting from the consolidation process.


	Thirteen weeks ended
	March 30, 2008		March 29, 2009

	(in thousands)		(in thousands)

Net sales
Beef	$1,935,142		$2,680,205
Pork	535,509		526,283
Corporate and other.	(8,994	)	(10,149	)

Total	$2,461,657		$3,196,339


Depreciation and amortization
Beef	$ 14,114		$ 26,568
Pork	5,025		6,784

Total	$ 19,139		$33,352


EBITDA
Beef	$ (13,517	)	$ 59,670
Pork	15,640		7,478
Corporate	—		(20,938	)

Total	2,123		46,210
Depreciation and amortization	(19,139	)	(33,352	)
Interest expense, net	(8,108	)	(14,592	)
Foreign currency transaction gains	12,614		5,075
Loss on sales of property, plant and equipment	(19	)	(180	)

Income (loss) before income tax expense	(12,529	)	3,161
Income tax expense	5,613		909

Net income (loss)	$(18,142	)	$2,252


Capital expenditures
Beef	$ 8,727		$ 26,897
Pork	2,949		8,292

Total	$ 11,676		$ 35,189

F-40

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to condensed consolidated financial statements

Sales by geographical area based on the location of the facility recognizing the sale (in thousands):


	Thirteen weeks ended
	March 30, 2008	March 29, 2009


Net sales
United States	$2,072,651	$2,817,070
Australia	389,006	379,269

Total	$2,461,657	$3,196,339

Sales to unaffiliated customers by location of customer (in thousands):


	Thirteen weeks ended
	March 30, 2008	March 29, 2009

United States	$1,772,254	$2,533,813
Japan	145,485	155,387
Australia	104,041	106,748
Mexico	127,122	97,924
China	55,501	67,295
Other	257,254	235,172

Total	$2,461,657	$3,196,339

No single customer or supplier accounted for more than 10% of net sales or cost of goods sold, respectively, during the thirteen weeks ended March 29, 2009.

Corporate and other—Includes certain assets not directly attributable to the primary segments as well as the parent companies’ investment in each operating subsidiary. Also includes eliminations resulting from the consolidation process.

Total assets by segments (in thousands):


	December 28, 2008		March 29, 2009

	(in thousands)		(in thousands)

Total assets
Beef	$2,838,619		$2,760,533
Pork	519,995		524,553
Corporate and other	(43,043	)	23,729

Total	$3,315,571		$3,308,815

F-41

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to condensed consolidated financial statements

Long-lived tangible assets by location of assets (in thousands):


	December 28, 2008	March 29, 2009


Long-lived assets:
United States	$ 906,044	$1,108,901
Australia	360,400	364,687
Other	83	97

Total	$1,266,527	$1,473,685

Long-lived assets consist of (1) property, plant, and equipment, net of depreciation, and (2) other assets less debt issuance costs of $12.5 million and $11.5 million as of December 28, 2008 and March 29, 2009, respectively.

Note 14. Supplemental guarantor information

JBS USA Holdings’ income and cash flow is generated by its subsidiaries. As a result, funds necessary to meet the Company’s debt service obligations, including its obligations as Guarantor under the unsecured debt due 2014 of its subsidiary JBS USA, LLC (see Note 16) are provided in large part by distributions or advances from its subsidiaries. Under certain circumstances, contractual and legal restrictions, as well as JBS USA Holding’s financial condition and operating requirements and those of certain domestic subsidiaries, could limit the Company’s ability to obtain cash for the purpose of meeting its debt service obligation including the payment of principal and interest on the unsecured debt offering due 2014.

The following condensed financial statements set forth JBS USA Holdings’ balance sheets as of December 28, 2008 and March 29, 2009, statements of earnings for the thirteen weeks ended March 30, 2008 and March 29, 2009 and statements of cash flows for the thirteen weeks ended March 30, 2008 and March 29,2009. Effective with the date of the debt issuance, JBS USA, LLC’s unsecured debt offering due 2014 has been guaranteed by JBS USA Holdings (the “Parent Guarantor”), JBS USA, LLC (the “Issuer”) and each of JBS USA Holding’s domestic subsidiaries (the “Subsidiary Guarantors”), excluding Five Rivers Cattle Feeding. The financial information is presented under the following column headings: Parent Guarantor, Issuer, Subsidiary Guarantors, and Subsidiary Non-Guarantors. “Subsidiary Non-Guarantors” include the foreign subsidiaries of JBS USA Holdings, which include Swift Refrigerated Foods S.A. de C.V., Kabushiki Kaisha SAC Japan, Swift Australia Pty. Ltd, and the domestic subsidiary, Five Rivers Cattle Feeding. For purposes of this Guarantor/Non guarantor presentation, investments in JBS USA Holdings’ subsidiaries are accounted for on the equity method. Accordingly, entries necessary to consolidate the Parent Guarantor, the Issuer, and all of its subsidiaries are reflected in the eliminations column. Separate complete financial statements of the Issuer and the Subsidiary Guarantors would not provide additional material information that would be useful in assessing the financial composition of the Issuer or the Subsidiary Guarantors.

F-42

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to condensed consolidated financial statements

All of the Subsidiary Guarantors are wholly-owned subsidiaries of JBS USA, LLC and their guarantees are full and unconditional, and joint and several. There are no provisions in the indentures governing the unsecured debt due 2014 or other existing agreements that would prevent holders of guaranteed obligations from taking immediate action against the Parent Guarantor or any Subsidiary Guarantor in the event of default. The ability of the Subsidiary Guarantors to pay dividends or make loans or other payments to JBS USA Holdings’ depends on their earnings, capital requirements, and general financial condition. The Parent Guarantor is a holding company with no operations of its own, and its assets consist of financing costs associated with, and the member’s interest of, JBS USA, LLC. Consequently, its ability to pay amounts under its guarantee depends on the earnings and cash flows of JBS USA, LLC and its subsidiaries and the ability of these entities to pay dividends or advance funds to the Parent Guarantor.

F-43

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to condensed consolidated financial statements

Condensed consolidating balance sheet

December 28, 2008

(in thousands)


	JBS USA Holdings parent guarantor	JBS USA, LLC issuer	Subsidiary guarantors	Subsidiary non-guarantors	Eliminations/ adjustments		Total


Assets

Current assets:
Cash and cash equivalents	$ 36	$ 32,096	$ 4,372	$ 218,281	$ —		$ 254,785
Accounts receivables, net	—	100,752	404,446	181,324	(97,537	)	588,985
Net intercompany receivables	—	889,097	—	21,786	(910,883	)	—
Inventories, net	—	—	440,696	208,304	—		649,000
Deferred income taxes, net	—	—	14,544	21	(9,160	)	5,405
Other current assets	373	21,704	87,384	14,972	(38,912	)	85,521

Total current assets	409	1,043,649	951,442	644,688	(1,056,492	)	1,583,696
Property, plant and equipment, net	—	—	810,684	418,632	—		1,229,316
Notes receivable	—	—	1,541	89	—		1,630
Other assets	11,640	104,661	432,888	66,344	(114,604	)	500,929
Net investment in and advances to subsidiaries	2,322,622	1,410,127	—	—	(3,732,749	)	—

Total assets	$2,334,671	$2,558,437	$2,196,555	$1,129,753	$(4,903,845	)	$3,315,571


Liabilities and stockholder’s equity

Current liabilities:
Short-term debt	$ —	$ —	$ —	$ 67,012	$ —		$ 67,012
Current portion of long term debt	—	920	2,028	1,551	—		4,499
Current portion of deferred revenue	10,400	302	24,916	2,601	—		38,219
Net Intercompany payable	—	—	910,883	—	(910,883	)	—
Accounts payable	96,291	—	112,354	81,397	(97,345	)	192,697
Book overdraft	—	8,377	134,878	17,277	—		160,532
Accrued liabilities able	17,366	81,246	157,353	66,209	(39,105	)	283,069
Deferred income taxes, net	1,182	7,977	—	8,587	(9,159	)	8,587

Total current liabilities	125,239	98,822	1,342,412	244,634	(1,056,492	)	754,615
Long-term debt, excluding current portion	658,588	123,968	21,960	2,292	—		806,808
Deferred revenue, excluding current portion	162,594	8	462	—	—		163,064
Deferred income taxes, net	—	—	263,890	1,384	(114,604	)	150,670
Other noncurrent liabilities Commitments and contingencies	—	13,017	17,656	21,491	—		52,164

Total liabilities	946,421	235,815	1,646,380	269,801	(1,171,096	)	1,927,321
Total stockholder’s equity	1,388,250	2,322,622	550,175	859,952	(3,732,749	)	1,388,250

Total liabilities and stockholder’s equity	$2,334,671	$2,558,437	$2,196,555	$1,129,753	$(4,903,845	)	$3,315,571

F-44

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to condensed consolidated financial statements

Condensed consolidating balance sheet

March 29, 2009

(in thousands)


	JBS USA Holdings parent guarantor	JBS USA, LLC issuer	Subsidiary guarantors		Subsidiary non-guarantors	Eliminations/ adjustments		Total


Assets

Current assets:
Cash and cash equivalents	$ 36	$ 95,697	$ 8,674		$ 52,330	$ —		$ 156,737
Accounts receivables, net	—	142,905	348,037		164,387	(141,169	)	514,160
Net intercompany receivables	—	874,470	—		28,262	(902,732	)	—
Inventories, net	—	—	433,096		216,930	—		650,026
Deferred income taxes, net	—	—	14,263		21	(9,159	)	5,125
Other current assets	10,179	26,210	70,114		13,628	(47,701	)	72,430

Total current assets	10,215	1,139,282	874,184		475,558	(1,100,761	)	1,398,478
Property, plant and equipment, net	—	—	816,597		424,458	—		1,241,055
Notes receivable	—	895,000	1,415		171,356	(895,000	)	172,771
Other assets	13,888	102,392	427,791		66,940	(114,500	)	496,511
Net investment in and advances to subsidiaries	2,350,412	538,417	—		—	(2,888,829	)	—

Total assets	$2,374,515	$2,675,091	$ 2,119,987		$1,138,312	$(4,999,090	)	$3,308,815


Liabilities and stockholder’s equity

Current liabilities:
Short-term debt	$ —	$ —	$ —		$ 71,428	$ —		$ 71,428
Current portion of long-term debt	—	920	1,608		1,575	—		4,103
Current portion of deferred revenue	10,400	238	10,876		2,198	—		23,712
Net intercompany payable	—	—	902,732		—	(902,732	)	—
Accounts payable	123,070	—	69,221		83,394	(123,070	)	152,615
Book overdraft	—	6,983	103,694		10,255	—		120,932
Accrued liabilities	27,974	77,287	166,281		65,514	(65,800	)	271,256
Deferred incomes taxes, net	1,182	7,977	—		8,723	(9,159	)	8,723

Total current liabilities	162,626	93,405	1,254,412		243,087	(1,100,761	)	652,769
Long-term debt, excluding current portion	658,597	219,252	21,743		1,925	—		901,517
Notes payable	—	—	895,000		—	(895,000	)	—
Deferred revenue, excluding current portion	158,353	8	362		—	—		158,723
Deferred income taxes, net	—	—	263,890		1,384	(114,500	)	150,774
Other noncurrent liabilities	—	12,014	16,337		21,742	—		50,093

Total liabilities	979,576	324,679	2,451,744		268,138	(2,110,261	)	1,913,876
Total stockholder’s equity	1,394,939	2,350,412	(331,757	)	870,174	(2,888,829	)	1,394,939

Total liabilities and stockholder’s equity	$2,374,515	$2,675,091	$2,119,987		$1,138,312	$(4,999,090	)	$3,308,815

F-45

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to condensed consolidated financial statements

Statements of operations

Thirteen weeks ended March 30, 2008

(in thousands)


	JBS USA Holdings parent guarantor		JBS USA, LLC issuer		Subsidiary guarantors		Subsidiary non- guarantors		Eliminations/ adjustments	Total

Net sales	$ —		$ —		$2,072,651		$389,006		$ —	$2,461,657
Cost of goods sold	—		—		2,071,626		379,787		—	2,451,413

Gross profit	—		—		1,025		9,219		—	10,244
Selling, general and administrative expenses	—		—		26,765		4,277		—	31,042
Foreign currency translation gains	—		—		(26	)	(12,588	)	—	(12,614	)
Other income	—		—		(3,543	)	(239	)		(3,782	)
Loss/(gain) on sales of property, plant and equipment	—		—		(151	)	170			19
Interest expense, net	8,772		—		(305	)	(359	)	—	8,108

Income (loss) before income taxes	(8,772	)	—		(21,715	)	17,958		—	(12,529	)
Income tax expense	—		—		1,827		3,786		—	5,613

Income (loss) before equity in earnings of consolidated subsidiaries	(8,772	)	—		(23,542	)	14,172		—	(18,142	)
Equity in earnings of consolidated subsidiaries	(9,370	)	(9,370	)	—		—		18,740	—

Net income (loss)	$(18,142	)	$(9,370	)	$ (23,542	)	$ 14,172		$18,740	$ (18,142	)

Thirteen weeks ended March 29, 2009

(in thousands)


	JBS USA Holdings parent guarantor		JBS USA, LLC issuer	Subsidiary guarantors		Subsidiary non- guarantors		Eliminations/ adjustments		Total

Net sales	$ —		$ —	$2,670,436		$525,903		$ —		$3,196,339
Cost of goods sold	—		—	2,611,139		512,219		—		3,123,358

Gross profit	—		—	59,297		13,684		—		72,981
Selling, general and administrative expenses	20,938		—	31,704		8,956		—		61,598
Foreign currency translation gains	—		—	(93	)	(4,982	)	—		(5,075	)
Other income	—			(1,138	)	(337	)			(1,475	)
Loss/(gain) on sales of property, plant and equipment	—			61		119				180
Interest expense, net	12,217		—	3,134		(759	)	—		14,592

Income (loss) before income taxes	(33,155	)	—	25,629		10,687		—		3,161
Income tax expense	(12,035	)	—	9,791		3,153		—		909

Income (loss) before equity in earnings of consolidated subsidiaries	(21,120	)	—	15,838		7,534		—		2,252
Equity in earnings of consolidated subsidiaries	23,372		23,372	—		—		(46,744	)	—

Net income (loss)	$ 2,252		$23,372	$ 15,838		$ 7,534		$(46,744	)	$ 2,252

F-46

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to condensed consolidated financial statements

Statement of cash flows

Thirteen weeks ended March 30, 2008

(in thousands)


	JBS USA Holdings parent guarantor		JBS USA, LLC issuer		Subsidiary guarantors		Subsidiary non- guarantors		Eliminations/ adjustments		Total

Net cash flows provided by (used in) operating activities	$ (23,376	)	$ (4,159	)	$(124,219	)	$ 22,843		$ —		$(128,911	)


Cash flows from investing activities:
Purchases of property, plant and equipment	—		(150	)	(8,422	)	(3,104	)	—		(11,676	)
Proceeds from sales of property, plant, and equipment	—		—		4		36		—		40
Investment activity with subsidiaries	(26,624	)	—		—		—		26,624		—
Investment in bonds	—		(4,900	)	—		—		—		(4,900	)
Proceeds from sale of non-operating property	—		—		1,160		—		—		1,160

Net cash flows provided by (used in) investing activities	(26,624	)	(5,050	)	(7,258	)	(3,068	)	26,624		(15,376	)


Cash flows from financing activities:
Payments of short-term debt	(400,000	)	—		—		(16,980	)	—		(416,980	)
Payments of long term debt and capital lease obligation	—		(118	)	(250	)	—		—		(368	)
Change in overdraft balances	—		(6,224	)	(4,293	)	—		—		(10,517	)
Capital contributions	450,000		50,000		—		—		(50,000	)	450,000
Dividend payment to parent	—		(23,376	)	—		—		23,376		—
Net investments and advances/(distributions)	—		(124,490	)	134,543		(10,053	)	—		—

Net cash flows provided by (used in) financing activities	50,000		(104,208	)	130,000		(27,033	)	(26,624	)	22,135

Effect of exchange rates on cash	—		—		—		634		—		634

Net change in cash and cash equivalents	—		(113,417	)	(1,477	)	(6,624	)	—		(121,518	)

Cash and cash equivalents, beginning of period	37		184,012		2,047		12,787		—		198,883

Cash and cash equivalents, end of period	$ 37		$ 70,595		$ 570		$ 6,163		$ —		$ 77,365

F-47

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to condensed consolidated financial statements

Statement of cash flows

Thirteen weeks ended March 29, 2009

(in thousands)


	JBS USA Holdings parent guarantor	JBS USA, LLC issuer		Subsidiary guarantors	Subsidiary non- guarantors	Eliminations/ adjustments	Total

Net cash flows provided by operating activities	$ —	$(31,317	)	$ 56,315	$ 26,005	$—	$ 51,003


Cash flows from investing activities:
Purchase of property, plant and equipment	—	—		(26,712)	(8,477)	—	(35,189)
Proceeds from sales of property, plant and equipment	—	—		—	15	—	15
Issuance of notes receivable	—	—		—	(171,266)	—	(171,266)

Net cash flows provided by (used in) investing activities	—	—		(26,712)	(179,728)	—	(206,440)


Cash flows from financing activities:
Net borrowings (payments) of revolving credit facility	—	95,514		—	1,292	—	96,806
Payments of short-term debt	—	—		(257)	(77)	—	(334)
Payments of long-term debt and capital lease obligations	—	(230)		(566)	(386)	—	(1,182)
Change in overdraft balances	—	(1,394)		(31,185)	(7,022)	—	(39,601)
Net investments and advances/(distributions)	—	1,028		6,707	(7,735)	—	—

Net cash flows provided by (used in) financing activities	—	94,918		(25,301)	(13,928)	—	55,689

Effect of exchange rates on cash	—	—		—	1,700	—	1,700

Net change in cash and cash equivalents	—	63,601		4,302	(165,951)	—	(98,048)

Cash and cash equivalents, beginning of period	36	32,096		4,372	218,281	—	254,785

Cash and cash equivalents, end of period	$36	$ 95,697		$ 8,674	$ 52,330	$—	$ 156,737

F-48

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to condensed consolidated financial statements

Note 15. Terminated acquisition

On February 29, 2008, JBS USA Holdings entered into an agreement with National Beef to acquire all of the outstanding membership interests for a combination of approximately $465.0 million cash, $95.0 million in JBS common stock (the purchase price) and the assumption of debt.

On October 20, 2008, the United States Department of Justice (“DOJ”) filed an injunction to stop the Company’s planned acquisition of National Beef.

On February 18, 2009, an agreement was reached with the sellers of National Beef whereby JBS USA Holdings will terminate the acquisition process of National Beef effective February 23, 2009. All related litigation with the DOJ was terminated. As a result of the agreement JBS USA Holdings agreed to reimburse the seller’s shareholders a total $19.9 million as full and final settlement of any and all liabilities related to the potential acquisition. This payment including related legal costs is reflected in Corporate and other segment for the thirteen weeks ended March 29, 2009.

Note 16. Subsequent events

On April 27, 2009 the Credit Agreement was amended to allow the execution of the senior unsecured notes of JBS USA, LLC described below. Under the amendment, the existing limitation on distributions between JBS USA, LLC and JBS USA Holdings was amended to allow for the proceeds of the senior unsecured bond offering, less transaction expenses and $100.0 million retained by JBS USA, LLC to be remitted to JBS USA Holdings as a one time distribution. Also, the unused line fee was increased from 37.5 basis points to 50 basis points.

On April 27, 2009, JBS USA, LLC, a wholly owned subsidiary, issued $700 million of senior unsecured notes. Interest on these notes accrues at a rate of 11.625% per annum and is payable semi-annually in arrears on May 1 and November 1 of each year, beginning on November 1, 2009. The principal amount of these notes is payable in full on May 1, 2014. The proceeds net of expenses were $650.8 million and were used to repay $100.0 million on the Credit Agreement and the balance was used to repay intercompany debt and accrued interest owed to JBS S.A. These notes are guaranteed by JBS S.A., us, JBS Hungary Holdings Kft. (a wholly owned, indirect subsidiary of JBS S.A.), and each of our U.S. restricted subsidiaries that guarantee our senior secured revolving facility (subject to certain exceptions).

Covenants. The indenture for the 11.625% senior unsecured notes due 2014 contains customary negative covenants that limit our and our restricted subsidiaries’ ability to, among other things:

•

incur additional indebtedness based on net debt to EBITDA ratio;

•

incur liens;

•

sell or dispose of assets;

•

pay dividends or make certain payments to our shareholders;

F-49

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to condensed consolidated financial statements

•

permit restrictions on dividends and other restricted payments by its restricted subsidiaries;

•

enter into related party transactions;

•

enter into sale/leaseback transactions; and

•

undergo changes of control without making an offer to purchase the notes.

Events of default. The indenture also contains customary events of default, including failure to perform or observe terms, covenants or other agreements in the indenture, defaults on other indebtedness if the effect is to permit acceleration, failure to make a payment on other indebtedness waived or extended within the applicable grace period, entry of unsatisfied judgments or orders against the issuer or its subsidiaries, and certain events related to bankruptcy and insolvency matters. If an event of default occurs, the trustee or the holders of at least 25% in aggregate principal amount of the notes then outstanding may declare such principal and accrued interest on the notes to be immediately due and payable.

On April 27, 2009, JBS USA Holdings refinanced its five separate intercompany notes with JBS HU Liquidity Management LLC into one note with a stated interest rate of 12% and a 10 year maturity.

On April 28, 2009, the Company received $50 thousand; including principal plus interest from an executive officer (see Note 10).

Beginning in mid-April 2009 the world press began publicizing the occurrence of regionalized influenza outbreaks which were linked on a preliminary basis to a hybrid avian/swine/human virus. As a result commencing on April 14, 2009 several foreign countries including Russia, Thailand, Ukraine, Communist China, and the Philippines closed their borders to some or all pork produced in the affected states in the USA or other affected regions in the world. The company is not able to assess whether or when the influenza outbreak might lessen or whether or when additional countries might impose restrictions on the importation of pork products from the USA, nor whether or when the existing import bans might be lifted.

On April 24, 2009, the Company issued a forgivable promissory note in the amount of $235 thousand to an officer of the Company. The note bears interest at 5.25% and will be forgiven in four equal installments on the anniversary date of the loan as long as the executive continues to be an employee. If the employee is terminated for cause the entire note balance plus accrued interest will be due and payable on the termination date.

F-50

LOGO

700 North Pearl, Suite 2000

Dallas, Texas 75201

Telephone: 214-969-7007

Fax: 214-953-0722

Board of Directors

JBS USA Holdings, Inc.

Greeley, Colorado

We have audited the accompanying consolidated balance sheet of JBS USA Holdings, Inc. as of December 28, 2008 and the related consolidated statements of operations, stockholder’s equity, and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the auditing standards of the Public Company Accounting Oversight Board (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 consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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 JBS USA Holdings, Inc. at December 28, 2008, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

/s/ BDO Seidman, LLP

Dallas, Texas

July 21, 2009

F-51

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Consolidated balance sheet

December 28, 2008

(dollars in thousands, except per share data)



Assets

Current assets:
Cash and cash equivalents	$ 254,785
Accounts receivable, net of allowance for doubtful accounts of $4,142	588,985
Inventories, net	649,000
Deferred income taxes, net	5,405
Other current assets	85,521

Total current assets	1,583,696
Property, plant, and equipment, net	1,229,316
Goodwill	147,855
Other intangibles, net	304,967
Notes Receivable	1,630
Deferred income taxes, net	15,500
Other assets	32,607

Total assets	$3,315,571


Liabilities and stockholder’s equity

Current liabilities:
Short-term debt	$ 67,012
Current portion of long-term debt	4,499
Current portion of deferred revenue	38,219
Accounts payable	192,697
Book overdraft	160,532
Deferred income taxes, net	8,587
Accrued liabilities	283,069

Total current liabilities	754,615
Long-term debt, excluding current portion	806,808
Deferred revenue	163,064
Deferred income taxes, net	150,670
Other non-current liabilities	52,164

Total liabilities	1,927,321
Commitments and contingencies

Stockholder’s equity:
Common stock: par value $.01 per share, 500,000,000 authorized, 100 shares issued and outstanding	—
Additional paid-in capital	1,400,159
Retained earnings	49,512
Accumulated other comprehensive loss	(61,421	)

Total stockholder’s equity	1,388,250

Total liabilities and stockholder’s equity	$3,315,571

The accompanying notes are an integral part of this consolidated financial statement.

F-52

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Consolidated statement of operations

For the fifty-two weeks ended December 28, 2008

(dollars in thousands, except per share data )


	The fifty-two weeks ended December 28, 2008

Gross sales	$12,424,274
Less deductions from sales	(61,993	)

Net sales	12,362,281
Cost of goods sold	11,917,777

Gross profit	444,504
Selling, general, and administrative expenses	148,785
Foreign currency transaction losses	75,995
Other income, net	(10,107	)
Loss on sales of property, plant, and equipment	1,082
Interest expense, net	36,358

Income before income tax expense	192,391
Income tax expense	31,287

Net income	$161,104


Income per common share:
Basic	$1,611,040.00
Diluted	$1,611,040.00

Weighted average shares:
Basic	100
Diluted	100

The accompanying notes are an integral part of this consolidated financial statement.

F-53

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Consolidated statement of cash flows

for the fifty-two weeks ended

December 28, 2008

(dollars in thousands)




Cash flows from operating activities:
Net income	$ 161,104
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	75,756
Amortization of intangibles	16,618
Amortization of debt issuance costs	1,815
Loss on sale of property, plant, and equipment	1,082
Deferred income taxes	5,686
Foreign currency transaction gains	(13,065	)

Change in assets and liabilities, net of impact of acquisitions:
Restricted cash	31,479
Accounts receivable, net	(74,445	)
Inventories	(84,489	)
Other current assets	(30,088	)
Accounts payable and accrued liabilities	15,928
Noncurrent assets	(1,513	)
Noncurrent liabilities	1,279
Deferred revenue	175,000

Net cash flows provided by operating activities	282,147


Cash flows from investing activities:
Purchases of property, plant, and equipment	(118,320	)
Proceeds from sales of property, plant, and equipment	530
Investment in bonds	(1,000	)
Proceeds from sale of nonoperating real property	2,537
Notes receivable and other	(89	)
Acquisition of businesses, net of cash acquired	(667,397	)

Net cash flows used in investing activities	(783,739	)


Cash flows from financing activities:
Net borrowings of revolver	127,926
Proceeds from debt issuance	750,000
Payments of short-term debt	(750,106	)
Payments of long-term debt and capital lease obligations	(3,577	)
Change in overdraft balances	10,251
Investment from parent	450,000
Debt issuance costs	(13,229	)

Net cash flows provided by financing activities	571,265

Effect of exchange rate changes on cash	(13,771	)

Net change in cash and cash equivalents	55,902
Cash and cash equivalents, beginning of period	198,883

Cash and cash equivalents, end of period	$ 254,785


Non-cash investing and financing activities:
Construction in process under deemed capital lease	$ 9,166

Reduction of long-term debt	$ 90,910

Debt assumed from Tasman acquisition	$ 52,137


Supplemental information:
Cash paid for interest	$ 34,895

Cash paid for income taxes	$ 11,735

The accompanying notes are an integral part of this consolidated financial statement

F-54

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Consolidated statement of stockholder’s equity

For the fifty-two weeks ended December 28, 2008

(dollars in thousands)


	Common stock issued/ outstanding	Common stock	Additional paid-in capital	Retained earnings (accumulated deficit)		Accumulated other comprehensive income/(loss)		Total stockholder’s equity


Balance at December, 30, 2007	100	$—	$ 950,159	$(111,592	)	$ 251		$ 838,818
Capital contributions	—	—	450,000	—		—		450,000

Comprehensive income (loss):
Net income	—	—	—	161,104		—		161,104
Derivative financial instrument adjustment, net of tax of $39	—	—	—	—		55		55
Foreign currency translation adjustment	—	—	—	—		(61,727	)	(61,727	)

Total comprehensive income								99,432

Balance at December 28, 2008	100	$—	$1,400,159	$49,512		$(61,421	)	$1,388,250

The accompanying notes are an integral part of this consolidated financial statement.

F-55

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to consolidated financial statements

December 28, 2008

Note 1. Description of business

JBS USA Holdings, Inc. (“JBS USA Holdings” or the “Company”), formerly known as JBS USA, Inc. is a Delaware corporation. On December 29, 2008, JBS USA, was renamed JBS USA, LLC and converted from a C corporation to a limited liability company. The operations of the Company and its subsidiaries constitute the operations of JBS USA Holdings as reported under accounting principles generally accepted in the United States of America (“GAAP”). JBS USA Holdings, Inc. (“JBS USA Holdings”) owns 100% of the issued and outstanding capital stock of JBS USA. JBS USA Holdings, Inc. is an indirect subsidiary of JBS S.A., a Brazilian company (“JBS”).

JBS USA Holdings processes, prepares, packages, and delivers fresh, further processed and value-added beef, pork and lamb products for sale to customers in the United States and in international markets. JBS USA Holdings sells its meat products to customers in the foodservice, international, further processor, and retail distribution channels. The Company also produces and sells by-products that are derived from its meat processing operations, such as hides and variety meats, to customers in various industries.

JBS USA Holdings conducts its domestic beef and pork processing businesses through its wholly owned subsidiaries Swift Beef Company (“Swift Beef”), Swift Pork Company (“Swift Pork”) and JBS Packerland (“JBS Packerland”), formerly known as Smithfield Beef Group and its Australian beef business through Swift Australia Pty. Ltd. (“Swift Australia”). We have two reportable segments comprised of Beef and Pork which, for the fifty-two weeks ended December 28, 2008, represented approximately 80.6% and 19.4% of net sales, respectively. The Company operates eight beef processing facilities, three pork processing facilities, one lamb slaughter facility, one value-added facility, and eleven feedlots in the United States and ten processing facilities and five feedlots in Australia. Three of the processing facilities in Australia process lamb, mutton and veal along with beef and a fourth processes only lamb, mutton and veal.

Note 2. Acquisition and refinancing of Swift Foods Company

On July 11, 2007, JBS acquired the Company (the “Acquisition”). Concurrent with the closing of the Acquisition, the entity formerly known as Swift Foods Company was renamed JBS USA, Inc. During the third quarter of the current fiscal year, this entity was renamed JBS USA Holdings, Inc. The aggregate purchase price for the Acquisition was $1,470.6 million (including approximately $48.5 million of transaction costs). The Company also refinanced its debt, the debt of its subsidiaries, and the outstanding debt assumed in the Acquisition which collectively were paid off using proceeds from $750 million of various debt instruments (see Note 8) and additional equity contributions from JBS. As a result of the Acquisition, the consolidated financial statements of JBS USA Holdings provided herein reflect the acquisition being accounted for as a purchase in accordance with Statement of Financial Accounting Standard (“SFAS”) No. 141, Business Combinations (“SFAS No. 141”) and push down accounting was applied in accordance with the guidance in Staff Accounting Bulletin (“SAB”) No. 54 to the consolidated financial statements.

F-56

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to consolidated financial statements

December 28, 2008

Note 3. Acquisition of Tasman Group

On March 4, 2008, JBS Southern Australia Pty. Ltd (“JBS Southern”), an indirect subsidiary of JBS USA Holdings entered into an agreement with Tasman Group Services, Pty. Ltd. (“Tasman Group”) to purchase substantially all of the assets of Tasman Group in an all cash transaction (“Tasman Acquisition”) and the purchase was completed on May 2, 2008. The assets acquired include six processing facilities and one feedlot located in Southern Australia. This acquisition provides additional capacity to continue to meet customer demand. The aggregate purchase price for the Tasman Acquisition was $117.3 million (including approximately $8.6 million of transaction costs), as shown below. JBS Southern also assumed approximately $52.1 million of outstanding debt (see Note 8). The consolidated financial statements of the Company provided herein reflect the Tasman Acquisition being accounted for as a purchase in accordance with SFAS No. 141. The results of the Tasman Group are included in the Company’s statement of operations from the date of acquisition.


Purchase price paid to previous shareholders	$108,786
Fees and direct expenses	8,555

Total purchase price	$117,341


Purchase price allocation:
Current assets and liabilities	$(27,942	)
Property, plant, and equipment	157,396
Deferred tax liability	(3,539	)
Goodwill	—
Other noncurrent assets and liabilities, net	(8,574	)

Total purchase price allocation	$117,341

Note 4. Acquisition of Smithfield Beef Group & Five Rivers Cattle Feeding

F-57

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to consolidated financial statements

December 28, 2008

Companies, Inc.). On October 23, 2008, the acquisition of Smithfield Beef was completed. In conjunction with the closing of this purchase Smithfield Beef was renamed JBS Packerland and Five Rivers was renamed JBS Five Rivers Cattle Feeding LLC (“JBS Five Rivers”). The assets acquired include four processing plants and eleven feedlots. This acquisition provides additional capacity to continue to meet customer demand.

The consolidated financial statements of the Company reflect the acquisition being accounted for as a purchase in accordance with SFAS No. 141. The acquired goodwill is treated as non-deductible for tax purposes. The results of Smithfield Beef and JBS Five Rivers are included in the Company’s statement of operations from the date of acquisition.


Purchase price paid to previous shareholders	$ 537,068
Fees and direct expenses	26,134

Total purchase price	$ 563,202


Purchase price allocation:
Current assets and liabilities	$ 44,146
Property, plant, and equipment	423,955
Deferred tax liability	(142,997	)
Goodwill	94,904
Intangible assets (see Note 5)	138,023
Other noncurrent assets and liabilities, net	5,171

Total purchase price allocation	$ 563,202

Had the Smithfield Acquisition occurred at the beginning of fiscal 2008, unaudited pro forma net sales, net income and net income per share would have been $15.4 billion, $222.3 million and $2,222,960.00 respectively.

Note 5. Basis of presentation and accounting policies

Consolidation

The consolidated financial statements include the accounts of the Company and its direct and indirect wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated.

F-58

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to consolidated financial statements

December 28, 2008

Use of estimates

The consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (GAAP) using management’s best estimates and judgments where appropriate. These estimates and judgments affect the reported amounts of assets and liabilities and disclosure of the contingent assets and liabilities at the date of the financial statements. The estimates and judgments will also affect the reported amounts for certain revenues and expenses during the reporting period. Actual results could differ materially from these estimates and judgments. Significant estimates made by the Company include the allowance for doubtful accounts, reserves related to inventory obsolescence or valuation, insurance accruals, and income tax accruals.

Fiscal year

The Company’s fiscal year consists of 52 or 53 weeks, ending on the last Sunday in December. The consolidated financial statements have been prepared for the fifty-two weeks ended December 28, 2008.

Cash and cash equivalents

Accounts receivable and allowance for doubtful accounts

F-59

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to consolidated financial statements

December 28, 2008


Balance at December 30, 2007	$1,389
Fair value of allowance on acquired business	1,714
Bad debt expense	1,470
Write-offs, net of recoveries	(375	)
Effect of exchange rates	(56	)

Balance, end of period	$4,142

Inventories


Livestock		$106,288

Product inventories:
Raw material		16,599
Work in progress		53,115
Finished goods		386,399
Supplies		86,599

		$649,000

Other current assets

Other current assets include prepaid expenses which are amortized over the period the Company expects to receive the benefit.

F-60

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to consolidated financial statements

December 28, 2008

Property, plant and equipment


Furniture, fixtures, office equipment and other		5 to 7 years
Machinery and equipment		5 to 15 years
Buildings and improvements		15 to 40 years
Leasehold improvements		shorter of useful life or the lease term

The costs of developing internal-use software are capitalized and amortized when placed in service over the expected useful life of the software. Major renewals and improvements that extend the useful life of the asset are capitalized while maintenance and repairs are expensed as incurred. The Company has historically and currently accounts for planned major maintenance activities as they are incurred in accordance with the guidance in the Financial Accounting Standards Board, (“FASB”) Staff Position (“FSP”) AUG Air-1: Accounting for Planned Major Maintenance Activities. Upon the sale or retirement of assets, the cost and related accumulated depreciation or amortization are eliminated from the respective accounts and any resulting gains or losses are reflected in earnings. Applicable interest charges incurred during the construction of assets are capitalized as one of the elements of cost and are amortized over the assets’ estimated useful lives. The Company capitalized $1.0 million of interest charges during the fifty-two weeks ended December 28, 2008. Assets held under capital lease are classified in property, plant, and equipment and amortized over the lease term. Capital lease amortization is included in depreciation expense. As of December 28, 2008, JBS USA Holdings had $28.5 million in commitments outstanding for capital projects including $14.5 million related to the Installment Bond Purchase Agreement, as discussed in Other Assets.

F-61

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to consolidated financial statements

December 28, 2008

Property, plant, and equipment, net are comprised of the following (in thousands) at December 28, 2008:


Land	$ 143,253
Buildings, machinery, and equipment	1,022,324
Property and equipment under capital lease	17,339
Furniture, fixtures, office equipment, and other	38,867
Construction in progress	88,732

	1,310,515
Less accumulated depreciation and amortization	(81,199	)

	$1,229,316

Accumulated depreciation includes accumulated amortization on capitalized leases of approximately $3.1 million as of December 28, 2008. For the fifty-two weeks ended December 28, 2008, the Company recognized $64.6 million and $27.8 million of depreciation and amortization expense in cost of goods sold and selling, general, and administrative expenses in the statement of operations, respectively.

Other assets

F-62

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to consolidated financial statements

December 28, 2008

community of Cactus. Swift Beef will purchase the Bonds in installments upon receipt of Bond installment requests from the City as the System improvements are completed through an anticipated completion date of June 2010. The interest rate on the Bonds is the six-month LIBOR plus 350 basis points, or 6.04% at December 28, 2008. The Bonds mature on June 1, 2032 and are subject to annual mandatory sinking fund redemption beginning on June 1, 2011. The principal and interest on the Bonds will be paid by the City from the net revenues of the System. At December 28, 2008, Swift Beef held $12.0 million of the Bonds, which fall within Level 3 of the value hierarchy in accordance with SFAS No. 157, Fair Value Measurements (“SFAS No. 157”).

The Company has evaluated the impact of the FASB Emerging Issues Task Force (“EITF”) No. 01-08, Determining Whether an Arrangement Contains a Lease, as well as EITF No. 97-10, The Effect of Lessee Involvement in Asset Construction, and has determined that it will be required to reflect the wastewater treatment facility as a capital asset (similar to a capital leased asset) as it will be the primary user of the wastewater facility based on projections of volume of throughput. As the City spends funds to construct the facility, the Company will record construction in process and the related construction financing. At December 28, 2008, $8.8 million had been recognized as construction in process and construction financing by the Company.

Debt issuance costs

Costs related to the issuance of debt are capitalized and amortized using the straight-line method to interest expense over the period the debt is outstanding. In conjunction with the Acquisition of JBS USA Holdings, $1.8 million of fees were capitalized and included in other assets. JBS USA Holdings wrote off $0.9 million of these costs during the fifty-two weeks ended December 28, 2008 as the amount under the related loan agreement was repaid in full (see Note 8).

On November 5, 2008, JBS USA Holdings entered into a $400.0 million revolving credit facility (see Note 8). The debt issuance cost associated with this facility is being amortized using the straight-line method over the life of the agreement.

Goodwill and other intangibles

Goodwill and other intangible assets with indefinite lives are not amortized but are tested for impairment at least on an annual basis or more frequently if impairment indicators arise, as

F-63

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to consolidated financial statements

December 28, 2008

required by SFAS No. 142, Goodwill and Other Intangible Assets. Identifiable intangible assets with definite lives are amortized over their estimated useful lives. Goodwill represents the excess of the aggregate purchase price over the fair value of the net identifiable assets acquired in a purchase business combination. The goodwill impairment test is a two-step test. Under the first step, the fair value of the reporting unit is compared with its carrying value (including goodwill). If the fair value of the reporting unit is less than its carrying value, an indication of goodwill impairment exists for the reporting unit and the enterprise must perform step two of the impairment test. Under step two, an impairment loss is recognized for any excess of the carrying amount of the reporting unit’s goodwill over the implied fair value of that goodwill. The implied fair value of goodwill is determined by allocating the fair value of the reporting unit in a manner similar to a purchase price allocation, in accordance with SFAS No. 141, Business Combination, and after December 15, 2008 in accordance with SFAS No. 141R as discussed in Recently Issued Accounting Pronouncements. The residual fair value after this allocation is the implied fair value of the reporting unit goodwill. The Company estimates the fair value of its reporting units using a discounted cash flow analysis. If the fair value of the reporting unit exceeds its carrying value, step two does not need to be performed.

Following is a rollforward of goodwill by segment for the fifty-two weeks ended December 28, 2008 (in thousands):


	December 30, 2007	Adjustments		Translation gain		December 28, 2008

Beef	$52,565	$ 83,826		$(2,566	)	$133,825
Pork	43,780	(29,750	)	—		14,030

Total	$96,345	$ 54,076		$(2,566	)	$147,855

The adjustments to goodwill are primarily related to the goodwill generated from the Smithfield Acquisition of $94.9 million (see Note 4) coupled with the release of the valuation allowance on deferred tax assets from the Acquisition of $42.9 million (see Note 12).

F-64

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to consolidated financial statements

December 28, 2008

Other identifiable amortizing intangible assets consist of the following at December 28, 2008 (in thousands):


	Initial gross carrying amount	Adjustments		Accumulated amortization		Net carrying amount

Amortizing:
Customer relationships	$129,000	$ 69,000		$(18,104	)	$179,896
Customer contracts	15,400	6,078		(2,004	)	19,474
Patents	5,200	(2,300	)	(282	)	2,618
Rental contract	3,507	—		(573	)	2,934
Deferred revenue	1,483	—		(459	)	1,024
Mineral rights	742	—		(65	)	677

Subtotal amortizing intangibles	155,332	72,778		(21,487	)	206,623

Non-amortizing:
Trademark	33,300	50,800		—		84,100
Water rights	2,100	12,144		—		14,244

Subtotal non-amortizing intangibles	35,400	62,944		—		98,344

Total intangibles	$190,732	$135,722		$(21,487	)	$304,967

The adjustments to intangibles result primarily from the Smithfield Acquisition (see Note 4). The adjustment to patents of $2.3 million reflects the impairment of a patent that no longer has a useful life.

The customer relationship intangible and customer contract intangible resulting from the Acquisition are amortized on an accelerated basis over 12 and 7 years respectively. The customer relationship and customer contract intangibles resulting from the Smithfield Acquisition are amortized on an accelerated basis over 21 and 10 years, respectively. These represent management’s estimates of the period of expected economic benefit and annual customer profitability. Patents consist of exclusive marketing rights and are being amortized over the life of the related agreements on a straight line basis, which range from 6 to 20 years. For the fifty-two weeks ended December 28, 2008, the Company recognized $16.6 million of amortization expense. Based on amortizing assets recognized as of December 28, 2008, amortization expense for each of the next five years is estimated as follows (in thousands):


Estimated amortization expense for fiscal years ending (in thousands):
2009		$20,502
2010		19,879
2011		18,964
2012		17,400
2013		15,299

F-65

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to consolidated financial statements

December 28, 2008

Overdraft balances

The majority of JBS USA Holdings bank accounts are zero balance accounts where cash needs are funded as checks are presented for payment by the holder. Checks issued pending clearance that result in overdraft balances for accounting purposes are included in the trade accounts payable balance, and the change in the related balance is reflected in financing activities on the statement of cash flows.

Insurance

Environmental expenditures and remediation liabilities

Foreign currency

For foreign operations, the local currency is the functional currency. Translation into US dollars is performed for assets and liabilities at the exchange rates as of the balance sheet date. Income and expense accounts are translated at average exchange rates for the period. Adjustments resulting from the translation are reflected as a separate component of other comprehensive income (loss). Transaction gains and losses on US dollar denominated revolving intercompany borrowings between the Australian subsidiaries and the US parent are recorded in earnings. Translation gains and losses on US dollar denominated intercompany borrowings between the Australian subsidiaries and the US parent and which are deemed to be part of the investment in the subsidiary are recorded in other comprehensive income (loss). The balance of foreign currency translation adjustment in accumulated other comprehensive income at December 28, 2008 was a cumulative loss of $(61.1) million.

F-66

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to consolidated financial statements

December 28, 2008

Income taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. JBS USA allocates current and deferred taxes as if it were a separate taxpayer. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Beginning with the adoption of FASB Interpretation No. 48 Accounting for Uncertainty in Income Taxes (“FIN 48”), as of May 28, 2007, the Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. Prior to the adoption of FIN 48, the Company recognized the effect of income tax positions only if such positions were probable of being sustained. JBS USA Holdings recognizes both interest and penalties related to uncertain tax positions as part of the income tax provision.

Fair value of financial instruments

The carrying amounts of JBS USA Holdings’ cash and cash equivalents, short-term trade receivables, and payables, approximate their fair values due to the short-term nature of the instruments. Existing long-term debt was recorded at fair value as of the date of the Acquisition (see Note 2) and the Company believes this approximates its fair value at December 28, 2008. Long-term debt incurred since the Acquisition was recorded at fair value at the date of incurrence and is considered to be fair value at December 28, 2008 due to the proximity of the balance sheet date to the issuance of the debt and its variable interest rate (see Note 8).

Revenue recognition

The Company’s revenue recognition policies are based on the guidance in Staff Accounting Bulletin (“SAB”) No. 104, Revenue Recognition in Financial Statements. Revenue on product sales is recognized when title and risk of loss are transferred to customers (upon delivery based on the terms of sale), when the price is fixed or determinable, and when collectability is reasonably assured, and pervasive evidence of an arrangement exists. The Company recognizes sales net of applicable provisions for discounts, returns and allowances, which are accrued as product is invoiced to customers who participate in such programs based on contract terms and historical and current purchasing patterns.

F-67

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to consolidated financial statements

December 28, 2008

Advertising costs

Advertising costs are expensed as incurred. Advertising costs were $5.6 million for the fifty-two weeks ended December 28, 2008.

Research and development

The Company incurs costs related to developing new beef and pork products. These costs include developing improved packaging, manufacturing, flavor enhancing, and improving consumer friendliness of meat products. The costs of these research and development activities are less than 1% of total consolidated net sales for the fifty-two weeks ended December 28, 2008 and are expensed as incurred.

Shipping costs

Pass-through finished goods delivery costs reimbursed by customers are reported in net sales while an offsetting expense is included in cost of goods sold.

Comprehensive income

Comprehensive income consists of net income, foreign currency translation, and adjustments from derivative financial instruments.

Net income per share

Derivatives and hedging activities

F-68

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to consolidated financial statements

December 28, 2008

the changes in both of these fair values being recognized immediately in the statement of operations. For derivatives designated as a hedge and used to hedge an anticipated transaction, changes in the fair value of the derivatives are deferred in the balance sheet within accumulated other comprehensive income to the extent the hedge is effective in mitigating the exposure to the related anticipated transaction. Any ineffectiveness is recognized immediately in the statement of operations. Amounts deferred within accumulated other comprehensive income are recognized in the statement of operations upon the completion of the related underlying transaction.

Gains and losses from energy and livestock derivatives related to purchases are recognized in the statement of operations as a component of cost of goods sold upon change in fair value. While management believes these instruments help mitigate various market risks, they are not designated and accounted for as hedges under SFAS No. 133 as a result of the extensive recordkeeping requirements of this statement. Gains and losses from foreign currency derivatives and livestock derivatives related to future sales are recognized in the statement of operations as a component of net sales or as a component of other comprehensive income upon change in fair value.

Recently issued accounting pronouncements

In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities (“SFAS No. 161”), which provides for enhanced disclosures about the use of derivatives and their impact on a Company’s financial position and results of operations. This statement is effective for JBS USA Holdings for fiscal year 2009. The Company does not expect the adoption of SFAS No. 161 to have a material impact on its financial position, results of operations, or cash flows.

F-69

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to consolidated financial statements

December 28, 2008

effective for business combinations consummated after December 31, 2008. Also effective, as a requirement of the statement, after December 31, 2008 any adjustments to uncertain tax positions from business combinations consummated prior to December 31, 2008 will no longer be recorded as an adjustment to goodwill, but will be reported in income. During the thirteen weeks ended December 28, 2008, the Company expensed $1.9 million of cost previously capitalized related to the pending acquisition of National Beef Packing Company (“National Beef”) as the transaction did not close prior to December 15, 2008.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. The provisions of SFAS No. 157 define fair value, establish a framework for measuring fair value in generally accepted accounting principles and expand disclosures about fair value measurements. The provisions of SFAS No. 157 are effective for fiscal years beginning after November 15, 2007, with the exception of nonfinancial assets and liabilities that are not currently recognized or disclosed at fair value in the financial statements on a recurring basis, for which SFAS No. 157 is effective for fiscal years beginning after November 15, 2008. Our adoption of SFAS 157 No. on January 1, 2008 did not have a significant effect on our consolidated financial position, results of operations, or cash flows.

Note 6. Accrued liabilities

Accrued liabilities consist of the following at December 28, 2008 (in thousands):


Self insurance reserves .		$ 24,265
Salaries .		74,528
Taxes		15,825
Freight		38,645
Interest		19,672
Other .		110,134

Total .		$283,069

Other accrued liabilities consist of items that are individually less than 5% of total current liabilities.

F-70

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to consolidated financial statements

December 28, 2008

Note 7. Derivative financial instruments

The Company utilizes various raw materials in its operations, including cattle, hogs, and energy, such as natural gas, electricity, and diesel fuel, which are all considered commodities. The Company considers these raw materials generally available from a number of different sources and believes it can obtain them to meet its requirements. These commodities are subject to price fluctuations and related price risk due to factors beyond its control, such as economic and political conditions, supply and demand, weather, governmental regulation, and other circumstances. Generally, the Company purchases derivatives in an attempt to mitigate price risk related to its anticipated consumption of commodity inputs for periods of up to 12 months. The Company may enter into longer-term derivatives on particular commodities if deemed appropriate. As of December 28, 2008, the Company had derivative positions in place covering less than 1% and 11% of anticipated cattle and hog needs, respectively, through December 2009.

On December 31, 2007, the beginning of the current fiscal year, the Company adopted SFAS No. 157, which defines fair value, establishes a framework for measuring fair value and requires additional disclosures about fair value measurements. The standard is applicable to the fair value measurement where it is permitted or required under other accounting pronouncements.

•

Level 1 consists of observable market data in an active market for identical assets or liabilities.

•

Level 2 consists of market data, other than that included in Level 1, that is either directly or indirectly observable.

•

F-71

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to consolidated financial statements

December 28, 2008

The fair value of derivative assets is recognized within other current assets while the fair value of derivative liabilities is recognized within accrued liabilities. At December 28, 2008, the fair value of derivatives recognized within other current assets was $54.1 million. The fair value of derivatives recognized within accrued liabilities was $17.0 million. The fair value measurements that are performed on a recurring basis fall within the level 1 of the fair value hierarchy. The amounts are as follows:


		Level 1
		December 28, 2008


Assets:
Commodity derivatives		$42,087
Foreign currency rate derivatives		12,002

Total fair value		$54,089


Liabilities:
Commodity derivatives		$16,392
Foreign currency rate derivatives		592

Total fair value		$16,984

As of December 28, 2008, the net deferred amount of derivative loss recognized in accumulated other comprehensive income was $0.3 million, net of tax. The Company anticipates these amounts will be transferred out of accumulated other comprehensive income and recognized within earnings over the next 12 months.

F-72

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to consolidated financial statements

December 28, 2008

Note 8. Long-term debt and loan agreements

JBS USA Holdings and its direct and indirect subsidiaries have entered into various debt agreements in order to finance the Acquisition, the Tasman Acquisition, the Smithfield Acquisition, and provide liquidity to operate the business on a go forward basis. As of December 28, 2008, debt outstanding consisted of the following (in thousands):


Short-term debt
Secured credit facilities		$36,186
Unsecured credit facilities		30,826

Total short-term debt		67,012

Current portion of long-debt:
Installment note payable		1,264
Capital lease obligations		3,235

Total current portion of long-term debt		4,499

Long-term debt:
Loans payable to JBS		658,588
Installment note payable		10,025
Secured credit facilities		114,673
Capital lease obligations		23,522

Long-term debt, less current portion		806,808

Total debt		$878,319

The aggregate minimum principal maturities of debt for each of the five fiscal years and thereafter following December 28, 2008, are as follows (in thousands):


For the fiscal years ending December		Minimum principal maturities


2009		$ 71,807
2010		662,866
2011		118,263
2012		3,185
2013		8,990
Thereafter		13,208

Total minimum principal maturities		$878,319

As of December 28, 2008, JBS USA Holdings had approximately $161.8 million of secured debt outstanding and approximately $20.9 million of outstanding letters of credit.

F-73

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to consolidated financial statements

December 28, 2008

A summary of the components of interest expense, net is presented below (in thousands):


	The fifty-two weeks ended December 28, 2008


Interest on:
Unsecured bank loans	$13,781
Unsecured credit facility	104
Loans payable to JBS	19,038
Capital lease interest	1,487
Bank fees	493
Other miscellaneous interest charges (i)	2,220
Debt issuance cost amortization	2,306
Secured credit facility	2,796

Less:
Capitalized interest	(976	)
Interest income	(4,891	)

Total interest expense, net	$36,358

(i)

Includes installment note interest expense of $0.53 million.

Description of indebtedness

Senior credit facilities—On November 5, 2008, JBS USA entered into a secured revolving loan credit agreement (the “Credit Agreement”) that allows borrowings up to $400 million, and terminates on November 5, 2011. Up to $75 million of the revolving credit facility is available for the issuance of letters of credit. Borrowings that are index rate loans will bear interest at the prime rate plus a margin of 2.25% (5.50% at December 28, 2008) while LIBOR rate loans will bear interest at the applicable LIBOR rate plus a margin of 3.25% (4.66% at December 28, 2008). At December 28, 2008, the borrowings totaled $114.7 million. Upon approval by the lender, LIBOR rate loans may be taken for one, two, or three month terms, (or six months at the discretion of the Agent).

Security and guarantees. Borrowings made by JBS USA are guaranteed by JBS Holdings and all domestic subsidiaries except Five Rivers are collateralized by a first priority perfected lien and interest in accounts receivable, inventory, and supplies.

F-74

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to consolidated financial statements

December 28, 2008

Covenants. The Credit Agreement contains customary representations and warranties and a financial covenant that requires a minimum fixed charge coverage ratio of not less than 1.15 to 1.00. This ratio is only applicable if borrowing availability falls below the minimum threshold which is the greater of 20% of the aggregate commitments or $70 million. The Credit Agreement also contains negative covenants that limit the ability of JBS USA and its subsidiaries to, among other things:

•

have capital expenditures greater than $175 million per year;

•

incur additional indebtedness;

•

create liens on property, revenue, or assets;

•

make certain loans or investments;

•

sell or dispose of assets;

•

pay certain dividends and other restricted payments;

•

prepay or cancel certain indebtedness;

•

dissolve, consolidate, merge, or acquire the business or assets of other entities;

•

enter into joint ventures other than certain permitted joint ventures or create certain other subsidiaries;

•

enter into new lines of business;

•

enter into certain transactions with affiliates and certain permitted joint ventures;

•

agree to restrictions on the ability of the subsidiaries to make dividends;

•

agree to enter into negative pledges in favor of any other creditor; and

•

enter into sale/leaseback transactions and operating leases.

The Credit Agreement also contains customary events of default, including failure to perform or observe terms, covenants or agreements included in the Credit Agreement, payment of defaults on other indebtedness, defaults on other indebtedness if the effect is to permit acceleration, entry of unsatisfied judgments or orders against a loan party or its subsidiaries, failure of any collateral document to create or maintain a priority lien, and certain events related to bankruptcy and insolvency or environmental matters. If an event of default occurs the lenders may, among other things, terminate their commitments, declare all outstanding borrowings to be immediately due and payable together with accrued interest, and fees and exercise remedies under the collateral documents relating to the Credit Agreement. At December 28, 2008, JBS USA was in compliance with all covenants.

Certain covenants of our indebtedness and debt guarantee terms include restrictions on our ability to pay dividends. As of December 28, 2008 the Company had $22.7 million of retained earnings available to pay dividends.

F-75

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to consolidated financial statements

December 28, 2008

Installment note payable—The installment note payable relates to JBS USA Holdings’ financing of a capital investment. The note bears interest at LIBOR, the rate as of December 28, 2008 was 2.46% plus a fixed margin of 1.75% per annum with payments due on the first of each month and matures on August 1, 2013.

Unsecured credit facility—Swift Australia entered into an Australian dollar (“A”) denominated $120 million unsecured credit facility on February 26, 2008 to fund working capital and letter of credit requirements. Under this facility A$80 million can be borrowed for cash needs and A$40 million is available to fund letters of credit. Borrowings are made at the cash advance rate (BBSY) plus a margin of 0.98%. The credit facility contains certain financial covenants which require the Company to maintain predetermined ratio levels related to interest coverage, debt coverage and tangible net worth. As of December 28, 2008, the Company is in compliance with all covenants and has USD $30.8 million outstanding. This facility has an evergreen renewal term with review periods each June, commencing in 2009.

Secured credit/ multi-option bridge facility—JBS Southern entered into an Australian dollar denominated $80 million secured multi-option bridge facility on July 2, 2008 to fund working capital and letter of credit requirements. JBS Southern property and plant assets secure this bridge facility. Under this facility A$65 million can be borrowed for cash needs and to fund letters of credit. The remaining A$15 million is used to facilitate daily transactional limits. Borrowings are made at the cash advance rate (BBSY) plus a margin of 1.60%. The multi-option bridge facility contains covenants and obligations which require the company to comply. As of December 28, 2008, the Company is in compliance with all covenants and has USD $36.2 million outstanding. This facility has a fixed term and expired on December 31, 2008.

The following four loan agreements sum to the $750 million described as debt related to the Acquisition in Note 2. As indicated below, as of December 28, 2008, there were no outstanding balances with respect to these four loan agreements.

F-76

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to consolidated financial statements

December 28, 2008

$250 million credit agreement—In connection with the Acquisition, JBS USA Holdings entered into a one year unsecured credit agreement with interest payable quarterly based on three month LIBOR plus a margin of 0.75%. The agreement matured on July 7, 2008. The credit agreement contained customary representations, warranties and negative covenants. There were no maintenance financial covenants but the agreement contained an incurrence Consolidated Net Indebtedness to EBITDA ratio of 3.75 to 1.00 prior to December 31, 2007 and 3.60 to 1.00 commencing on January 1, 2008 and ending on the Maturity Date. The credit agreement was guaranteed by JBS. On July 3, 2008 this credit agreement was repaid with funds received from JBS through a loan repayable to JBS.

$100 million loan payable to JBS—On April 28, 2008, the Company entered into an unsecured loan agreement with its parent, JBS, for $100 million with a maturity date of April 28, 2011. Interest payments are due semi-annually at a rate of six month LIBOR plus a margin of 3%, the rate as of December 28, 2008 was 6.03%; however the parties have reached an agreement to defer the 2008 interest payment. The funds received from this loan were used to fund the purchase of Tasman Group (see Note 3).

$25 million loan payable to JBS—On May 5, 2008, the Company entered into an unsecured loan agreement with JBS for $25 million with a maturity date of May 5, 2009. Interest payments are due semi-annually at a rate of six month LIBOR plus a margin of 3%, the rate of as of December 28, 2008 was 6.15%; however the parties have reached an agreement to defer the 2008 interest payment. The funds received were used to fund operations.

$25 million loan payable to JBS—On June 10, 2008, the Company entered into an unsecured loan agreement with JBS for $25 million with a maturity date of June 10, 2009. Interest payments are due semi-annually at a rate of six month LIBOR plus a margin of 3%, the rate as of December 28, 2008 was 5.94%; however the parties have reached an agreement to defer the 2008 interest payment. The funds received from this loan were used to fund operations.

F-77

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to consolidated financial statements

December 28, 2008

$350 million loan payable to JBS—On June 30 2008, the Company entered into an unsecured loan agreement with JBS totaling $350 million with a maturity date of June 30, 2011. Interest payments are due semi-annually at a rate of six month LIBOR plus a margin of 3%, for $250 million the rate as of December 28, 2008 was 6.12% and for $100 million the rate as of December 28, 2008 was 6.13%. The funds received were used to pay outstanding unsecured bank debt.

$250 million loan payable to JBS—On October 21, 2008, the Company entered into an unsecured loan agreement with JBS for $250 million with a maturity date of October 21, 2011. Interest payments are due semi-annually at a rate of six month LIBOR plus a margin of 3%. As of December 28, 2008 this rate was 4.13%. The funds received were used for the acquisition of Smithfield Beef and Five Rivers (see Note 4).

See Note 16 regarding subsequent event issuance of $700 million 11.625% senior unsecured notes by a subsidiary in April 2009.

Capital and operating leases—JBS USA Holdings and certain of its subsidiaries lease the corporate headquarters in Greeley, Colorado under capital lease; six distribution facilities located in New Jersey, Florida, Nebraska, Arizona, Colorado and Texas; marketing liaison offices in the US, Korea, Japan, Mexico, China, and Taiwan; its distribution centers and warehouses in Australia; and a variety of equipment under operating lease agreements that expire in various years between 2008 and 2019. Future minimum lease payments at December 28, 2008, under capital and non-cancelable operating leases with terms exceeding one year are as follows (in thousands):


	Capitalized lease obligations		Noncancellable operating lease obligations


For the fiscal years ending December
2009	$ 4,639		$17,431
2010	4,166		13,426
2011	3,571		11,016
2012	2,955		4,850
2013	2,874		4,054
Thereafter	13,432		5,113

Net minimum lease payments	31,637		$55,890

Less: Amount representing interest	(4,880	)

Present value of net minimum lease payments	$26,757

Rent expense associated with operating leases was $23.2 million for the fifty-two weeks ended December 28, 2008.

F-78

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to consolidated financial statements

December 28, 2008

Note 9. Deferred revenue

On October 22, 2008 we received a deposit in cash from a customer of $175 million for the customer to secure an exclusive right to collect a certain byproduct of the beef fabrication process in all of our US beef plants. This agreement was formalized in writing as the Raw Material Supply agreement on February 27, 2008. The customer advance payment was recorded as deferred revenue. As byproduct is delivered to the customer over the term of the agreement the deferred revenue is recognized as revenue in the statement of operations. To provide the customer with security, in the unlikely event the Company was to default on our commitment, the payment is evidenced by a note which bears interest at 2 month LIBOR plus 200 basis points. In the event of default the note provides for a conversion into shares of common stock of JBS USA Holdings based on a formula stipulated in the note agreement. Assuming default had occurred on December 28, 2008 the conversion rights under the promissory note would have equaled 11.65% of the outstanding common stock, equal to 11.65 shares. The note also contains affirmative and negative covenants which require the Company to among other things: maintain defined market share; maintain certain tangible net worth levels; and comply in all material respects with the raw material supply agreement. The unamortized balance at December 28, 2008 was approximately $173 million.

Note 10. Defined contribution plans

Defined contribution plans

F-79

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to consolidated financial statements

December 28, 2008

Nampa, Idaho plant pursuant to a settlement agreement. As these payments are made, they are recorded as a reduction of the pre-acquisition contingency established during the Acquisition (see Note 2).

Employees of Swift Australia do not participate in the Company’s 401(k) Plans. Under Australian law, Swift Australia contributes a percentage of employee compensation to a superannuation fund. This contribution approximates 9% of employee cash compensation as required under the Australian “Superannuation Act of 1997”. As the funds are administered by a third party, once this contribution is made to the fund, Swift Australia has no obligation for payments to participants or oversight of the fund. The Company’s expenses related to contributions to this fund totaled $16.6 million for the fifty-two weeks ended December 28, 2008.

Note 11. Related party transactions

JBS USA Holdings enters into transactions in the normal course of business with affiliates of JBS. Sales to affiliated companies included in net sales in the statement of operations for the fifty-two weeks ended December 28, 2008 were $48.5 million. Amounts owed to JBS USA Holdings by affiliates as of December 28, 2008 totaled approximately $20.2 million. Purchases from affiliated companies included in the statement of operations for the fifty-two weeks ended December 28, 2008 were $0.9 million. No amounts were due to affiliates by JBS USA Holdings at December 28, 2008 related to these purchases.

The Company had a $0.6 million receivable from an unconsolidated affiliate at December 28, 2008 related to the funding of debt issuance costs on behalf of the affiliate.

For the fifty-two weeks ended December 28, 2008, the Company recorded $26 thousand of rental income related to real property leased to two of its executive officers. At December 28, 2008 no balances were due to the Company related to these transactions.

The Company had a $25 thousand receivable from an executive officer at December 28, 2008 (see Note 16).

JBS USA Holdings guarantees, on an unsecured basis, $300.0 million of 10.5% notes due 2016 issued by its parent, JBS. JBS USA Holdings meets the definition of a significant subsidiary contained in the indentures and therefore the board of directors of JBS USA Holdings approved the guarantee.

F-80

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to consolidated financial statements

December 28, 2008

Guarantees—JBS SA has notes payable outstanding of approximately $300 million at December 28, 2008 that are due in 2016. The indenture governing the 2016 Notes requires any significant subsidiary (any subsidiary constituting at least 20% of JBS S.A.’s total assets or annual gross revenues, as shown on the latest financial statements of JBS S.A.) to guarantee all of JBS S.A.’s obligations under the 2016 Notes. The 2016 Notes are guaranteed by JBS Hungary Holdings Kft. (a wholly owned, indirect subsidiary of JBS S.A.), our company and our subsidiaries, JBS USA Holdings, Inc., JBS USA, LLC and Swift Beef Company. Additional subsidiaries of JBS S.A. (including our subsidiaries) may be required to guarantee the 2016 Notes in the future.

Covenants. The indentures for the 2016 Notes contain customary negative covenants that limit the ability of JBS S.A. and its subsidiaries (including us) to, among other things:

•

incur additional indebtedness;

•

incur liens;

•

sell or dispose of assets;

•

pay dividends or make certain payments to JBS S.A.’s shareholders;

•

permit restrictions on dividends and other restricted payments by its subsidiaries;

•

enter into related party transactions;

•

enter into sale/leaseback transactions; and

•

undergo changes of control without making an offer to purchase the notes.

F-81

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to consolidated financial statements

December 28, 2008

of cattle at all times. The agreement commenced on October 23, 2008 and continues until the last of the cattle on Five Rivers’ feed yards as of October 23, 2011 are shipped to the Unconsolidated Affiliate, a packer or another third party.

Cattle purchase and sale agreement—The Company is party to a cattle purchase and sale agreement with the Unconsolidated Affiliate. Under this agreement, the Unconsolidated Affiliate agrees to sell to JBS USA, LLC, and JBS USA, LLC agrees to purchase from the Unconsolidated Affiliate, at least 500,000 cattle during each year from 2009 through 2011. The price paid by JBS USA, LLC is determined pursuant to JBS USA, LLC’s pricing grid in effect on the date of delivery. The grid used for the Unconsolidated Affiliate is identical to the grid used for unrelated third parties. If the cattle sold by the Unconsolidated Affiliate in a quarter result in a breakeven loss (selling price below accumulated cost to acquire the feeder animal and fatten it to delivered weight) then JBS USA LLC will reimburse 40% of the average per head breakeven loss incurred by the Unconsolidated Affiliate on up to 125,000 head delivered to JBS USA, LLC in that quarter. If the cattle sold by the Unconsolidated Affiliate in a quarter result in a breakeven gain (selling price above the accumulated cost to acquire the feeder animal and fatten it to delivered weight), then JBS USA LLC will receive from the Unconsolidated Affiliate an amount of cash equal to 40% of that per head gain on up to 125,000 head delivered to JBS USA, LLC in that quarter. There were no payments under the loss/profit sharing provisions of this agreement in fiscal 2008.

Guarantee of unconsolidated affiliate’s revolving credit facility—The Unconsolidated Affiliate has a $600.0 million secured revolving credit facility with a commercial bank. Its parent company has entered into a keepwell agreement with its subsidiary (the Unconsolidated Affiliate) whereby it will make contributions to the Unconsolidated Affiliate if the Unconsolidated Affiliate is not in compliance with its financial covenants under this credit facility. If the Unconsolidated Affiliate defaults on its obligations under the credit facility and such default is not cured by its parent under the keep-well agreement, Five Rivers is obligated for up to $250.0 million of guaranteed borrowings plus certain other obligations and costs under this credit facility. This credit facility and the guarantee thereof are secured by the assets of the Unconsolidated Affiliate and the net assets of Five Rivers. This credit facility matures on October 7, 2011. This credit facility is used to acquire cattle which are then fed in the Five Rivers feed yards pursuant to the cattle supply and feeding agreement described above. The finished cattle are sold to JBS USA, LLC under the cattle purchase and sale agreement discussed above.

Credit facility to the unconsolidated affiliate—Five Rivers is party to an agreement with the Unconsolidated Affiliate pursuant to which Five Rivers has agreed to loan up to $200.0 million in revolving loans to the Unconsolidated Affiliate. The loans are used by the Unconsolidated Affiliate to acquire feeder animals which are placed in Five Rivers feed yards for finishing. Borrowings accrue interest at a per annum rate of LIBOR plus 2.25% or base rate plus 1.0% and interest is payable at least quarterly. This credit facility matures October 7, 2011. During the period October 23, 2008 (when Five Rivers was acquired) through December 28, 2008, average

F-82

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to consolidated financial statements

December 28, 2008

borrowings were approximately $131.0 million, and total interest accrued was approximately $663,000 and was recognized as interest income on the statement of operations. As of December 28, 2008 the balance on the note was $90 thousand.

Variable interest entities—As of December 28, 2008 the Company holds variable interests in the Unconsolidated Affiliate, which is considered a variable interest entity under FASB Interpretation No. 46(R), Consolidation of Variable Interest Entities. The Company has determined that it is not the primary beneficiary of the Unconsolidated Affiliate but has significant variable interests in the entity. The Company’s significant variable interests are listed below and discussed further above:

•

Five Rivers has agreed to provide up to $200 million in loans to the Unconsolidated Affiliate;

•

JBS USA, LLC’s rights and obligations under the cattle purchase and sale agreement.

The Company’s maximum exposure to loss related to these variable interests is limited to the lesser of the net assets of Five Rivers (including loans made to the Unconsolidated Affiliate), or $250 million plus certain other obligations and costs. As of December 28, 2008, the carrying value of Five Rivers’ net assets is $332.1 million. Potential losses under the terms of the cattle purchase and sale agreement depend on future market conditions.

Note 12. Income taxes

The pre-tax income (loss) on which the provision for income taxes was computed is as follows (in thousands):


	For the Fifty-Two Weeks Ended December 28, 2008

Domestic	$199,555
Foreign	(7,164	)

Total	$192,391

F-83

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to consolidated financial statements

December 28, 2008

Income tax expense (benefit) includes the following current and deferred provisions (in thousands):


	For the Fifty-Two Weeks Ended December 28, 2008


Current provision:
Federal	$3,024
State	3,159
Foreign	19,418

Total current tax expense	25,601


Deferred provision:
Federal	23,886
State	6,369
Foreign	(24,569	)

Total deferred tax expense.	5,686


Total income tax expense	$31,287

The principal differences between the effective income tax rate, and the US statutory federal income tax rate, were as follows:


	For the Fifty-Two Weeks Ended December 28, 2008

Expected tax rate	35.0%
State income taxes (net of federal benefit)	3.3
Change in the valuation allowance due to a change in facts	(18.7	)
Other, net	(3.3	)

Effective tax rate	16.3%

F-84

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to consolidated financial statements

December 28, 2008

Temporary differences that gave rise to a significant portion of deferred tax assets (liabilities) were as follows (in thousands):


	December 28, 2008

Inventory	$(10,874	)
Depreciation and amortization	(283,598	)
Derivatives	(2,786	)
All other current	(7,716	)
All other long-term	(941	)

Gross deferred tax liability	(305,915	)

Accounts receivable reserve	2,026
Inventory	4,509
Interest	557
Accrued liabilities	16,625
Deferred revenue	329
Loss carryforwards	141,025
Tax credit carryforwards	14,322
Derivatives	225
All other long-term	30,771

Total deferred tax asset	210,389
Valuation allowance	(42,826	)

Net deferred tax assets	167,563

Net deferred tax liability	$(138,352	)

The valuation allowance for deferred tax assets as of December 31, 2007 was $127 million. The net change in the total valuation allowance was a decrease of $84 million in 2008. The valuation allowance as of December 28, 2008 was primarily related to loss and credit carryforwards that, in the judgment of management, are not more likely than not to be realized. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that

F-85

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to consolidated financial statements

December 28, 2008

some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities (including the impact of available carryback and carryforward periods), projected future taxable income, and tax-planning strategies in making this assessment.

Subsequently recognized tax benefits relating to the valuation allowance for deferred tax assets as of December 28, 2008 will be allocated to income tax expense pursuant to FAS No. 141R.

JBS USA Holdings follows the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes (“FIN 48”). JBS USA’s unrecognized tax benefits are $8.1 million, the recognition of which would not have a material impact on the effective rate.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):


Balance at December 30, 2007	$8,300
Additions based on tax positions related to the current period	—
Additions for tax positions of prior years	—
Reductions for tax positions of prior years	—
Settlements	(200	)

Balance at December 28, 2008	$8,100

JBS USA Holdings recognizes both interest and penalties related to uncertain tax positions as part of the income tax provision. As of December 30, 2007, accrued interest and penalties were $187 thousand. As of the year ended December 28, 2008, interest and penalty amounts related to uncertain tax positions were reduced to $5 thousand as a result of a reduction in the amount recorded as uncertain tax positions. The unrecognized tax benefit and related penalty and interest balances at December 28, 2008 are expected to decrease by $35 thousand within the next twelve months.

JBS USA Holdings files income tax returns in the U.S. and in various states and foreign countries. JBS USA Holdings is no longer subject to audit for US Federal income tax purposes for years prior to 2004. In other major jurisdictions where JBS USA Holdings operates, it is generally no longer subject to income tax examinations by tax authorities for years before 2002.

Note 13. Commitments and contingencies

On July 1, 2002, a lawsuit entitled Herman Schumacher et al v. Tyson Fresh Meats, Inc., et al was filed against a predecessor company, Tyson Foods, Inc., Excel Company, and Farmland National

F-86

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to consolidated financial statements

December 28, 2008

Beef Packing Company, L.P. in the United States District Court for the District of South Dakota seeking certification of a class of all persons who sold cattle to the defendants for cash, or on a basis affected by the cash price for cattle, during the period from April 2, 2001 through May 11, 2001 and for some period up to two weeks thereafter. The complaint alleges that the defendants, in violation of the Packers and Stockyards Act of 1921, knowingly used, without correction or disclosure, incorrect and misleading boxed beef price information generated by the USDA to purchase cattle offered for sale by the plaintiffs at a price substantially lower than was justified by the actual and correct price of boxed beef during this period. On April 12, 2006, the jury returned a verdict against three of the four defendants, including a $2.3 million verdict against Swift Beef.

On February 15, 2007, a judgment was entered on the verdict by the court and on March 12, 2007 Swift Beef Company filed a notice of appeal. Nevertheless, a liability for the amount of the verdict was recorded during the final thirteen weeks of Smithfield Beef’s fiscal year ended May 28, 2006. ConAgra Foods will indemnify Swift & Company against any judgments for monetary damages or settlements arising out of this litigation or any future litigation arising from the same facts to the extent such damages together with any other indemnifiable claims under the acquisition agreement entered into the purchase of Swift Foods from ConAgra Foods, Inc. in 2002 exceed a minimum threshold of $7.5 million. On January 29, 2008, Swift Beef was notified that the appeals court ruled in favor of the defendants on all counts. Swift Beef is now seeking the recovery of a portion of the legal fees it expended in this matter. As the claimants rights to appeal expired during the third quarter ended December 28, 2008 the reversal of the previously accrued trial court verdict amount was recorded as an adjustment to the Acquisition, not as a reduction of expenses on the Consolidated Statement of Operations.

F-87

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to consolidated financial statements

December 28, 2008

for further proceedings consistent with the court’s opinion. Defendants filed a Motion for Rehearing En Banc on October 26, 2006. On May 10, 2007, the Tenth Circuit denied that motion.

The case is now before the trial court. Issues in the case have been bifurcated. From April 28, 2008, to April 29, 2008 a jury trial was held on key significant issues. On May 1, 2008, a verdict was returned ruling in favor of the Company on all counts. If the verdict is not overturned on appeal the Relator’s claims will be greatly limited and the issues in the case will be focused solely on bovine hides. This result significantly reduces the Company’s possible liability from the original lawsuit. Swift Beef is unable to estimate what liability, if any, it may have in connection with this lawsuit or to reasonably estimate the amount or range of any loss that may result from this lawsuit at this time. In accordance with SFAS No. 5, Accounting for Contingencies, Swift Beef has not established a loss accrual for this claim. Pursuant to the acquisition agreement by which Swift Foods separated from ConAgra Foods in 2002, Swift Foods Company agreed to indemnify ConAgra Foods against all direct liabilities and damages relating to this lawsuit, including the costs and expenses of defending the lawsuit.

Commitments

JBS USA Holdings enters into purchase agreements for livestock which require the purchase of either minimum quantities or the total production of the facility over a specified period of time. At December 28, 2008, the Company had commitments to purchase 33 million hogs through 2014 and approximately 29% or approximately 7.5 million of our estimated cattle needs through short-term contracts. As the final price paid cannot be determined until after delivery, the Company has estimated market prices based on Chicago Mercantile Exchange traded futures contracts and applied those to either the minimum quantities required per the contract or management’s estimates of livestock to be purchased under certain contracts to determine its estimated commitments for the purchase of livestock, which are as follows (in thousands):


Estimated livestock purchase commitments for fiscal year ended:
2009		$3,395,206
2010		1,035,072
2011		862,430
2012		710,159
2013		483,723
Thereafter		99,087

Through use of these contracts, the Company purchased approximately 70% of its hog slaughter needs during the fifty-two weeks ended December 28, 2008.

F-88

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to consolidated financial statements

December 28, 2008

Note 14. Business segments

JBS USA Holdings is organized into two operating segments, which are also the Company’s reportable segments: Beef and Pork. In the Beef segment, we conduct our domestic and international beef processing business, including the beef operations we acquired in the JBS Packerland Acquisition in 2008 and the beef, lamb, and sheep operations we acquired in the Tasman Acquisition in 2008. In the Pork segment, we conduct our domestic pork and lamb processing business. Segment operating performance is evaluated by the Chief Operating Decision Maker (“CODM”), as defined in SFAS No. 131, Disclosure about Segments of an Enterprise and Related Information, based on Earnings before Interest, Taxes, Depreciation, and Amortization (“EBITDA”). EBITDA is not intended to represent cash from operations as defined by GAAP and should not be considered as an alternative to cash flow or operating income as measured by GAAP. JBS USA Holdings believes EBITDA provides useful information about operating performance, leverage, and liquidity. The accounting policies of the segments are consistent with those described in Note 5. All intersegment sales and transfers are eliminated in consolidation.

On November 5, 2008, the Company entered into a new asset based revolving credit facility (see Note 8). The definition of EBITDA contained in that agreement requires EBITDA to be calculated as net income adding back taxes, depreciation, amortization and interest and the excluding certain non-cash items which affect net income. The Company has changed its definition of EBITDA to align with the definition contained in that agreement and as such the amounts below reflect the new definition.

Beef—The majority of Beef’s revenues are generated from US and Australian sales of fresh meat, which include chuck cuts, rib cuts, loin cuts, round cuts, thin meats, ground beef, and other products. In addition, Swift Beef also sells beef by-products to the variety meat, feed processing, fertilizer, automotive and pet food industries. Furthermore, Australia’s Foods Division produces value-added meat products including toppings for pizzas. On May 2, 2008, JBS Southern completed the Tasman Acquisition and now operates six processing facilities and one feedlot which are reported in the Beef segment (see Note 3). On October 23, 2008, the Company completed the Smithfield Acquisition adding four plants and eleven feedlots which are reported in the Beef segment (see Note 4).

F-89

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to consolidated financial statements

December 28, 2008

Corporate and other—Includes certain revenues, expenses, and assets not directly attributable to the primary segments, as well as eliminations resulting from the consolidation process.


	The fifty-two weeks ended
(in thousands)	December 28, 2008


Net sales
Beef	$ 9,975,510
Pork	2,438,049
Corporate and other.	(51,278	)

Total	$12,362,281


Depreciation and amortization
Beef	$ 68,721
Pork	23,653

Total	$ 92,374


EBITDA
Beef	$ 284,527
Pork	113,673

Total	398,200
Depreciation and amortization	(92,374	)
Interest expense, net	(36,358	)
Foreign currency transaction losses	(75,995	)
Loss on fixed assets	(1,082	)

Income before income tax expense	$ 192,391


Capital expenditures
Beef	$ 89,237
Pork	29,083

Total	$ 118,320

Total assets by segment (in thousands):


(in thousands)	December 28, 2008


Total assets
Beef	$ 2,838,619
Pork	519,995
Corporate and other	(43,043	)

Total	$ 3,315,571

F-90

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to consolidated financial statements

December 28, 2008

Sales by geographical area based on the location of the facility recognizing the sale (in thousands):


	The fifty-two weeks ended December 28, 2008

Net sales
United States	$	10,561,484
Australia		1,800,797

Total	$	12,362,281

Sales to unaffiliated customers by location of customer (in thousands):


	The fifty-two weeks ended December 28, 2008

United States	$	8,789,407
Japan		792,678
Australia		521,085
Mexico		296,680
China		77,623
Other		1,884,808

Total	$	12,362,281

Long-lived tangible assets by location of assets (in thousands):


	December 28, 2008

Long-lived assets:
United States	$	906,044
Australia		360,400
Other		83

Total	$	1,266,527

No single customer or supplier accounted for more than 10% of net sales or cost of goods sold, respectively, during the fifty-two weeks ended December 28, 2008.

Long-lived assets consist of property, plant, and equipment, net of depreciation, and other assets less debt issuance costs, net, of $12.5 million as of December 28, 2008.

F-91

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to consolidated financial statements

December 28, 2008

Note 15. Terminated acquisition

On October 20, 2008, the United States Department of Justice (“DOJ”) filed an injunction to stop the Company’s planned acquisition of National Beef.

On February 18, 2009 an agreement was reached with the sellers of National Beef whereby JBS USA Holdings will terminate the acquisition process of National Beef. All related litigation with the DOJ will also be terminated. As a result of the agreement JBS USA Holdings has agreed to reimburse the seller’s shareholders a total $19.9 million as full and final settlement of any and all liabilities related to the potential acquisition.

Note 16. Subsequent events

On December 29, 2008, JBS USA, Inc., was renamed JBS USA, LLC. and converted from a C corporation to a limited liability company.

On January 12, 2009, the Company received $25 thousand; including principal plus interest from an executive officer (see Note 11).

On January 27, 2009, the Company reached agreement with Smithfield Foods for final settlement of the working capital component of the purchase price pursuant to the Stock Purchase Agreement. The settlement calls for a payment of $4.5 million from Smithfield Foods to the Company as full and final settlement of the working capital delivered at October 23, 2008. The Company recorded the settlement as a reduction of purchase price upon receipt.

On March 27, 2009, JBS S.A. assigned its five separate intercompany notes with JBS USA Holdings to JBS HU Liquidity Management LLC, a subsidiary of JBS, which is organized in the country of Hungary.

On April 27, 2009, JBS USA Holdings refinanced its five separate intercompany notes with JBS HU Liquidity Management LLC into one note with a stated interest rate of 12% and a 10 year maturity (see Note 8).

On April 27, 2009 the Credit Agreement was amended to allow the execution of the senior unsecured note offering of JBS USA, LLC described below. Under the amendment, the existing limitation on distributions between JBS USA, LLC and JBS USA Holdings was amended to allow for the proceeds of the senior unsecured bond offering, less transaction expenses and $100 million retained by JBS USA, LLC to be remitted to JBS USA Holdings as a one time distribution. Also, the unused line fee was increased from 37.5 basis points to 50 basis points.

F-92

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to consolidated financial statements

December 28, 2008

notes are guaranteed by JBS S.A., us, JBS Hungary Holdings Kft. (a wholly owned, indirect subsidiary of JBS S.A.), and each of our U.S. restricted subsidiaries that guarantee our senior secured revolving facility (subject to certain exceptions).

Covenants. The indenture for the 11.625% senior unsecured notes due 2014 contains customary negative covenants that limit our and our restricted subsidiaries’ ability to, among other things:

•

incur additional indebtedness based on net debt to EBITDA ratio;

•

incur liens;

•

sell or dispose of assets;

•

pay dividends or make certain payments to our shareholders;

•

permit restrictions on dividends and other restricted payments by its restricted subsidiaries;

•

enter into related party transactions;

•

enter into sale/leaseback transactions; and

•

undergo changes of control without making an offer to purchase the notes.

F-93

JBS USA Holdings, Inc.

An indirect subsidiary of JBS S.A.

Notes to consolidated financial statements

December 28, 2008

additional countries might impose restrictions on the importation of pork products from the USA, nor whether or when the existing import bans might be lifted.

F-94

LOGO

Audit · Tax · Advisory

Grant Thornton LLP

200 S 6th Street, Suite 500

Minneapolis, MN 55402-1459

T 612.332.0001

F 612.332.8361

www.GrantThornton.com

Report of independent certified public accountants

Board of Directors

JBS USA Holdings, Inc. (formerly Swift Foods Company):

We have audited the accompanying consolidated balance sheets of JBS USA Holdings, Inc. (formerly Swift Foods Company) and subsidiaries (the Company) as of December 24, 2006 and July 10, 2007 and the related consolidated statements of operations, stockholders’ equity, and cash flows for the fiscal year ended December 24, 2006 and the 198 days ended July 10, 2007 (Predecessor) and the consolidated balance sheet as of December 30, 2007 and the related consolidated statements of operations, stockholder’s equity, and cash flows for the 173 days ended December 30, 2007 (Successor). These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America as established by the American Institute of Certified Public Accountants. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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 consolidated financial statements referred to above present fairly, in all material respects, the financial position of JBS USA Holdings, Inc. and subsidiaries as of December 24, 2006 and July 10, 2007 and the results of their operations and cash flows for the fiscal year ended December 24, 2006 and the 198 days ended July 10, 2007 (Predecessor) and as of December 30, 2007 and the results of their operations and cash flows for the 173 days ended December 30, 2007 (Successor) in conformity with accounting principles generally accepted in the United States of America.

LOGO

Minneapolis, Minnesota

July 1, 2009

F-95

JBS USA Holdings, Inc.

A wholly owned subsidiary of JBS S.A.

Consolidated balance sheets

(dollars in thousands)


	Predecessor				Successor
	December 24, 2006		July 10, 2007		December 30, 2007

Assets
Current assets:
Cash and cash equivalents	$ 83,420		$ 44,673		$ 198,883
Restricted cash	—		—		30,014
Accounts receivable, net of allowance for doubtful accounts of $1,030, $1,466 and $1,389, respectively	334,341		365,642		417,375
Inventories	457,829		487,598		466,756
Deferred income taxes, net	11,149		7,784		4,493
Other current assets	34,864		48,629		35,492

Total current assets	921,603		954,326		1,153,013
Property, plant, and equipment, net	487,427		505,172		708,056
Goodwill	6,811		—		96,345
Other intangibles, net	103,993		92,606		185,573
Deferred income taxes, net	—		—		5,434
Other assets	18,763		26,246		17,394

Total assets	$1,538,597		$1,578,350		$2,165,815

Liabilities and stockholders’ equity
Current liabilities:
Short-term debt	$ —		$ —		$ 776,287
Current portion of long-term debt	1,950		1,937		1,998
Accounts payable	179,939		122,821		179,650
Book overdraft	73,314		70,639		92,289
Deferred income taxes, net	6,696		9,323		12,885
Accrued liabilities	194,932		234,681		186,494

Total current liabilities	456,831		439,401		1,249,603
Long-term debt, excluding current portion	1,065,553		1,201,975		32,433
Deferred income taxes, net	38,914		23,878		19,688
Other non-current liabilities	17,389		11,914		25,273

Total liabilities	1,578,687		1,677,168		1,326,997
Commitments and contingencies (see Note 10)
Stockholders’ equity (deficit):
Common stock: par value $.01 per share, shares authorized, issued and outstanding of 221,359,000, 221,359,000 and 100, respectively	2,212		2,212		—
Additional paid-in capital	49,552		50,741		950,159
Treasury stock at cost, 1,784,584 shares at December 24, 2006 and July 10, 2007	(1,814	)	(1,814	)	—
Accumulated deficit	(143,946	)	(226,611	)	(111,592	)
Accumulated other comprehensive income	53,906		76,654		251

Total stockholders’ equity (deficit)	(40,090	)	(98,818	)	838,818

Total liabilities and stockholders’ equity	$1,538,597		$1,578,350		$2,165,815

The accompanying notes are an integral part of this financial statement.

F-96

JBS USA Holdings, Inc.

A wholly owned subsidiary of JBS S.A.

Consolidated statements of operations

(dollars in thousands)


	Predecessor				Successor
	Fiscal year ended December 24, 2006		198 days ended July 10, 2007		173 days ended December 30, 2007

Gross sales	$9,747,029		$5,000,046		$5,014,381
Less deductions from sales	(55,597	)	(29,422	)	(25,397	)

Net sales	9,691,432		4,970,624		4,988,984
Cost of goods sold	9,574,715		4,920,594		5,013,084

Gross profit (loss)	116,717		50,030		(24,100	)
Selling, general, and administrative expenses	158,783		92,333		60,727
Foreign currency transaction gains	(463	)	(527	)	(5,201	)
Other income, net	(4,937	)	(3,821	)	(3,581	)
(Gain) loss on sales of property, plant, and equipment	(666	)	(2,946	)	182
Interest expense, net	118,754		66,383		34,340

Loss before income tax expense	(154,754	)	(101,392	)	(110,567	)
Income tax (benefit) expense	(37,348	)	(18,380	)	1,025

Net loss	$ (117,406	)	$ (83,012	)	$ (111,592	)

The accompanying notes are an integral part of this financial statement.

F-97

JBS USA Holdings, Inc.

A wholly owned subsidiary of JBS S.A.

Consolidated statements of cash flows

(dollars in thousands)


	Predecessor				Successor
	Fiscal year ended December 24, 2006		198 days ended July 10, 2007		173 days ended December 30, 2007

Cash flows from operating activities:
Net loss	$(117,406	)	$(83,012	)	$(111,592	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation	73,611		38,904		30,085
Amortization of intangibles	11,023		5,934		5,159
Goodwill impairment charge	4,488		—		—
Amortization of debt issuance costs	9,991		6,226		883
PIK interest (Seller Note, Convertible Senior Note and Senior Notes due 2010)	37,994		21,333		—
(Gain) loss on sales of property, plant and equipment	(666	)	(2,946	)	182
Deferred income taxes	(38,324	)	(22,078	)	(177	)
Stock based compensation	853		1,189		—
Foreign currency transaction gains on intercompany note	—		—		(4,457	)
Other non-cash	(279	)	—		—
Change in assets and liabilities, net of impact of acquisition:
Restricted cash	—		—		(30,014	)
Accounts receivable, net	46,613		(24,781	)	(57,625	)
Inventories	47,919		(10,327	)	32,851
Other current assets	9,202		3,979		19,414
Accounts payable and accrued liabilities	(18,080	)	(45,009	)	7,171
Noncurrent assets	884		(73	)	336

Net cash flows provided by (used in) operating activities	67,823		(110,661	)	(107,784	)


Cash flows from investing activities:
Purchases of property, plant and equipment	(47,294	)	(33,700	)	(33,461	)
Proceeds from disposal of NonFed Plants	29,648		—		—
Proceeds from sales of property, plant, and equipment	5,607		5,203		379
Proceeds from sales of water rights	—		2,872		—
Investment in bonds	—		(11,000	)	—
Purchase of nonoperating real property	—		—		(2,629	)
Notes receivable and other	116		8,848		—
Costs associated with acquisition by parent, net of cash acquired $44,673	—		—		(3,698	)

Net cash flows used in investing activities	(11,923	)	(27,777	)	(39,409	)


Cash flows from financing activities:
Net borrowings (payments) of revolver	(7,779	)	104,316		—
Net payments of short-term debt	—		—		(296,550	)
Proceeds from debt issuance	—		—		750,000
Payments of debt	(2,653	)	(1,149	)	(851,736	)
Change in overdraft balances	(15,265	)	(2,675	)	21,650
Investment from parent	—		—		950,159
Repurchase of common stock	(250	)	—		—
Payment to previous shareholders in conjunction with acquisition by parent	—		—		(225,000	)
Debt issuance costs	—		—		(1,812	)

Net cash flows provided by (used in) financing activities	(25,947	)	100,492		346,711

Effect of exchange rate changes on cash	1,403		(801	)	(635	)

Net change in cash and cash equivalents	31,356		(38,747	)	198,883
Cash and cash equivalents, beginning of period	52,064		83,420		—

Cash and cash equivalents, end of period	$ 83,420		$ 44,673		$ 198,883


Non-cash investing and financing activities:
Construction in process under deemed capital lease	$ —		$ 7,559		$ 664


Supplemental information:
Cash paid for interest	$ 74,887		$ 45,707		$ 26,270

Cash paid/(received) for income taxes	$ 4,317		$ (3,150	)	$ 1,022

The accompanying notes are an integral part of this financial statement.

F-98

JBS USA Holdings, Inc.

A wholly owned subsidiary of JBS S.A.

Consolidated statements of stockholders’ equity

(dollars in thousands)


	Common stock issued	Treasury shares		Common stock	Additional paid-in capital	Treasury stock		Accumulated deficit		Accumulated other comprehensive income		Total stockholders’ equity


Predecessor
Balance at December 25, 2005	221,359,000	(1,537,151	)	$2,212	$ 48,699	$(1,564	)	$ (26,540	)	$39,775		$ 62,582
Repurchase of common stock	—	(247,433	)	—	—	(250	)	—		—		(250	)
Stock based compensation	—	—		—	853	—		—		—		853

Comprehensive loss:
Net loss	—	—		—	—	—		(117,406	)	—		(117,406	)
Derivative adjustment, net of tax of $1,169	—	—		—	—	—		—		(1,267	)	(1,267	)
Foreign currency translation adjustment	—	—		—	—	—		—		15,398		15,398

Total comprehensive loss												(103,275	)

Balance at December 24, 2006	221,359,000	(1,784,584	)	2,212	49,552	(1,814	)	(143,946	)	53,906		(40,090	)
Stock based compensation	—	—		—	1,189	—		—		—		1,189
Cumulative effect of adoption of FIN 48	—	—		—	—	—		347		—		347

Comprehensive loss:
Net loss	—	—		—	—	—		(83,012	)	—		(83,012	)
Derivative adjustment, net of tax of $217	—	—		—	—	—		—		1,959		1,959
Foreign currency translation adjustment	—	—		—	—	—		—		20,789		20,789

Total comprehensive loss												(60,264	)

Balance at July 10, 2007	221,359,000	(1,784,584	)	$2,212	$ 50,741	$(1,814	)	$(226,611	)	$76,654		$ (98,818	)


Successor
Investment from parent	100	—		$ —	$950,159	$ —		$ —		$ —		$950,159

Comprehensive loss:
Net loss	—	—		—	—	—		(111,592	)	—		(111,592	)
Derivative adjustment, net of tax of $186	—	—		—	—	—		—		(422	)	(422	)
Foreign currency translation adjustment	—	—		—	—	—		—		673		673
Total comprehensive loss												(111,341	)

Balance at December 30, 2007	100	—		$ —	$950,159	$ —		$(111,592	)	$ 251		$838,818

The accompanying notes are an integral part of this financial statement.

F-99

JBS USA Holdings, Inc.

A wholly owned subsidiary of JBS S.A.

Notes to consolidated financial statements

Note 1. Description of business

JBS USA Holdings, Inc. (“JBS USA Holdings” or the “Company” or “we”), formerly known as Swift Foods Company (“Swift Foods”) and JBS USA, Inc., is a Delaware corporation and a wholly owned subsidiary of JBS S.A., a Brazilian company (“JBS”). JBS USA Holdings owns all of JBS USA, Inc. (“JBS USA”) which is the operating entity (See Note 12). JBS USA and its subsidiaries constitute the operations of JBS USA Holdings as reported under accounting principles generally accepted in the United States of America (“GAAP”).

JBS USA is the leading beef processor and one of the leading pork processing companies in the world. The Company processes, prepares, packages, and delivers fresh, further processed and value-added beef, pork and lamb products for sale to customers in the United States and in international markets. The Company also provides services to its customers designed to help them develop more sophisticated and profitable sales programs. JBS USA sells its meat products to customers in the foodservice, international, further processor, and retail distribution channels. The Company also produces and sells by-products that are derived from its meat processing operations, such as hides and variety meats, to customers in various industries.

JBS USA conducts its domestic beef and pork processing businesses through Swift Beef Company (“Swift Beef”) and Swift Pork Company (“Swift Pork”) and its Australian beef business through Swift Australia Pty. Ltd. (“Swift Australia”). The Company has two reportable segments comprised of Beef and Pork which, for the fiscal year ended December 24, 2006, the 198 days ended July 10, 2007 and the 173 days ended December 30, 2007, represented approximately 78.1% and 21.9%, 75.5% and 24.5% and 78.9% and 21.1% of net sales, respectively. During the periods covered by these financial statements, the Company operated four beef processing facilities, three pork processing facilities, one lamb slaughter facility, and one value-added facility in the United States and four beef processing facilities and four feedlots in Australia (See Note 12).

Note 2. Acquisition and refinancing of JBS USA Holdings, Inc.

On July 11, 2007, JBS acquired Swift Foods (the “Acquisition”). Concurrent with the closing of the Acquisition, the entity formerly known as Swift Foods was renamed JBS USA, Inc. and later renamed JBS USA Holdings, Inc. The aggregate purchase price for the Acquisition was $1,470.6 million (including approximately $48.5 million of transaction costs), as shown below. JBS USA Holdings also refinanced its debt and the outstanding debt assumed at the date of the Acquisition was paid off using proceeds from $750 million of various debt instruments and additional equity contributions from JBS (See Note 6). As a result of the Acquisition, the financial statements of JBS USA Holdings reflect the acquisition being accounted for as a purchase in accordance with Statement of Financial Accounting Standard (“SFAS”) No. 141, Business Combinations (“SFAS No. 141”).

The purchase price allocation is based on an independent valuation of assets and liabilities acquired. The allocation presented below reflects the preliminary fair value of the individual

F-100

JBS USA Holdings, Inc.

A wholly owned subsidiary of JBS S.A.

Notes to consolidated financial statements

assets and liabilities of JBS USA Holdings as of July 11, 2007 (in thousands). Subsequent to the completion of the December 2007 balance sheet the preliminary purchase price allocation was finalized in September 2008 (See Note 12).


Purchase price paid to previous shareholders	$ 225,000
Debt assumed including accrued interest of $22,872	1,197,124
Fees and direct expenses	48,490

Total purchase price	$1,470,614


Preliminary purchase price allocation:
Current assets and liabilities	$583,833
Property, plant, and equipment	693,672
Identified intangibles	190,732
Deferred tax liability	(110	)
Goodwill	97,194
Other noncurrent assets and liabilities, net	(94,707	)

Total purchase price allocation	$1,470,614

The debt refinancing in conjunction with the acquisition was financed in part using the following sources (in thousands):


Loan Agreements due June 30, 2008		$400,000
Credit Agreement due July 6, 2008		250,000
Loan Agreement due July 7, 2008		100,000

		$750,000

The impact of the Acquisition on the financial statements of JBS USA Holdings was the identification of intangible assets, adjustment of assets and liabilities to fair value, and an equity investment from its parent and payoff of certain outstanding debt. Although certain of the outstanding debt of JBS USA Holdings was paid off or refinanced in conjunction with the Acquisition and replaced with an equity investment from its parent, the parent does have debt outstanding and JBS USA Holdings could be called upon to provide funding to meet debt service requirements.

Note 3. Basis of presentation and accounting policies

Consolidation

The consolidated financial statements include the accounts of JBS USA Holdings and its direct and indirect wholly-owned subsidiaries. All intercompany transactions have been eliminated.

F-101

JBS USA Holdings, Inc.

A wholly owned subsidiary of JBS S.A.

Notes to consolidated financial statements

Use of estimates

Restricted cash

JBS USA Holdings has outstanding letters of credit, supporting current liabilities, which are collateralized by cash. As this cash is not available for operations and is not considered highly liquid it is classified as restricted cash.

Cash and cash equivalents

JBS USA Holdings considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. The carrying value of these assets approximates the fair market value. Financial instruments which potentially subject JBS USA Holdings to concentration of credit risk consist principally of cash and temporary cash investments. At times, cash balances held at financial institutions were in excess of Federal Deposit Insurance Corporation insurance limits. JBS USA Holdings places its temporary cash investments with high quality financial institutions. JBS USA Holdings believes no significant concentration of credit risk exists with respect to these cash investments.

Investment in auction rate securities

During the 173 days ended December 30, 2007, JBS USA Holdings invested in auction rate securities based on its cash needs and available cash balances. As of December 30, 2007 the Company held no investments in auction rate securities. The Company considered these investments to be available-for-sale in accordance with SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities, and, as such, the cash flows associated with these investments have been reflected in investing activities. Realized gains recorded in interest income for the period July 11 through December 30, 2007 totaled $2.7 million.

Accounts receivable and allowance for doubtful accounts

F-102

JBS USA Holdings, Inc.

A wholly owned subsidiary of JBS S.A.

Notes to consolidated financial statements

The Company evaluates the collectability of its accounts receivable based on a general analysis of past due receivables, and a specific analysis of certain customers which management believes will be unable to meet their financial obligations due to economic conditions, industry-specific conditions, historic or anticipated performance, and other relevant circumstances. The Company continuously performs credit evaluations and reviews of its customer base. The Company will write-off an account when collectability is not reasonably assured. The Company believes this process effectively mitigates its exposure to bad debt write-offs; however, if circumstances related to changes in the economy, industry, or customer conditions change, the Company may need to subsequently adjust the allowance for doubtful accounts.


	Predecessor				Successor
	Fiscal year ended December 24, 2006		198 days ended July 10, 2007		173 days ended December 30, 2007

Balance, beginning of period	$1,701		$1,030		$1,466
Bad debt provision (decrease)	(793	)	512		(115	)
Write-offs, net of recoveries	122		(76	)	36
Effect of exchange rates	—		—		2

Balance, end of period	$1,030		$1,466		$1,389

Inventories

Inventories consist primarily of product, livestock, and supplies. Product inventories are considered commodities and are primarily valued based on quoted commodity prices. Australian product inventories are valued based on the lower of cost or net realizable value. Livestock inventories are valued on the basis of the lower of first-in, first-out cost or market. Costs capitalized into livestock inventory include cost of feeder livestock, direct materials, supplies, and feed. Cattle, hogs, and lamb are reclassified from livestock to work in process at time of slaughter. Supply inventories are carried at historical cost. The components of inventories, net of reserves, are as follows (in thousands):


	Predecessor		Successor
	December 24, 2006	July 10, 2007	December 30, 2007

Livestock	$105,033	$122,853	$96,851

Product inventories:
Work in progress	29,561	43,671	37,127
Finished goods	277,433	277,348	292,157
Supplies	45,802	43,726	40,621

	$457,829	$487,598	$466,756

F-103

JBS USA Holdings, Inc.

A wholly owned subsidiary of JBS S.A.

Notes to consolidated financial statements

Other Current Assets

Other current assets include prepaid expenses which are amortized over the period the Company expects to receive the benefit.

Property, plant and equipment

Property, plant and equipment was recorded at cost and was adjusted to fair value at the date of the Acquisition. Subsequent additions are recorded at cost. Depreciation is recorded using the straight-line method over the estimated useful lives of the assets as follows.


Furniture, fixtures, office equipment and other		5 to 7 years
Machinery and equipment		5 to 15 years
Buildings and improvements		15 to 40 years
Leasehold improvements		shorter of useful life or the lease term

The costs of developing internal-use software are capitalized and amortized when placed in service over the expected useful life of the software. Major renewals and improvements are capitalized while maintenance and repairs are expensed as incurred. The Company has historically and currently accounts for planned major maintenance activities as they are incurred. Upon the sale or retirement of assets, the cost and related accumulated depreciation or amortization are eliminated from the respective accounts and any resulting gains or losses are reflected in earnings. Applicable interest charges incurred during the construction of assets are capitalized as one of the elements of cost and are amortized over the assets’ estimated useful lives. During the fiscal year ended December 24, 2006, the 198 days ended July 10, 2007 and the 173 days ended December 30, 2007, JBS USA Holdings capitalized $0.3 million, $0.4 million and $0.4 million of interest charges, respectively. Assets held under capital lease are classified in property, plant, and equipment and amortized over the lease term. Lease amortization is included in depreciation expense. As of December 24, 2006, July 10, 2007 and December 30, 2007, JBS USA Holdings had $3.7 million, $6.1 million and $6.8 million in commitments outstanding for capital projects, respectively. At December 30, 2007, the Company also had a commitment to purchase $15.5 million of bonds, as discussed in other assets.

JBS USA Holdings assesses the recoverability of long-lived assets whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. When future undiscounted cash flows of assets are estimated to be insufficient to recover their related carrying value, the Company compares the asset’s future cash flows, discounted to present value using a risk-adjusted discount rate, to its current carrying value and records a provision for impairment as appropriate.

F-104

JBS USA Holdings, Inc.

A wholly owned subsidiary of JBS S.A.

Notes to consolidated financial statements

Property, plant, and equipment, net are comprised of the following (in thousands):


	Predecessor				Successor
	December 24, 2006		July 10, 2007		December 30, 2007

Land	$ 54,058		$ 58,580		$ 59,832
Buildings, machinery, and equipment	628,844		657,681		596,954
Property and equipment under capital lease	21,130		20,893		16,776
Furniture, fixtures, office equipment, and other	55,259		58,269		32,527
Construction in progress	18,473		41,477		30,915

	777,764		836,900		737,004
Less accumulated depreciation	(290,337	)	(331,728	)	(28,948	)

	$ 487,427		$ 505,172		$708,056

Accumulated depreciation includes accumulated amortization on capitalized leases of approximately $7.1 million, $7.8 million and $0.9 million as of December 24, 2006, July 10, 2007 and December 30, 2007, respectively. For the fiscal year ended December 24, 2006, the Company recognized $63.9 million and $9.7 million of depreciation expense in cost of goods sold and selling, general, and administrative expenses in the statement of operations, respectively. For the 198 days ended July 10, 2007, the Company recognized $33.8 million and $5.2 million of depreciation expense in cost of goods sold and selling, general, and administrative expenses in the statement of operations, respectively. For the 173 days ended December 30, 2007, the Company recognized $23.9 million and $6.2 million of depreciation expense in cost of goods sold and selling, general, and administrative expenses in the statement of operations, respectively.

JBS USA Holdings monitors certain asset retirement obligations in connection with its operations. These obligations relate to clean-up, removal or replacement activities and related costs for “in-place” exposures only when those exposures are moved or modified, such as during renovations of its facilities. These in-place exposures include asbestos, refrigerants, wastewater, oil, lubricants and other contaminants common in manufacturing environments. Under existing regulations, JBS USA Holdings is not required to remove these exposures and there are no plans or expectations of plans to undertake a renovation that would require removal of the asbestos nor remediation of the other in place exposures at this time. The facilities are expected to be maintained and repaired by activities that will not result in the removal or disruption of these in place exposures. As a result, there is an indeterminate settlement date for these asset retirement obligations because the range of time over which JBS USA Holdings may incur these liabilities is unknown and cannot be estimated. Therefore, JBS USA Holdings cannot reasonably estimate the fair value of the potential liability.

F-105

JBS USA Holdings, Inc.

A wholly owned subsidiary of JBS S.A.

Notes to consolidated financial statements

Other Assets

Other assets at December 24, 2006 include notes receivable totaling $7.6 million, from the City of Cactus, Texas (the “City”). In December 2002, Swift Beef loaned $2.3 million to the City for use by the City to secure acreage for the construction of the City’s new wastewater treatment plant. JBS USA Holdings owns a beef processing facility, as well as a wet blue hide processing facility which will be served by the new treatment plant. The loan was for an original two-year term and accrued interest at 6%. The loan was amended in December 2004 to extend the maturity for up to one year and was extended for an additional year in December 2005 and again for an additional year in December 2006. An additional loan was made by Swift Beef to the City in the amount of $3.5 million in January 2005 to secure additional acreage and was amended in December 2005 and again in December 2006 to extend the maturity for up to one year. A final loan in the amount of $1.8 million was made to the City to secure final acreage in September 2005 and was amended in September 2006 to extend the maturity for up to one year. In March 2007, the maturity dates of the notes receivable were amended to be on the demand of Swift Beef to the extent that debt securities have been issued by the City in amounts sufficient to repay the loans but in no event later than December 31, 2012. Interest income on the notes is recognized as an offset to interest expense and is payable upon maturity of the notes. In August 2006, the State of Texas approved the issuance of a wastewater treatment permit which was issued on November 9, 2006.

Effective May 15, 2007, Swift Beef entered into an Installment Bond Purchase Agreement (the “Purchase Agreement”) with the City. Under the Purchase Agreement, Swift Beef agreed to purchase up to $26.5 million of the “City of Cactus, Texas Sewer System Revenue Improvement and Refunding Bonds, Taxable Series 2007” to be issued by the City (the “Bonds”) . The Bonds are being issued by the City to finance improvements to its sewer system (the “System”) which is utilized by Swift Beef’s processing plant located in Cactus, Texas (the “Plant”) as well as other industrial users and the citizens of the community of Cactus. Swift Beef will purchase the Bonds in installments upon receipt of Bond installment requests from the City as the System improvements are completed through an anticipated completion date of June 2010. The interest rate on the Bonds is the six-month LIBOR plus 350 basis points. The Bonds mature on June 1, 2032 and are subject to annual mandatory sinking fund redemption beginning on June 1, 2011. The principal and interest on the Bonds will be paid by the City from the net revenues of the System. At December 30, 2007, $8.2 million had been recognized as construction in process and construction financing by the Company. At the date of the Acquisition and at December 30, 2007, Swift Beef held $11.0 million of the Bonds.

F-106

JBS USA Holdings, Inc.

A wholly owned subsidiary of JBS S.A.

Notes to consolidated financial statements

On June 1, 2007, Swift Beef purchased the initial installment of Bonds in the amount of $11.0 million. The City repaid the former notes receivable of $7.6 million and accrued interest totaling $1.3 million on June 1, 2007.

The Company has evaluated the impact of EITF No. 01-08, Determining Whether an Arrangement Contains a Lease, as well as EITF No. 97-10, The Effect of Lessee Involvement in Asset Construction, and has determined that it will be required to reflect the wastewater treatment facility as a capital asset (similar to a capital leased asset) as it will be the primary user of the wastewater facility based on projections of volume of throughput. As the City spends funds to construct the facility, the Company will record construction in process and the related construction financing. Construction in progress and construction financing by the Company at July 10, 2007 and December 30, 2007 was $7.6 million and $8.2 million, respectively.

Debt issuance costs

Costs related to the issuance of debt are capitalized and amortized to interest expense over the period the debt is outstanding. Amortization of debt issuance costs for the fiscal year ended December 24, 2006, the 198 days ended July 10, 2007 and the 173 days ended December 30, 2007 was $10.0 million, $6.2 million and $0.9 million, respectively.

In addition the Company recognized $12.7 million in interest expense for the period ended December 30, 2007 for debt not issued.

Goodwill and other intangible assets

Goodwill and other intangible assets with indefinite lives are not amortized and are tested for impairment at least on an annual basis or more frequently if impairment indicators arise, as required by SFAS No. 142, Goodwill and Other Intangible Assets (“SFAS No. 142”). Identifiable intangible assets with definite lives are amortized over their estimated useful lives. On an annual basis, JBS USA Holdings performs testing for impairment using a fair-value based approach and, if there is impairment, the carrying amount of goodwill and other non-amortizing intangible assets are written down to the implied fair value. Before the Acquisition, the Company’s annual impairment testing date was in May and was subsequently changed to December in May 2008. Goodwill resulting from the preliminary purchase price allocation from the Acquisition totaled $97.2 million (See Note 12).

For the fiscal year ended December 24, 2006, the Company completed its annual impairment testing of goodwill and identifiable intangible assets with indefinite lives in May 2006. As a result of this testing, the Company recorded an impairment charge totaling $4.5 million related to the goodwill of its Beef segment in the cost of goods sold line in the Statement of Operations.

During the 198 day period ended July 10, 2007, the Company recorded an adjustment to goodwill of $6.8 million related to the reversal of tax reserves which were established as part of the predecessor original 2002 purchase accounting transaction. Under EITF 93-7, the reversal of

F-107

JBS USA Holdings, Inc.

A wholly owned subsidiary of JBS S.A.

Notes to consolidated financial statements

tax contingencies related to purchase accounting are recognized as reductions of book goodwill when it is determined that the original reserve is no longer needed.

The table below shows a roll forward of goodwill by segment for the periods ended December 24, 2006, July 10, 2007 and December 30, 2007 (in thousands). The “other” category included in the roll forward is comprised of translation and other adjustments made to goodwill.

Predecessor


	December 25, 2005	Additions	Impairments		Other	December 24, 2006

Beef	$ 4,318	$—	$(4,488	)	$170	$ —
Pork	6,811	—	—		—	6,811

Total	$11,129	$—	$(4,488	)	$170	$6,811


	December 24, 2006	Additions	Impairments	Other		July 10, 2007

Beef	$ —	$—	$—	$ —		$—
Pork	6,811	—	—	(6,811	)	—

Total	$6,811	$—	$—	$(6,811	)	$—

Successor


	July 11, 2007	Additions	Impairments	Other		December 30, 2007

Beef	$—	$53,414	$—	$(849	)	$52,565
Pork	—	43,780	—	—		43,780

Total	$—	$97,194	$—	$(849	)	$96,345

Other identifiable intangible assets as of December 24, 2006, July 10, 2007 and December 30, 2007 are as follows (in thousands):


	Predecessor
	December 24, 2006
	Gross carrying amount	Accumulated amortization		Net carrying amount


Amortizing:
Patents	$ 3,429	$ (1,696	)	$ 1,733
Customer relationships	124,640	(36,861	)	87,779
Mineral rights	810	(95	)	715

Subtotal amortizing intangibles	128,879	(38,652	)	90,227

Non-amortizing:
Water rights	3,628	—		3,628
Trademark	10,138	—		10,138

Subtotal non-amortizing intangibles	13,766	—		13,766

Total intangibles	$142,645	$(38,652)		$103,993

F-108

JBS USA Holdings, Inc.

A wholly owned subsidiary of JBS S.A.

Notes to consolidated financial statements


	Predecessor
	July 10, 2007
	Gross carrying amount	Adjustments		Accumulated amortization		Net carrying amount

Patents	$ 3,429	$ —		$ (1,904	)	$ 1,525
Customer relationships	129,366	(5,640	)	(43,783	)	79,943
Mineral rights	813	—		(115	)	698

Subtotal amortizing intangibles	133,608	(5,640	)	(45,802	)	82,166

Non-amortizing:
Water rights	3,628	(3,326	)	—		302
Trademarks	10,138	—		—		10,138

Subtotal non-amortizing intangibles	13,766	(3,326	)	—		10,440

Total intangibles	$147,374	$(8,966	)	$(45,802	)	$92,606

Patents consist of exclusive marketing rights and are being amortized over the life of the related agreements, which range from 10 to 16 years. The Customer relationship intangible is being amortized on an accelerated basis over its expected useful life of 20 years representing management’s estimate of the period of expected economic benefit. Mineral rights are being amortized over its expected useful life of 20 years. For the fiscal year ended December 24, 2006 and the 198 days ended July 10, 2007, JBS USA Holdings, Inc. recognized $11.0 million and $5.9 million of amortization expense, respectively.

As part of the EITF 93-7 tax adjustment discussed above, the Company also recorded an adjustment of $5.6 million to reverse tax reserves established in the 2002 purchase accounting transaction.

F-109

JBS USA Holdings, Inc.

A wholly owned subsidiary of JBS S.A.

Notes to consolidated financial statements

The adjustment to non-amortizing intangibles reflects the sale of water rights at a carrying value of $3.3 million during the period ended July 10, 2007.


	Successor
	December 30, 2007
	Gross carrying amount	Accumulated amortization		Net carrying amount


Amortizing:
Customer relationships	$129,000	$(4,137	)	$124,863
Customer contracts	15,400	(441	)	14,959
Patents	5,200	(227	)	4,973
Rental contract	3,507	(185	)	3,322
Deferred revenue	1,483	(148	)	1,335
Mineral rights	742	(21	)	721

Subtotal amortizing intangibles	155,332	(5,159	)	150,173

Non-amortizing:
Trademark	33,300	—		33,300
Water rights	2,100	—		2,100

Subtotal non-amortizing intangibles	35,400	—		35,400

Total intangibles	$190,732	$(5,159	)	$185,573

The customer relationship intangible and customer contract intangible are amortized on an accelerated basis over 12 and 7 years respectively, representing management’s estimate of the period of expected economic benefit and yearly customer profitability.

Patents consist of exclusive marketing rights and are being amortized over the life of the related agreements, which range from 6 to 20 years. For the 173 days ended December 30, 2007, JBS USA Holdings, Inc. recognized $5.2 million of amortization expense. Based on amortizing assets recognized as of December 30, 2007, amortization expense for each of the next five years is estimated as follows (in thousands):


Estimated amortization expense for fiscal years ending (in thousands):
2008		$16,126
2009		19,857
2010		19,232
2011		18,317
2012		16,740

Overdraft balances

The majority of JBS USA Holdings bank accounts are zero balance accounts where cash needs are funded as checks are presented for payment by the holder. Checks issued pending clearance

F-110

JBS USA Holdings, Inc.

A wholly owned subsidiary of JBS S.A.

Notes to consolidated financial statements

result in overdraft balances for accounting purposes and the change in the related balance is reflected in financing activities on the statement of cash flows.

Self-insurance

JBS USA Holdings is self-insured for employee medical and dental benefits and purchases insurance policies with deductibles for certain losses relating to worker’s compensation and general liability. The Company has purchased stop-loss coverage in order to limit its exposure to any significant levels of certain claims. Self-insured losses are accrued based upon periodic third party actuarial reports of the aggregate uninsured claims incurred using actuarial assumptions accepted in the insurance industry and the Company’s historical experience rates. JBS USA Holdings has recorded a prepaid asset with an offsetting liability to reflect the amounts estimated as due for claims incurred and accrued but not yet paid to the claimant by the third party insurance company in accordance with SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities.

Environmental expenditures and remediation liabilities

Environmental expenditures that relate to current or future operations and which improve operational capabilities are capitalized at time of incurrence. Expenditures that relate to an existing or prior condition caused by past operations, and which do not contribute to current or future revenue generation, are expensed. Liabilities are recorded when environmental assessments and/or remedial efforts are probable and the costs can be reasonably estimated.

Foreign currency translation

For foreign operations, the local currency is the functional currency. Translation into US dollars is performed for assets and liabilities at the exchange rates as of the balance sheet date. Income and expense accounts are translated at average exchange rates for the period. Adjustments resulting from the translation are reflected as a separate component of other comprehensive income. Translation gains and losses on US dollar denominated revolving intercompany borrowings between the Australian subsidiaries and the US parent are recorded in earnings. Translation gains and losses on US dollar denominated intercompany borrowings between the Australian subsidiary and the US parent and which are deemed to be part of the investment in the subsidiary are recorded in other comprehensive income. The balance of foreign currency translation, net of tax in other comprehensive income at December 24, 2006, July 10, 2007 and December 30, 2007 was $55.3 million, $76.1 million and $0.7 million, respectively.

Income taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the

F-111

JBS USA Holdings, Inc.

A wholly owned subsidiary of JBS S.A.

Notes to consolidated financial statements

financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Beginning with the adoption of FASB Interpretation No. 48 Accounting for Uncertainty in Income Taxes (“FIN 48”) as of December 25, 2006, the Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. JBS USA Holdings has a pre-acquisition tax year ending in May and its post-acquisition tax year ending in December.

Fair value of financial instruments

The carrying amounts of JBS USA Holdings’ financial instruments, including cash and cash equivalents, short-term trade receivables, and payables, approximate their fair values due to the short-term nature of the instruments. Long-term debt, including the $750 million of unsecured loans, installment notes payable and capital lease obligations, were recorded at fair value at the time of the Acquisition (See Note 2) and JBS USA Holdings believes this approximates its fair value at December 30, 2007 subject to adjustments for any payments.

Revenue recognition

The Company’s revenue recognition policies are based on the guidance in Staff Accounting Bulletin (“SAB”) No. 104, Revenue Recognition in Financial Statements. Revenue on product sales is recognized when title and risk of loss are transferred to customers (upon delivery based on the terms of sale), when the price is fixed or determinable, and when collectibility is reasonably assured. The Company recognizes sales net of applicable provisions for discounts, returns and allowances which are accrued as product is invoiced to customers who participate in such programs based on contract terms and historical and current purchasing patterns.

Advertising costs

Advertising costs are expensed as incurred. Advertising costs for the fiscal year ended December 24, 2006, the 198 days ended July 10, 2007 and the 173 days ended December 30, 2007 were $7.6 million, $2.9 million and $2.2 million, respectively.

Research and development

F-112

JBS USA Holdings, Inc.

A wholly owned subsidiary of JBS S.A.

Notes to consolidated financial statements

Shipping costs

Pass-through finished goods delivery costs reimbursed by customers are reported in net sales while an offsetting expense is included in cost of goods sold.

Comprehensive income

Comprehensive income consists of net income, foreign currency translation, and derivative adjustments. JBS USA Holdings deems all of its foreign investments to be permanent in nature and does not provide for taxes on permanently reinvested earnings or on currency translation adjustments arising from converting the investment in a foreign currency to US dollars. It is not practical to determine the amount of incremental taxes that might arise were these foreign earnings to be remitted.

Facility closure

In August 2005, the Company closed its Nampa, Idaho non-fed cattle processing facility. The closure was due to continued difficulty of sourcing older non-fed cattle for slaughter in the Northwestern US and the uncertainty surrounding the opening of the Canadian border to the importation of livestock older than 30 months of age. On May 26, 2006, the Company completed the sale of the idled Nampa facility as well as the operating Omaha, Nebraska non-fed cattle processing facility. Due to significant continuing involvement with the non-fed processing facilities through a raw material supply agreement, the operating results related to these plants for all periods presented have been reflected in continuing operations.

Derivatives and hedging activities

F-113

JBS USA Holdings, Inc.

A wholly owned subsidiary of JBS S.A.

Notes to consolidated financial statements

Adoption of new accounting pronouncements

In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities (“SFAS No. 161”), which provides for enhanced disclosures about the use of derivatives and their impact on a Company’s financial position and results of operations. The Company adopted SFAS No. 161 on the first day of their 2008 calendar year and the adoption of the standard did not have a material impact on its financial position, results of operations, or cash flows.

In December 2007, the FASB issued SFAS No. 141(R) Business Combinations (“SFAS No. 141(R)”). SFAS No. 141(R) is intended to provide greater consistency in the accounting and reporting of business combinations. SFAS 141(R) requires the acquiring entity in a business combination to recognize all assets acquired and liabilities assumed in the transaction and any non-controlling interest in the acquiree at the acquisition date, measured at fair value at that date. This includes the measurement of the acquirer’s shares issued as consideration in a business combination, the recognition of contingent consideration, the accounting for pre-acquisition gains and loss contingencies, the recognition of capitalized in-process research and development, the accounting for acquisition related restructuring cost accruals, the treatment of acquisition related transaction costs and the recognition of changes in the acquirer’s income tax valuation allowance and deferred taxes. One significant change in this statement is the requirement to expense direct costs of the transaction, which under existing standards are included in the purchase price of the acquired company. This statement also established disclosure requirements to enable the evaluation of the nature and financial effect of the business combination. SFAS No. 141(R) is effective for business combinations consummated after December 31, 2008. Also effective, as a requirement of the statement, after December 31, 2008 any adjustments to uncertain tax positions from business combinations consummated prior to December 31, 2008 will no longer be recorded as an adjustment to goodwill, but will be reported in income. During the thirteen weeks ended December 28, 2008, the Company expensed $1.9 million of cost previously capitalized related to the pending acquisition of National Beef Packing Company (“National Beef”) as the transaction did not close prior to December 15, 2008.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (“SFAS No. 157”). This statement provides a single definition of fair value, a framework for measuring fair value, and expanded disclosures concerning fair value. This Statement is effective for JBS USA Holdings for the fiscal year ending December 28, 2008. The adoption of SFAS No. 157 did not have a material impact on the Company’s financial position, results of operations, or cash flows.

F-114

JBS USA Holdings, Inc.

A wholly owned subsidiary of JBS S.A.

Notes to consolidated financial statements

Note 4. Accrued liabilities

Accrued liabilities consist of the following (in thousands):


	Predecessor		Successor
	December 24, 2006	July 10, 2007	December 30, 2007

Accrued self insurance reserves	$ 48,504	$ 48,895	$ 30,183
Accrued salaries	38,944	58,838	41,678
Accrued taxes	9,857	7,542	8,538
Accrued freight	22,027	21,781	23,863
Accrued interest	16,793	18,095	18,157
Other	58,807	79,530	64,075

Total	$194,932	$234,681	$186,494

Other accrued liabilities consist of items that are individually less than 5% of total current liabilities.

Note 5. Derivative financial instruments

The fair value of derivative assets is recognized within other current assets while the fair value of derivative liabilities is recognized within accrued liabilities. At December 24, 2006, July 10, 2007 and December 30, 2007, the fair value of derivatives recognized within other current assets was $5.8 million, $23.7 million and $13.9 million, respectively. At December 24, 2006, July 10, 2007 and December 30, 2007, the fair value of derivatives recognized within accrued liabilities was $3.9 million, $11.3 million and $1.4 million, respectively.

As of December 24, 2006, July 10, 2007 and December 30, 2007, the net deferred amount of derivative gains and losses recognized in accumulated other comprehensive income was $1.4 million, $0.6 million and $0.4 million net of tax, respectively. The Company anticipates these amounts will be transferred out of accumulated other comprehensive income and recognized within earnings over the 12 month period following each respective balance sheet date.

The Company utilizes various raw materials in its operations, including cattle, hogs, and energy, such as natural gas, electricity, and diesel fuel, which are all considered commodities. The Company considers these raw materials generally available from a number of different sources and believes it can obtain them to meet its requirements. These commodities are subject to price fluctuations and related price risk due to factors beyond its control, such as economic and political conditions, supply and demand, weather, governmental regulation, and other circumstances. Generally, the Company purchases derivatives in an attempt to mitigate price risk related to its anticipated consumption of commodity inputs for periods of up to 12 months. The Company may enter into longer-term derivatives on particular commodities if deemed appropriate. As of December 30, 2007, the Company had derivative positions in place covering approximately 1% of its anticipated need for livestock through December 2008.

F-115

JBS USA Holdings, Inc.

A wholly owned subsidiary of JBS S.A.

Notes to consolidated financial statements

Note 6. Long-term debt and loan agreements

As of December 24, 2006, July 10, 2007 and December 30, 2007, debt consisted of the following (in thousands):


	Predecessor		Successor
	December 24, 2006	July 10, 2007	December 30, 2007


Short-term debt
Unsecured bank loans	$ —	$ —	$750,000
Unsecured credit facility	—	—	26,287

Total short-term debt	—	—	776,287
Current portion of long-debt:
Installment notes payable	468	468	619
Capital lease obligations	1,482	1,469	1,379

Total current portion of long-term debt	1,950	1,937	1,998

Long-term debt:
Senior credit facility	217,552	323,529	—
Senior notes due 2009, including unamortized premium	273,909	272,903	—
Senior subordinated notes, including unamortized premium	158,462	157,482	—
Senior notes due 2010	117,809	124,916	—
Convertible senior subordinated notes	89,167	94,183	—
Seller PIK Note, net of accretion discount	182,086	195,971	—
Installment notes payable	10,910	10,637	10,291
Capital lease obligations	15,658	22,354	22,142

Long-term debt, less current portion	1,065,553	1,201,975	32,433

Total debt	$1,067,503	$1,203,912	$810,718

The aggregate minimum principal maturities of the long-term debt for each of the five fiscal years and thereafter following December 30, 2007, are as follows (in thousands):


For the fiscal years ending December		Minimum principal maturities

2008		$778,285
2009		2,604
2010		2,541
2011		2,767
2012		3,098
Thereafter		21,423

Total minimum principal maturities		$810,718

F-116

JBS USA Holdings, Inc.

A wholly owned subsidiary of JBS S.A.

Notes to consolidated financial statements

As of December 30, 2007, we had approximately $34.4 million of secured debt outstanding and approximately $29.9 million of outstanding letters of credit.

A summary of the components of interest expense, net is presented below (in thousands):


	Predecessor				Successor
	Fiscal year ended December 24, 2006		198 days ended July 10, 2007		173 days ended December 30, 2007


Interest on:
Unsecured bank loans	$ —		$ —		$22,966
Unsecured credit facility	—		—		1,311
Senior credit facility (approximately 7.18% and 7.47%)(i)	22,799		12,288		—
Senior notes due 2009 (10.125% rate)	27,068		14,773		50
Senior subordinated notes (12.50% rate)	18,706		10,207		194
Senior notes due 2010 (approximately 11.5%)	13,182		7,646		—
Convertible senior subordinated notes (approximately 11.25%)	9,382		5,408		—
Seller PIK Note	15,772		9,236		—
Amortization of deferred financing costs(ii)	6,394		3,538		—
Amortization of deferred financing costs(iii)	—		—		883
Accretion of original issue discount(iv)	2,542		1,383		—
Accretion of discount on Seller PIK note(v)	7,802		5,289		—
Amortization of premium(vi)	(6,747	)	(3,983	)
Capital lease interest	1,572		855		697
Interest rate swap	1,022		368		31
Other miscellaneous interest charges(vii)	561		524		404
Bank fees	—		—		731
Debt issuance cost on debt not executed(viii)	—		—		12,664

Less:
Capitalized interest	(304	)	(430	)	(420	)
Interest income	(997	)	(719	)	(5,171	)

Total interest expense, net	$118,754		$66,383		$34,340

(i)

Represents interest on the outstanding balance of the amount drawn on the revolving credit facility, plus a 0.375% commitment fee on the unused portion of the revolving credit facility and other fees associated with the revolving credit facility.

F-117

JBS USA Holdings, Inc.

A wholly owned subsidiary of JBS S.A.

Notes to consolidated financial statements

(ii)

Represents amortization utilizing an average maturity of 7 years.

(iii)

Represents amortization over the life of the unsecured bank loans.

(iv)

Represents accretion of the original issue discount on the notes utilizing the effective interest method

(v)

Represents accretion of the discount on the Seller PIK Note calculated using the effective interest method.

(vi)

Represents amortization of premium associated with the increased fair value of debt recorded to the extent of the approximate 45% interest acquired in the Call Option using the effective interest method.

(vii)

Includes installment notes interest expense of $0.7 million, $0.5 million and $0.3 million for the fiscal year ended December 24, 2006, the 198 days ended July 10, 2007 and the 173 days ended December 30, 2007, respectively, the remainder is expense for other miscellaneous items.

(viii)

Fees incurred with debt refinancing intended as part of the Acquisition. The debt facilities associated with these fees were not consummated and therefore these fees were expensed immediately.

Description of indebtedness

Predecessor

Senior credit facilities—On May 26, 2005, the Company entered into an Amended and Restated Credit Agreement (the “Amended Credit Agreement”) providing senior credit facilities which allowed borrowings up to $550.0 million, consisting entirely of a revolving credit facility of $550.0 million that was to terminate May 26, 2010. Up to $125.0 million of the revolving credit facility was available for the issuance of letters of credit or Australian bank guarantees and up to $65.0 million of the revolving credit facility was available for borrowings in Australian dollars by the Company’s Australian subsidiaries. US dollar denominated borrowings that were euro dollar rate loans would initially bear interest at rates of 1.75% per annum plus the applicable euro dollar rate, or (ii) base rate loans would initially bear interest at rates of 0.75% per annum plus the highest of Citibank’s base rate, the three-month certificate of deposit rate plus 0.5%, and the federal funds effective rate plus 0.5%. Australian dollar denominated borrowings that were (i) bill rate loans would initially bear interest at rates of 1.375% per annum plus the applicable bid rate for Australian bills for the applicable interest period or (ii) short-term loans would initially bear interest at rates of 1.375% per annum plus the Reserve Bank of Australia Official Cash Rate. The revolver balance under the Company’s Amended Credit Agreement included $195.0 million that was financed as a term loan under the Company’s original credit facility. Based on management’s review of cash flow expectations the Company classified all revolver borrowings as long-term as of December 24, 2006 and July 10, 2007. At the closing of the Acquisition on July 11, 2007 this debt was repaid.

Senior notes due 2009—On September 19, 2002, the Company purchased the original business from ConAgra Foods. As a result, the Company issued $268.0 million of its 10 1/8% senior notes due 2009. The senior notes were issued with original issue discount and generated gross proceeds to the Company of approximately $250.5 million. The senior notes were to mature on October 1, 2009. Interest was payable semi-annually in arrears on April 1 and October 1 of each year, commencing on April 1, 2003. On August 15, 2003, the Company completed an exchange offer in which it exchanged new notes that were registered under the Securities Act for the notes. The senior notes were guaranteed by the Company and all of the Company’s domestic subsidiaries. At the closing of the Acquisition on July 11, 2007 this debt was repaid.

F-118

JBS USA Holdings, Inc.

A wholly owned subsidiary of JBS S.A.

Notes to consolidated financial statements

On July 16, 2003, the Company entered into a $100 million (notional) interest rate swap that converted a portion of the fixed rate 10¹/8% notes into a floating rate obligation. The swap, which had an original maturity of October 1, 2007, was utilized to achieve a target fixed/floating capital structure appropriate for the business. In connection with the exercise of the Call Option, the carrying value for the notes was adjusted to reflect 45% of the excess of fair value over book value resulting in a premium of $218 million being recorded. On July 13, 2007, the Company cancelled its interest rate swap for a payment of $1.1 million since the underlying debt was repaid at the closing of the Acquisition.

Senior subordinated notes—The Company issued to the former owner, ConAgra Foods (“Former Shareholder”), $150.0 million aggregate principal amount of its 12.5% senior subordinated notes due January 1, 2010. The Company completed an exchange of offer in which it exchanged new notes that were registered under the Securities Act of 1933 for Senior subordinated notes. ConAgra Foods subsequently sold all $150.0 million aggregate principal amount of the senior subordinated notes. Interest was payable semi-annually in arrears on April 1 and October 1 of each year, commencing on April 1, 2003. The senior subordinated notes were guaranteed by the Company and all of its domestic subsidiaries. At the closing of the Acquisition on July 11, 2007 this debt was repaid.

Senior notes due 2010—On March 11, 2005, the Company issued $105.0 million of 11% senior notes due 2010. The notes were issued with original issue discount and generated gross proceeds to the Company of $104.7 million. The notes were to mature on March 11, 2010. Interest was payable semi-annually in arrears on May 1 and November 1 of each year commencing on November 1, 2005. Interest could have been paid in cash or as in kind and capitalized to the loan balance, or a combination thereof at the option of the Company. If interest was paid in kind and capitalized and not paid in cash on the semi-annual due dates, the interest rate increased to 12.0%. Interest capitalized to the original issuance amount was $13.0 million as of December 24, 2006 and $20.1 million as of July 10, 2007. Accretion of debt discount totaled $28 thousand for the 198 days ended July 10, 2007 and $52 thousand for the fiscal year ended December 24, 2006. The senior notes were guaranteed by the Company. At the closing of the Acquisition on July 11, 2007 this debt was repaid.

Convertible senior subordinated notes—On March 11, 2005, the Company issued $75.0 million of 10.25% convertible senior subordinated notes. The convertible notes were to mature on March 11, 2010. Interest was payable semi-annually in arrears on May 1 and November 1 each year commencing on November 1, 2005 at the rate of 10.25% per annum, if paid in cash, or 11.25% per annum, if paid in kind and capitalized. Interest capitalized to the original issuance amount was $14.2 million as of December 24, 2006 and $20.1 million as of July 10, 2007. At the closing of the Acquisition on July 11, 2007 this debt was repaid.

Seller PIK note—On September 19, 2002, the Company issued a $150 million promissory note to the Former Shareholder. The stated interest rate was an increasing rate from 8.0% to 10.0% over the 7.5 year life of the note. To record the note at fair value, it was discounted at an estimated market rate at September 19, 2002 of 14.95% resulting in a discount of $54.8 million. Accrued

F-119

JBS USA Holdings, Inc.

A wholly owned subsidiary of JBS S.A.

Notes to consolidated financial statements

interest was capitalized to the note balance and both the face amount of the note and all accrued interest would have been payable on the due date March 19, 2010. In connection with the acquisition of the minority interest, the carrying value of the note was adjusted to reflect 45% of the excess of fair value over book value, resulting in a premium of $7.6 million. Accretion of debt discount was approximately $5.3 million for the 198 days ended July 10, 2007 and $7.8 million for the fiscal year ended December 24, 2006. Amortization of the premium discussed above was $0.6 million for the 198 days ended July 10, 2007 and $0.9 million for the fiscal year ended December 24, 2006. Accrued interest was capitalized to the note balance and both the face amount of the note and all accrued interest was to be payable on the due date in 2010. At the closing of the Acquisition on July 11, 2007 this debt was repaid.

Successor

Unsecured credit facility—On August 15, 2007 Swift Australia entered into an unsecured credit facility for Australian Dollar borrowings up to a maximum of AUD $70 million to fund working capital and letter of credit requirements. The initial 90 day term expired on November 17, 2007 and the facility was subsequently extended to February 29, 2008. This facility was replaced with a new agreement on February 26, 2008 when Swift Australia entered into an AUD $120 million unsecured credit facility of which AUD $80 million can be borrowed for cash needs and AUD $40 million is available to fund letters of credit (See Note 12). Borrowings are made at either the cash advance rate (BBSY) plus a margin of 0.35% or a market rate advance (RBA cash rate) plus a margin of 0.50%.

Unsecured bank loans

The following unsecured bank loans were all repaid between April 28, 2008 and June 30, 2008. These loans were repaid with additional paid in capital of $400 million and $350 million in intercompany notes payable (See Note 12).

$250 million loan agreement—In connection with the Acquisition, JBS USA entered into a one year unsecured loan agreement with interest payable semi-annually based on six month LIBOR plus a margin of 1.50%. The loan was to mature on June 30, 2008. The loan agreement contained customary representations and warranties. The loan agreement was guaranteed by JBS. S.A.

$150 million loan agreement—In connection with the Acquisition, JBS USA entered into a one year unsecured loan agreement with interest payable semi-annually based on six month LIBOR plus a margin of 0.75%. The loan was to mature on June 30, 2008. The loan agreement contained customary representations, warranties and covenants. The loan agreement was guaranteed by JBS. S.A.

$250 million credit agreement—In connection with the Acquisition, JBS USA entered into a one year unsecured credit agreement with interest payable quarterly based on three month LIBOR plus a margin of 0.75%. The agreement was to mature on July 7, 2008. The credit agreement contained customary representations, warranties and negative covenants. There were no

F-120

JBS USA Holdings, Inc.

A wholly owned subsidiary of JBS S.A.

Notes to consolidated financial statements

maintenance financial covenants but the agreement contained an incurrence of Consolidated Net Indebtedness to EBITDA ratio of 3.75 to 1.00 prior to December 31, 2007 and 3.60 to 1.00 commencing on January 1, 2008 and ending on the maturity date. The credit agreement was guaranteed by JBS. S.A.

$100 million loan agreement—In connection with the Acquisition, JBS USA entered into a one year unsecured loan agreement. The original 182 day loan agreement with interest payable at maturity based on six month LIBOR plus a margin of 0.8%. The loan was to mature on January 7, 2008. On January 3, 2008, an extension and modification agreement was signed changing the maturity date to July 7, 2008 and increasing the margin to 1.5% (See Note 12). The loan agreement contained customary representations, warranties and covenants. The loan agreement was guaranteed by JBS S.A.

Secured debt

Installment notes payable—The installment note payable relates to the Company’s financing of a capital investment and was assumed at the Acquisition. The note bears interest at LIBOR plus a fixed margin of 1.75% per annum with payments due on the first of each month and matures on August 1, 2013.

Capital and operating leases—JBS USA Holdings and certain of its subsidiaries lease the corporate headquarters in Greeley, Colorado under capital lease; six distribution facilities located in New Jersey, Florida, Nebraska, Arizona, Colorado and Texas; marketing liaison offices in the US, Korea, Japan, Mexico, China, and Taiwan; its distribution centers and warehouses in Australia; and a variety of equipment under operating lease agreements that expire in various years between 2008 and 2019 which were assumed in the Acquisition. Future minimum lease payments at December 30, 2007, under capital and non-cancelable operating leases with terms exceeding one year are as follows (in thousands):


	Capitalized lease obligations		Noncancellable operating lease obligations


For the fiscal years ending December
2008	$ 2,573		$11,924
2009	2,850		9,200
2010	2,644		5,334
2011	2,721		4,628
2012	2,874		2,732
Thereafter	15,646		6,128

Net minimum lease payments	29,308		$39,946

Less: Amount representing interest	(5,787	)

Present value of net minimum lease payments	$23,521

F-121

JBS USA Holdings, Inc.

A wholly owned subsidiary of JBS S.A.

Notes to consolidated financial statements

Rent expense associated with operating leases for the fiscal year ended December 24, 2006, the 198 days ended July 10, 2007 and the 173 days ended December 30, 2007, was $16.2 million, $9.6 million and $8.1 million, respectively.

Note 7. Stock option and defined contribution plans

Predecessor

Stock purchase plans

We had a stock purchase plan pursuant to which eligible employees and non-employees (including non-employee directors) of the Company and its subsidiaries could purchase shares of common stock of Swift Foods. A total of 4,657,095 shares of common stock of the predecessor were authorized for purchase at a price per share as determined by the board of directors on the date of purchase. As of July 10, 2007, certain members of Swift Foods’ management and non-employee directors held an aggregate of (i) 1,410,000 shares purchased under the 2002 stock purchase plan at a purchase price of $1.00 per share, (ii) 500,000 shares under the 2002 stock purchase plan at a purchase price of $1.01 per share and (iii) 286,940 shares purchased under the 2005 stock purchase plan at a purchase price of $1.32 per share. At July 10, 2007, there were 1,440,000 shares available for purchase under the 2002 stock purchase plan and 334,584 shares available for purchase under the 2005 stock purchase plan. Purchases under the 2002 plan were at the estimated fair market value of such shares on the date of purchase. Purchases under the 2005 plan were at less than fair market value in order to allow management to share in the economic benefit arising from the exercise of the Call Option. The Plan was terminated immediately prior to the closing of the Acquisition on July 11, 2007.

2002 Stock Option Plan

We adopted the Swift Foods Company 2002 Stock Option Plan (the “Option Plan”), pursuant to which options were granted at the sole discretion of the Board of Directors to the predecessor employees and eligible non-employees of Swift Foods or subsidiaries for the purchase of shares of common stock of Swift Foods. Due to acceleration of vesting of outstanding options and the termination of the Option Plan immediately prior to the closing of the Acquisition on July 11, 2007 the remaining unrecognized expense was recorded as a component of earnings prior to July 10, 2007.

Stock based compensation expense recognized in the statements of earnings was $0.9 million for the fiscal year ended December 24, 2006 and $1.2 million for the 198 days ended July 10, 2007.

Predecessor & Successor

Defined contribution plans

The Company sponsors two tax-qualified employee savings and retirement plans (the “401(k) Plans”) covering its US based employees, both union and non-union. Pursuant to the 401(k) Plans,

F-122

JBS USA Holdings, Inc.

A wholly owned subsidiary of JBS S.A.

Notes to consolidated financial statements

eligible employees may elect to reduce their current compensation by up to the lesser of 75% of their annual compensation or the statutorily prescribed annual limit and have the amount of such reduction contributed to the 401(k) Plans. The 401(k) Plans provide for additional matching contributions by the Company, based on specific terms contained in the 401(k) Plans. On July 8, 2008 the Company amended its 401(k) Plans described above by eliminating the immediate vesting and instituting a five year vesting schedule for all non-production employees and reducing the maximum Company match to an effective 2% from the former rate of 5%. The trustee of the 401(k) Plans, at the direction of each participant, invests the assets of the 401(k) Plans in participant designated investment options. The 401(k) Plans are intended to qualify under Section 401 of the Internal Revenue Code. The Company’s expenses related to the matching provisions of the 401(k) Plans for the fiscal year ended December 24, 2006, the 198 days ended July 10, 2007 and the 173 days ended December 30, 2007 totaled approximately $7.1 million, $4.1 million and $3.3 million, respectively.

One of the Company’s facilities had participated in a multi-employer pension plan. The Company’s contributions to this plan, which are included in cost of goods sold in the statement of operations for the fiscal year ended December 24, 2006, the 198 days ended July 10, 2007 and the 173 days ended December 30, 2007, were $0.4 million, $0.1 million, and $0.1 million, respectively. The Company also made contributions for the 198 days ended July 10, 2007 and the 173 days ended December 30, 2007 totaling $26 thousand dollars for each period to a multiemployer pension related to former employees at the former Nampa, Idaho plant pursuant to a settlement agreement. The Company recognized $0.7 million of contribution expense in costs of goods sold for the fiscal year ended December 24, 2006. As the future payments are made they are recorded as a reduction of the pre-acquisition contingency established during the Acquisition. (See Note 2).

Employees of Swift Australia do not participate in the Company’s 401(k) Plans. Under Australian law, Swift Australia contributes a percentage of employee compensation to a superannuation fund. This contribution approximates 9% of employee cash compensation as required under the Australian “Superannuation Act of 1997”. As the funds are administered by a third party, once this contribution is made to the fund, Swift Australia has no obligation for payments to participants or oversight of the fund. The Company’s expenses related to contributions to this fund for the fiscal year ended December 24, 2006, the 198 days ended July 10, 2007 and the 173 days ended December 30, 2007 totaled $14.0 million, $7.1 million and $7.2 million, respectively.

Note 8. Related party transactions

JBS USA Holdings was formerly known as Swift Foods Company (“Swift Foods”). Swift Foods was acquired from ConAgra Foods in a two-step process, 54.7% on September 18, 2002 and 45.3% on September 23, 2004 (collectively “The Transaction”). Swift Foods majority shareholders were HM Capital Partners (“Hicks Muse”) and Booth Creek Investments (“Booth Creek”).

F-123

JBS USA Holdings, Inc.

A wholly owned subsidiary of JBS S.A.

Notes to consolidated financial statements

Predecessor

Stockholders’ agreement—ConAgra Foods, Hicks Muse, other holders of Swift Foods common stock, and Swift Foods were parties to a Stockholders Agreement that included provisions regarding, among others, the election of directors, registration rights, restrictions on transfer, and other rights regarding sales of Swift Foods stock by Hicks Muse.

The Stockholders Agreement required the holders of Swift Foods common stock that were subject to the agreement, subject to certain conditions, to vote their shares in favor of the election to Swift Foods board of directors of five individuals as may be designated by Hicks Muse and its affiliates. Under the HMTF Rawhide Partnership Agreement, Hicks Muse had agreed to cause an individual designated by an affiliate of George N. Gillett, Jr., our then Chairman of the Board, to be included in the five individuals designated for election to Swift Foods board of directors by Hicks Muse for as long as Mr. Gillett or his affiliates continued to own at least 25% of the limited partnership interest in Rawhide owned by such parties at the closing of the Transaction.

Monitoring and oversight agreement—In connection with the Transaction, Swift Foods and certain of its direct and indirect subsidiaries entered into a ten-year agreement (the “Monitoring and Oversight Agreement”) with an affiliate of HM Capital Partners, LLC (formerly known as Hicks, Muse, Tate & Furst, Incorporated) pursuant to which Swift Foods, as the assignee of this agreement in November 2004, would pay Hicks Muse Partners an annual fee for ongoing oversight and monitoring services provided to it. The annual fee would be adjusted at the beginning of each fiscal year to an amount equal to the greater of (a) $2 million or (b) 1% of the budgeted consolidated annual EBITDA of Swift Foods and its subsidiaries. The annual fee would also be adjusted in the event that Swift Foods or any of its subsidiaries acquired another entity or business during the term of the agreement. This expense was paid in advance quarterly and $2.2 million and $1.3 million are included in selling, general, and administrative expense for the fiscal year ended December 24, 2006 and the 198 days ended July 10, 2007.

Swift Foods had agreed to indemnify Hicks Muse, its affiliates and their respective directors, officers, controlling persons, if any, agents, independent contractors, and employees from and against all claims, liabilities, damages, losses, and expenses arising out of or in connection with the services rendered by Hicks Muse pursuant to the Monitoring and Oversight Agreement. One of Swift Foods’ directors, Mr. Muse, was a limited partner of Hicks Muse and a director, officer, and stockholder of the general partner of Hicks Muse.

The Monitoring and Oversight Agreement made available the resources of Hicks Muse concerning a variety of financial and operational matters. Swift Foods believed the services that were to be provided by Hicks Muse could not otherwise be obtained by it without the addition of personnel or the engagement of outside professional advisors. In management’s opinion, the fees provided for under the Monitoring and Oversight Agreement reasonably reflected the benefits received by Swift Foods.

F-124

JBS USA Holdings, Inc.

A wholly owned subsidiary of JBS S.A.

Notes to consolidated financial statements

Hicks Muse had agreed to pay to Gillett Greeley, LLC, an affiliate of George N. Gillett, Jr., the then Chairman of the Board, 25% of the annual fees payable to it under the Monitoring and Oversight Agreement pursuant to a consulting agreement between Hicks Muse and Booth Creek, which was ultimately controlled by Mr. Gillett. Booth Creek had agreed to provide consulting services to Hicks Muse.

Financial advisory agreement—In connection with the Transaction, Swift Foods and certain of its direct and indirect subsidiaries also entered into a ten-year agreement (the “Financial Advisory Agreement”) pursuant to which an affiliate of Hicks Muse received a cash financial advisory fee equal to $15.0 million upon the closing of the Transaction as compensation for its services as financial advisor for the Transaction. The Financial Advisory Agreement also provided for Hicks Muse to receive an expense reimbursement of $2.0 million upon the closing of the Transaction. These fees were included as part of the expenses of the Transaction. The expense reimbursement was agreed upon in the purchase agreement to reimburse Swift Foods’ chairman for normal due diligence costs incurred in evaluating and analyzing the acquisition. The agreement provided for a defined reimbursement of $2.0 million to cover due diligence expenses without having to provide Swift Foods with detailed expense records. These fees were included as part of the expenses of the Transaction.

Hicks Muse also was entitled to receive a fee equal to 1.5% of the transaction value for any subsequent transaction in which Swift Foods, as the assignee of the agreement in November, 2004, was involved that was consummated during the term of the Financial Advisory Agreement.

The Financial Advisory Agreement made available the investment banking, financial advisory, and other similar services of Hicks Muse. Swift Foods believed the services that were provided by Hicks Muse could not otherwise be obtained by it without the addition of personnel or the engagement of outside professional advisors. In management’s opinion, the fees provided for under the Financial Advisory Agreement reasonably reflect the benefits received by Swift Foods.

Swift Foods had agreed to indemnify Hicks Muse, its affiliates and their respective directors, officers, controlling persons, if any, agents, independent contractors and employees from and against all claims, liabilities, damages, losses and expenses arising out of or in connection with the services rendered by Hicks Muse pursuant to the Financial Advisory Agreement. One of Swift Foods’ directors, Mr. Muse, is a limited partner of Hicks Muse and a director, officer, and shareholder of the general partner of Hicks Muse Partners.

Hicks Muse had agreed to pay to Booth Creek, an affiliate of George N. Gillett, Jr., the Company’s then Chairman of the Board, 25% of the annual fees payable to it under the Financial Advisory Agreement. Booth Creek Management Company did not receive any portion of the $15.0 million cash financial advisory fee paid to Hicks Muse upon the closing of the Transaction. Hicks Muse paid to Gillett Greeley, LLC, an affiliate of George N. Gillett, Jr., all of the $2.0 million expense reimbursement described above.

Indemnification and release agreement—At the closing of the Transaction, Swift Foods and certain of its direct and indirect subsidiaries entered into an indemnification and release

F-125

JBS USA Holdings, Inc.

A wholly owned subsidiary of JBS S.A.

Notes to consolidated financial statements

agreement with ConAgra Foods pursuant to which Swift Foods agreed to be bound by the post-closing indemnification obligations set forth in the purchase agreement and, following the closing, to release ConAgra Foods from all liabilities and actions for environmental costs or liabilities other than that which are set forth in the purchase agreement.

Tax Sharing Agreement—In connection with the closing of the Transaction, Swift Foods and certain of its direct and indirect subsidiaries entered into a tax sharing agreement assumed by Swift Foods in November 2004 pursuant to which the Company is obligated, among other things, to distribute to Swift Foods any taxes attributable to it and its subsidiaries and under which the Company will be indemnified for any taxes paid by it or its subsidiaries on behalf of any other member of Swift Foods’ consolidated tax group.

Contribution Agreement—In connection with the closing of the Transaction, Swift Foods, with its direct and indirect subsidiaries entered into a contribution agreement assumed by Swift Foods in November 2004 pursuant to which these entities will contribute or otherwise pay over, or cause any of their subsidiaries to contribute or otherwise pay over, to the Company any amounts they receive from ConAgra Foods or its affiliates pursuant to indemnification claims under the purchase agreement and any amounts obtained from other sources which are applied to offset any indemnification claims that the Company could otherwise make under the purchase agreement.

Indemnity Side Letter—In connection with the closing of the Transaction, ConAgra Foods agreed to reimburse the Company to the extent recall costs incurred after the Transaction exceed the accrual made for estimated recall costs pursuant to the purchase agreement relating to the Transaction, and the Company agreed to reimburse ConAgra Foods to the extent the accrual exceeds the recall costs. ConAgra Foods had further agreed to indemnify the Company for liabilities, costs, and expenses that it may incur with respect to third parties in connection with product liability claims or personal injury causes of action arising from the consumption of the products subject to the recall. The Company has a $1.6 million receivable from ConAgra Foods at December 24, 2006, July 10, 2007 and December 30, 2007 for reimbursement of amounts in excess of the accrual which represents additional claims from customers seeking reimbursement for recall related costs from the Company. The balance of the receivable was subsequently collected in 2008.

Transactions with affiliated companies

During the fiscal year ended December 24, 2006 and the 198 days ended July 10, 2007, the Company purchased $3.9 million and $2.5 million in cattle hides, respectively and $368 thousand and $334 thousand of commodity product from Coleman Natural Meats (“Coleman”), an independent meat packing company controlled by the then chairman of the Board of Swift Foods and its subsidiaries, respectively. In addition, it provided certain further processing capabilities to Coleman in the amount of $118 thousand for the fiscal year ended December 24, 2006. There were no amounts for the 198 days ended July 10, 2007 for these services.

F-126

JBS USA Holdings, Inc.

A wholly owned subsidiary of JBS S.A.

Notes to consolidated financial statements

During the 198 days ended July 10, 2007, the Company paid commissions totaling $27 thousand to Swett & Crawford, an intermediary insurance broker owned by HMSC Investments, L.P., an affiliate of Hick Muse Partners, one of the Company’s then equity sponsors. The commissions were earned by Swett & Crawford for placing insurance coverage with third-party carriers at market rates.

Successor

JBS USA Holdings enters into transactions in the normal course of business with affiliates of JBS S.A. Sales to affiliated companies included in net sales on the statement of operations for the 173 days ended December, 2007 were $6.3 million. Amounts owed to JBS USA Holdings by affiliates as of December 30, 2007 totaled approximately $5.6 million.

For the 173 days ended December 30, 2007, the Company recorded $26 thousand of rental income related to real property leased to two of its executive officers. At December 30, 2007 the receivable balance related to this income was $26 thousand.

Indemnification and release agreement—A predecessor entity of JBS USA Holdings and certain of its direct and indirect subsidiaries entered into an indemnification and release agreement with ConAgra Foods pursuant to which JBS USA Holdings is bound by the post-closing indemnification obligations set forth in the purchase agreement and to release ConAgra Foods from all liabilities and actions for environmental costs or liabilities other than that which are set forth in the purchase agreement.

Guarantees—JBS S.A. has notes payable outstanding of approximately $300 million at December 30, 2007 that were issued in July 2006 and are due in 2016. The notes payable indenture requires each of JBS’s significant subsidiaries, at the time of issuance or any time in the future, to be a guarantor on the notes payable. The Company has determined that they meet the definition of a significant subsidiary and are a guarantor on those notes payable issued by JBS.

Note 9. Income taxes

The pre-tax loss on which the provision for income taxes was computed is as follows (in thousands):


	Predecessor				Successor
	Fiscal year ended December 24, 2006		198 days ended July 10, 2007		173 days ended December 30, 2007

Domestic	$(139,170	)	$ (66,499	)	$(112,074	)
Foreign	(15,584	)	(34,893	)	1,507

Total	$(154,754	)	$(101,392	)	$(110,567	)

F-127

JBS USA Holdings, Inc.

A wholly owned subsidiary of JBS S.A.

Notes to consolidated financial statements

Income tax expense (benefit) includes the following current and deferred provisions (in thousands):


	Predecessor				Successor
	Fiscal year ended December 24, 2006		198 days ended July 10, 2007		173 days ended December 30, 2007


Current provision:
Federal	$ (132	)	$ (1,855	)	$ (2	)
State	231		943		313
Foreign	877		4,610		891

Total current tax expense	976		3,698		1,202


Deferred benefit:
Federal	(26,000	)	(9,435	)	92
State	(4,613	)	(1,170	)	(63	)
Foreign	(7,711	)	(11,473	)	(206	)

Total deferred tax benefit	(38,324	)	(22,078	)	(177	)

Total income tax (benefit) expense	$(37,348	)	$(18,380	)	$1,025

The principal differences between the effective income tax rate, and the US statutory federal income tax rate, were as follows:


	Predecessor				Successor
	Fiscal year ended December 24, 2006		198 days ended July 10, 2007		173 days ended December 30, 2007

Expected tax rate	35.0%		35.0%		35.0%
State income taxes (net of federal benefit)	4.1		3.5		5.0
Non-deductible expense	(0.7	)	(1.0	)	—
Benefit from export sales	1.5		—		—
Valuation allowance	(7.9	)	(29.0	)	(42.4	)
Unremitted earnings	(8.6	)	7.2		—
Reclass of reserve	0.4		2.4		—
Other, net	0.4		0.1		1.5

Effective tax rate	24.2%		18.2%		(0.9)%

F-128

JBS USA Holdings, Inc.

A wholly owned subsidiary of JBS S.A.

Notes to consolidated financial statements

Temporary differences that gave rise to a significant portion of deferred tax assets (liabilities) were as follows (in thousands):


	Predecessor				Successor
	December 24, 2006		July 10, 2007		December 30, 2007

Inventory	$(13,634	)	$(18,329	)	$(13,812	)
Derivatives	(21	)	(149	)	—
Interest	—		—		(1,417	)
Depreciation and amortization	(82,123	)	(58,590	)	(138,633	)
Undistributed earnings	(60,198	)	(78,125	)	—
Long term debt discount	(14,791	)	(11,400	)	—
All other current	(9,579	)	(6,348	)	(5,866	)
All other long-term	—		—		(75	)

Gross deferred tax liability	(180,346	)	(172,941	)	(159,803	)

Accounts receivable reserve	544		698		649
Depreciation and amortization	4,310		1,896		857
Inventory	488		572		33
Long term debt premium	12,409		9,294		—
Interest	—		—		13,379
Accrued liabilities	25,563		24,550		21,507
Deferred revenue	—		602		505
Net operating loss/capital loss	113,559		147,539		215,812
Tax credit carryforwards	4,827		6,197		6,775
Derivatives	—		—		148
All other current	317		587		—
All other long-term	2,618		7,594		4,468

Total deferred tax asset	164,635		199,529		264,133
Valuation allowance	(18,750	)	(52,005	)	(126,976	)

Net deferred tax assets	145,885		147,524		137,157

Net deferred tax liability	$(34,461	)	$(25,417	)	$(22,646	)


Financial statement classification:
Current deferred tax asset	$11,149		$7,784		$4,493
Current deferred tax liability	(6,696	)	(9,323	)	(12,885	)
Long-term deferred tax asset	—		—		5,434
Long-term deferred tax liability	(38,914	)	(23,878	)	(19,688	)

Net deferred tax liability	$(34,461	)	$(25,417	)	$(22,646	)

F-129

JBS USA Holdings, Inc.

A wholly owned subsidiary of JBS S.A.

Notes to consolidated financial statements

At December 24, 2006, July 10, 2007 and December 30, 2007, JBS USA Holdings has recorded net deferred tax assets of $109.4 million, $142.9 million and $192.8 million respectively for federal and state net operating loss carryforwards expiring in the years 2007 through 2028.

The valuation allowance for deferred tax assets as of December 24, 2006, July 10, 2007 and December 31, 2007 was $18.8 million, $52.0 million, and $127.0 million respectively. The net change in the total valuation allowance was an increase of $33.2 million and an increase of $75.0 million as of July 10, 2007 and December 30, 2007 respectively. The valuation allowance as of all dates presented was primarily related to loss and credit carryforwards that, in the judgment of management, are not more likely than not to be realized. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities (including the impact of available carryback and carryforward periods), projected future taxable income, and tax-planning strategies in making this assessment.

Subsequently recognized tax benefits relating to the valuation allowance for deferred tax assets as of December 30, 2007 will be allocated to income tax expense pursuant to FAS 141(R). Prior to the adoption of FAS 141(R), $79.8 million of any subsequent tax benefits would be allocated to reduce goodwill related to the acquisition of JBS USA Holdings by JBS SA.

JBS USA Holdings (predecessor) has provided $60.2 million and $78.1 million for taxes on unremitted earnings of foreign subsidiaries. However as of December 24, 2006 and July 10, 2007, $57.1 million and $64.9 million, respectively, were considered indefinitely reinvested.

JBS USA Holdings (successor) deems all of its foreign investments to be permanent in nature and does not provide for taxes on permanently reinvested earnings. It is not practical to determine the amount of incremental taxes that might arise were these earnings to be remitted.

JBS USA Holdings adopted the provisions of Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes (“FIN 48”), on December 25, 2006. Upon adoption of FIN 48, JBS USA Holdings recognized a $347 thousand increase in its retained earnings balance. After adoption of FIN 48, JBS USA Holding’s unrecognized tax benefits were $776 thousand, the recognition of which would have no net impact on the effective rate.

F-130

JBS USA Holdings, Inc.

A wholly owned subsidiary of JBS S.A.

Notes to consolidated financial statements

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows (in thousands):


Balance at December 25, 2006		$ 776
Additions based on tax positions related to the current period		—
Additions for tax positions of prior years		—
Reductions for lapses of statute of limitations		—
Reductions for settlements		—
Balance at July 10, 2007		$ 776

Balance at Acquisition		$8,286
Additions based on tax positions related to the current period		14
Additions for tax positions of prior years		—
Reductions for lapses of statute of limitations		—
Reductions for settlements		—
Balance at December 30, 2007		$8,300

JBS USA Holdings recognizes both interest and penalties related to uncertain tax positions as part of the income tax provision. Accrued interest and penalties were $161 thousand and $187 thousand as of July 10, 2007 and December 30, 2007 respectively.

JBS USA Holdings files income tax returns in the US and in various other states and foreign countries. JBS USA Holdings is no longer subject to audit for US Federal income tax purposes for years before 2004. In the other major jurisdictions where JBS USA Holdings operates, it is generally no longer subject to income tax examinations by tax authorities for years before 2002.

JBS USA Holdings and its subsidiaries have various income tax returns in the process of examination. The unrecognized tax benefit and related penalty and interest balances at December 30, 2007 are expected to decrease by $0.4 million within the next twelve months.

Note 10. Commitments and contingencies

On July 1, 2002, a lawsuit entitled Herman Schumacher et al v. Tyson Fresh Meats, Inc., et al was filed against a predecessor company, Tyson Foods, Inc., Excel Company, and Farmland National Beef Packing Company, L.P. in the United States District Court for the District of South Dakota seeking certification of a class of all persons who sold cattle to the defendants for cash, or on a basis affected by the cash price for cattle, during the period from April 2, 2001 through May 11, 2001 and for some period up to two weeks thereafter. The complaint alleges that the defendants, in violation of the Packers and Stockyards Act of 1921, knowingly used, without correction or disclosure, incorrect and misleading boxed beef price information generated by the USDA to purchase cattle offered for sale by the plaintiffs at a price substantially lower than was justified by the actual and correct price of boxed beef during this period. On April 12, 2006, the jury returned a verdict against three of the four defendants, including a $2.3 million verdict against Swift Beef. On February 15, 2007 a judgment was entered on the verdict by the court and

F-131

JBS USA Holdings, Inc.

A wholly owned subsidiary of JBS S.A.

Notes to consolidated financial statements

on March 12, 2007 Swift Beef Company filed a notice of appeal. Although Swift Beef Company had begun the process of appealing this judgment, a liability for the amount of the verdict was recorded on May 28, 2006. ConAgra Foods will indemnify Swift & Company against any judgments for monetary damages or settlements arising out of this litigation or any future litigation arising from the same facts to the extent such damages together with any other indemnifiable claims under the acquisition agreement entered into the purchase of Swift Foods from ConAgra Foods, Inc. in 2002 exceed a minimum threshold of $7.5 million. On January 29, 2008 Swift Beef was notified that the appeals court ruled in favor of the defendants on all counts. Swift Beef is now seeking the recovery of a portion of the legal fees it expended in this matter. As the claimants rights to appeal expired during the third quarter ended December 28, 2008 the reversal of the previously accrued trial court verdict amount was recorded as an adjustment to the Acquisition, not as a reduction of expenses on the Consolidated Statement of Operations.

Swift Beef was a defendant in a lawsuit entitled United States of America, ex rel, Ali Bahrani v. ConAgra, Inc., ConAgra Foods, Inc., ConAgra Hide Division, ConAgra Beef Company and Monfort, Inc., filed in the United States District Court for the District of Colorado in May 2000 by the relator on behalf of the United States of America and himself for alleged violations of the False Claims Act. Under the False Claims Act, a private litigant, termed the “relator,” may file a civil action on the United States government’s behalf against another party for violation of the statute, which, if proven, would entitle the relator to recover a portion of any amounts recovered by the government. The lawsuit alleged that the defendants violated the False Claims Act by forging and/or improperly altering USDA export certificates used from 1991 to 2002 to export beef, pork, poultry and bovine hides to foreign countries. The lawsuit sought to recover three times the actual damages allegedly sustained by the government, plus per-violation civil penalties.

Issues in the case were bifurcated and two separate jury trials were held, the first trial centering on beef certificates was held from April 28, 2008, to April 29, 2008 and the second trial centering on bovine hide certificates was held from March 9 to March 19, 2009. Following the April trial, a verdict with respect to the beef certificates was returned ruling in favor of the Company on all counts. Following the March trial, a verdict with respect to the bovine hide certificates was returned ruling in favor of Company on 99.5% of the claims. Specifically, Company prevailed with respect to approximately 995 bovine hide certificates and the relator prevailed with respect to only 5 certificates. Based on the False Claims Act, this verdict resulted in a judgment against Company of $28 thousand and the court ordered that each party pay its own attorneys’ fees and court costs. The relator timely issued a notice of appeal and entered a motion for attorneys’ fees and costs alleging that, because it prevailed on 0.5% of its claims, it was entitled to the payment

F-132

JBS USA Holdings, Inc.

A wholly owned subsidiary of JBS S.A.

Notes to consolidated financial statements

of its attorneys’ fees and costs, estimated at $3 million. The Company has timely responded to the relator’s notice of appeal, filed a cross appeal, and responded to the relator’s motion for attorneys’ fees and costs. The parties await final adjudication of these issues, which could come as early as the third quarter, 2009.

Commitments

JBS USA Holdings enters into purchase agreements for livestock which require the purchase of either minimum quantities or the total production of the facility over a specified period of time. At December 30, 2007, the Company had commitments to purchase 34.7 million hogs through 2014 and approximately 35% of cattle needs through short-term contracts. As the final price paid cannot be determined until after delivery, the Company has estimated market prices based on Chicago Mercantile Exchange traded futures contracts and applied those to either the minimum quantities required per the contract or management’s estimates of livestock to be purchased under certain contracts to determine its estimated commitments for the purchase of livestock, which are as follows (in thousands):


Estimated livestock purchase commitments for fiscal year ended:
2008		$3,167,672
2009		1,010,143
2010		940,570
2011		609,332
2012		547,507
Thereafter		439,003

Through use of these contracts, the Company purchased approximately 65% of its hog slaughter needs during the 173 days ended December 30, 2007.

Note 11. Business segments

JBS USA Holdings is organized into two operating segments, which are also the Company’s reportable segments: Beef and Pork. Segment operating performance is evaluated by the Chief Operating Decision Maker (“CODM”), as defined in SFAS No. 131, Disclosure about Segments of an Enterprise and Related Information, based on Earnings Before Interest, Taxes, Depreciation, and Amortization and interest and exclusion of certain non-cash items which affect net income (“EBITDA”). EBITDA is not intended to represent cash from operations as defined by GAAP and should not be considered as an alternative to cash flow or operating income as measured by GAAP. JBS USA Holdings believes EBITDA provides useful information about operating performance, leverage, and liquidity. The accounting policies of the segments are consistent with those described in Note 3. All intersegment sales and transfers are eliminated in consolidation.

F-133

JBS USA Holdings, Inc.

A wholly owned subsidiary of JBS S.A.

Notes to consolidated financial statements

Beef—The majority of Swift Beef’s revenues are generated from the sale of fresh meat, which include chuck cuts, rib cuts, loin cuts, round cuts, thin meats, ground beef, and other products. In addition, Swift Beef also sells beef by-products to the variety meat, feed processing, fertilizer, automotive and pet food industries. Furthermore, Australian’s foods division produces value-added meat products including toppings for pizzas. The trading division in the US and Australia trades boxed meat products to brokers and retailers who resell those products to end customers.

Pork—A significant portion of Swift Pork’s revenues are generated from the sale of products predominantly to retailers of fresh pork including trimmed cuts such as loins, roasts, chops, butts, picnics, and ribs. Other pork products, including hams, bellies, and trimmings are sold predominantly to further processors who, in turn, manufacture bacon, sausage, and deli and luncheon meats. The remaining sales are derived from by-products and from further-processed, higher-margin products. The lamb slaughter facility is included in Pork and accounts for less than 1% of total net sales.

F-134

JBS USA Holdings, Inc.

A wholly owned subsidiary of JBS S.A.

Notes to consolidated financial statements

Corporate and other—Includes certain revenues, expenses, and assets not directly attributable to the primary segments, as well as eliminations resulting from the consolidation process.


	Predecessor						Successor
	Fiscal year ended December 24, 2006			198 days ended July 10, 2007			173 days ended December 30, 2007

	(in thousands)			(in thousands)			(in thousands)

Net sales
Beef	$	7,576,136		$	3,757,295		$	3,942,231
Pork		2,152,583			1,234,133			1,063,644
Corporate and other		(37,287	)		(20,804	)		(16,891	)


Total	$	9,691,432		$	4,970,624		$	4,988,984


Depreciation, amortization, and goodwill impairment charges (i)
Beef	$	65,443		$	32,913		$	25,627
Pork		23,679			11,925			9,617


Total	$	89,122		$	44,838		$	35,244


EBITDA
Beef	$	(13,034	)	$	(24,878	)	$	(103,354	)
Pork		65,027			31,234			57,352


Total		51,993			6,356			(46,002	)

Depreciation, amortization, and goodwill impairment(i)		(89,122	)		(44,838	)		(35,244	)
Interest expense, net		(118,754	)		(66,383	)		(34,340	)
Foreign currency transaction gains		463			527			5,201
Gain/(loss) on sales of property, plant and equipment		666			2,946			(182	)

Loss before income tax expense		(154,754	)		(101,392	)		(110,567	)
Income tax benefit/(expense)		37,348			18,380			(1,025	)


Net loss	$	(117,406	)	$	(83,012	)	$	(111,592	)

(i)

The fiscal year ended December 24, 2006 includes a goodwill impairment charge of $4.5 million related to the Beef segment.


	Predecessor				Successor
	Fiscal year ended December 24, 2006		198 days ended July 10, 2007		173 days ended December 30, 2007

	(in thousands)		(in thousands)		(in thousands)

Capital expenditures
Beef	$	39,304	$	29,390	$	28,129
Pork		7,990		4,310		5,332


Total	$	47,294	$	33,700	$	33,461

F-135

JBS USA Holdings, Inc.

A wholly owned subsidiary of JBS S.A.

Notes to consolidated financial statements

Corporate and other—Includes certain assets not directly attributable to the primary segments as well as the parent companies’ investments in each operating subsidiary. Also includes eliminations resulting from the consolidation process.

Total assets by segment (in thousands):


	Predecessor				Successor
	December 24, 2006		July 10, 2007		December 30, 2007


Total Assets
Beef	$1,210,242		$1,322,788		$1,572,928
Pork	338,940		289,408		487,160
Corporate and other	(10,585	)	(33,846	)	105,727

Total	$1,538,597		$1,578,350		$2,165,815

Sales by geographical area based on the location of the facility recognizing the sale (in thousands):


	Predecessor		Successor
	Fiscal year ended December 24, 2006	198 days ended July 10, 2007	173 days ended December 30, 2007


Net sales
United States	$8,159,577	$4,111,114	$3,980,369
Australia	1,531,855	859,510	1,008,615

Total	$9,691,432	$4,970,624	$4,988,984

Sales to unaffiliated customers by location of customer (in thousands):


	Predecessor				Successor
	Fiscal year ended December 24, 2006		198 days ended July 10, 2007		173 days ended December 30, 2007

United States	$	7,499,398	$	3,749,312	$	3,520,268
Japan		682,773		373,372		365,759
Mexico		390,115		212,232		245,475
Korea		285,122		139,224		161,606
Australia		217,365		137,881		256,987
Other		616,659		358,603		438,889

Total	$	9,691,432	$	4,970,624	$	4,988,984

F-136

JBS USA Holdings, Inc.

A wholly owned subsidiary of JBS S.A.

Notes to consolidated financial statements

Long-lived tangible assets by location of assets (in thousands):


	Predecessor				Successor
	December 24, 2006		July 10, 2007		December 30, 2007


Long-lived assets:
United States	$	315,841	$	332,274	$	449,013
Australia		174,277		185,844		281,750
Other		113		106		121

Total	$	490,231	$	518,224	$	730,884

Long-lived assets consist of property, plant, and equipment, net of depreciation, and other assets less debt issuance costs. Long-lived assets by geographical area are based on location of facilities.

No single customer accounted for more than 10% of net sales in the fiscal year ended December 24, 2006, 198 days ended July 10, 2007, or 173 days ended December 30, 2007.

Note 12. Subsequent events

Acquisitions

The allocation presented below reflects the finalized fair value of the individual assets and liabilities as of July 11, 2007 (in thousands) for the purchase of JBS USA Holdings:



Purchase price paid to previous shareholders	$ 225,000
Debt paid including accrued interest of $22,872	1,197,124
Fees and direct expenses	48,544

Total purchase price	$1,470,668


Preliminary purchase price allocation:
Current assets and liabilities	$583,643
Property, plant, and equipment	693,672
Identified intangibles	188,761
Deferred tax asset	56,537
Goodwill	42,762
Other noncurrent assets and liabilities, net	(94,707	)

Total purchase price allocation	$1,470,668

F-137

JBS USA Holdings, Inc.

A wholly owned subsidiary of JBS S.A.

Notes to consolidated financial statements

price for the Tasman Acquisition was $117.3 million (including approximately $8.6 million of transaction costs). JBS Southern also assumed approximately $52.1 million of outstanding debt.

On March 4, 2008, JBS and Smithfield Foods, Inc (“Smithfield Foods”) entered into a Stock Purchase Agreement (“Smithfield Agreement”). Pursuant to the Smithfield Agreement, JBS purchased Smithfield Beef Group, Inc. (“Smithfield Beef”) for $563.2 million in cash (including $26.1 million of transaction related costs) and contributed its ownership in Smithfield Beef to JBS USA Holdings, Inc. (Smithfield Acquisition). JBS USA Holdings contributed its ownership in Smithfield Beef Group to JBS USA, Inc. (now known as JBS USA, LLC). The purchase included 100% of Five Rivers Ranch Cattle Feeding LLC (“Five Rivers”), which was held by Smithfield Beef in a 50/50 joint venture with Continental Grain Company (“CGC,” formerly ContiGroup Companies, Inc.). On October 23, 2008, the acquisition of Smithfield Beef was completed. In conjunction with the closing of this purchase Smithfield Beef was renamed JBS Packerland and Five Rivers was renamed JBS Five Rivers Cattle Feeding LLC (“JBS Five Rivers”). The assets acquired include four processing plants and eleven feedlots. This acquisition provides additional capacity to continue to meet customer demand.

The purchase excludes substantially all live cattle inventories held by Smithfield Beef and Five Rivers as of the closing date, together with its associated debt. The excluded live cattle will be raised by JBS Five Rivers after closing for a negotiated fee and then sold upon maturity at market-based prices. Proceeds from the sale of the excluded live cattle will be paid in cash to the Smithfield Foods/CGC joint venture or to Smithfield Foods, as appropriate. The parties to this agreement believe most of the live cattle inventories will be sold within six months following closing, with substantially all sold within 12 months of closing.

Five Rivers is party to a cattle supply and feeding agreement with an unconsolidated affiliate (“the unconsolidated affiliate”). Five Rivers feeds and takes care of cattle owned by the unconsolidated affiliate. The unconsolidated affiliate pays Five Rivers for the cost of feed and medicine at cost plus a yardage fee on a per head per day basis. Beginning on June 23, 2009 or such earlier date on which Five Rivers’ feed yards are at least 85% full of cattle and ending on October 23, 2011, the unconsolidated affiliate agrees to maintain sufficient cattle on Five Rivers’ feed yards so that such feed yards are at least 85% full of cattle at all times. The agreement commenced on October 23, 2008 and continues until the last of the cattle on Five Rivers’ feed yards as of October 23, 2011 are shipped to the unconsolidated affiliate, a packer or another third party.

On October 7, 2008 JBS USA, LLC became party to a cattle purchase and sale agreement with the unconsolidated affiliate. Under this agreement, the unconsolidated affiliate agrees to sell to JBS USA, LLC, and JBS USA, LLC agrees to purchase from the unconsolidated affiliate, at least 500,000 cattle during each year from 2009 through 2011. The price paid by JBS USA, LLC is determined pursuant to JBS USA, LLC’s pricing grid in effect on the date of delivery. The grid used for the unconsolidated affiliate is identical to the grid used for unrelated third parties. If the cattle sold by the unconsolidated affiliate in a quarter result in a breakeven loss (selling price below accumulated cost to acquire the feeder animal and fatten it to delivered weight) then JBS USA,

F-138

JBS USA Holdings, Inc.

A wholly owned subsidiary of JBS S.A.

Notes to consolidated financial statements

LLC will reimburse 40% of the average per head breakeven loss incurred by the unconsolidated affiliate on up to 125,000 head delivered to JBS USA, LLC in that quarter. If the cattle sold by the unconsolidated affiliate in a quarter result in a breakeven gain (selling price above the accumulated cost to acquire the feeder animal and fatten it to delivered weight), then JBS USA, LLC will receive from the unconsolidated affiliate an amount of cash equal to 40% of that per head gain on up to 125,000 head delivered to JBS USA, LLC in that quarter. There were no payments under the loss/profit sharing provisions of this agreement for the thirteen weeks ended March 29, 2009.

The unconsolidated affiliate has a $600.0 million secured revolving credit facility with a commercial bank. Its parent company has entered into a keep-well agreement with its subsidiary (the unconsolidated affiliate) whereby it will make contributions to the unconsolidated affiliate if the unconsolidated affiliate is not in compliance with its financial covenants under this credit facility. If the unconsolidated affiliate defaults on its obligations under the credit facility and such default is not cured by its parent under the keep-well agreement, Five Rivers is obligated for up to $250.0 million of the obligations under this credit facility. This credit facility and the guarantee thereof are secured solely by the fixed assets of the unconsolidated affiliate and Five Rivers. This credit facility matures on October 7, 2011. This credit facility is used to acquire cattle which are then fed in the Five Rivers feed yards pursuant to the cattle supply and feeding agreement described above. The finished cattle are sold to JBS USA, LLC under the cattle purchase and sale agreement discussed above.

Five Rivers is party to an agreement with an unconsolidated affiliate pursuant to which Five Rivers has agreed to loan up to $200.0 million in revolving loans to the unconsolidated affiliate. The loans are used by the unconsolidated affiliate to acquire feeder animals which are placed in Five Rivers feed yards for finishing. Borrowings accrue interest at a per annum rate of LIBOR plus 2.25% or base rate plus 1.0% and interest is payable at least quarterly. This credit facility matures October 7, 2011. During the thirteen weeks ended March 29, 2009, average borrowings were approximately $149.0 million and total interest accrued was approximately $1.6 million which was recognized as interest income on the statement of operations.

On January 27, 2009, the Company reached agreement with Smithfield Foods for final settlement of the working capital component of the purchase price pursuant to the Stock Purchase Agreement. The settlement called for a payment of $4.5 million from Smithfield Foods to the Company as full and final settlement of the working capital delivered at October 23, 2008. The Company recorded the settlement as a reduction of purchase price upon receipt.

On February 18, 2009 an agreement was reached with the sellers of National Beef whereby JBS USA Holdings terminated the acquisition process of National Beef effective February 23, 2009. Related litigation with the DOJ was also terminated. As a result of the agreement, JBS USA Holdings, Inc. reimbursed the seller’s shareholders a total $19.9 million in February 2009 as full and final settlement of any and all liabilities related to the potential acquisition.

F-139

JBS USA Holdings, Inc.

A wholly owned subsidiary of JBS S.A.

Notes to consolidated financial statements

Intercompany debt with JBS S.A.

On March 2, 2008, JBS S.A. contributed $400 million in additional paid in capital to repay a portion of the $750 million unsecured bank debt. On June 30, 2008, the Company entered into an unsecured loan agreement with JBS S.A. totaling $350 million with a maturity date of June 30, 2011. Interest payments are due semi-annually at a rate of six month LIBOR plus a margin of 3%.

On April 28, 2008, the Company entered into an unsecured loan agreement with its parent, JBS S.A. for $100 million with a maturity date of April 28, 2011. Interest payments are due semi-annually at a rate of six month LIBOR plus a margin of 3%. The funds received from this loan were used to fund the purchase of Tasman Group.

On May 5, 2008, the Company entered into an unsecured loan agreement with JBS S.A. for $25 million with a maturity date of May 5, 2009. Interest payments are due semi-annually at a rate of six month LIBOR plus a margin of 3%. The funds received were used to fund operations.

On June 30, 2008, the Company entered into an unsecured loan agreement with JBS S.A. for $25 million with a maturity date of June 10, 2009. Interest payments are due semi-annually at a rate of six month LIBOR plus a margin of 3%. The funds received were used to fund operations.

On October 20, 2008, the Company entered into an unsecured loan agreement with JBS S.A. for $250 million with a maturity date of October 21, 2011. Interest payments are due semi-annually at a rate of six month LIBOR plus a margin of 3%. The funds received were used in the acquisition of Smithfield Beef Group.

On April 27, 2009, JBS USA Holdings refinanced its five separate intercompany notes with JBS HU Liquidity Management LLC (“JBS HU”), a subsidiary of JBS S.A., which is organized in the country of Hungary, into one note with a stated interest rate of 12% and a 10 year maturity.

On May 6, 2009, the Company entered into an unsecured loan agreement with JBS HU for $6 million with a maturity date of May 6, 2019. Interest payments are due semi-annually at a rate of 12%. The funds received were used to repay a portion of the intercompany loans with JBS S.A.

Revolving credit facilities

On February 26, 2008, Swift Australia entered into an Australian dollar denominated $120 million unsecured credit facility to fund working capital and letter of credit requirements. Under this facility AUD $80 million can be borrowed for cash needs and AUD $40 million is available to fund letters of credit. Borrowings are made at the cash advance rate (BBSY) plus a margin of 0.98%. The credit facility contains certain financial covenants which require the Company to maintain predetermined ratio levels related to interest coverage, debt coverage and tangible net worth. This facility has an evergreen renewal term with review periods each June, commencing in 2009.

On November 5, 2008, JBS USA Holdings entered into a secured revolving loan credit agreement (the “Credit Agreement”) that allows borrowings up to $400.0 million, and terminates on November 5, 2011. Up to $75.0 million of the revolving credit facility is available for the issuance

F-140

JBS USA Holdings, Inc.

A wholly owned subsidiary of JBS S.A.

Notes to consolidated financial statements

of letters of credit. Borrowings that are index rate loans will bear interest at the prime rate plus a margin of 2.25% while LIBOR rate loans will bear interest at the applicable LIBOR rate plus a margin of 3.25%. At December 28, 2008, the rates were 5.50% and 4.66%, respectively. Upon approval by the lender, LIBOR rate loans may be taken for one, two, or three month terms, (or six months at the discretion of the Agent).

Debt offering

On April 27, 2009, JBS USA Holdings refinanced its five separate intercompany notes with JBS S.A. through JBS HU into one note with a stated interest rate of 12% and a 10 year maturity with a balance of $133 million at the reporting date.

On April 27, 2009, JBS USA, LLC, a wholly owned subsidiary, entered into a $700 million senior unsecured note offering bearing interest at 11.625% with interest payable semi-annually and a maturity of May 1, 2014. The proceeds net of expenses were $650.8 million and were used to repay $100 million on the Credit Agreement and the balance was used to repay intercompany debt and accrued interest owed to JBS HU.

Other

On October 14, 2008, the Company purchased $1 million in additional bonds from the City of Cactus, Texas (See Note 3).

On October 23, 2008, JBS USA Holdings issued a promissory note to a third party for approximately $173 million the proceeds of which were contributed to JBS USA, LLC. The promissory note bears interest at a rate of three-month LIBOR plus 2.0% per annum and matures on December 30, 2016.

The promissory note also contains events of default, including failure to perform or observe terms, covenants or other agreements in the promissory note, payment defaults on other indebtedness, defaults on other indebtedness if the effect is to permit acceleration, and entry of unsatisfied judgments of orders against JBS USA Holdings and its subsidiaries. If an event of default occurs and is continuing the payee may accelerate the note and declare all amounts due and payables or at the payee’s election, convert amounts owing under the promissory note into voting stock of JBS USA Holdings.

JBS USA Holdings is also party to a raw materials supply agreement with a customer, pursuant to which JBS USA Holdings has agreed that it and its affiliates will sell certain raw materials to such

F-141

JBS USA Holdings, Inc.

A wholly owned subsidiary of JBS S.A.

Notes to consolidated financial statements

customer on an exclusive basis. To the extent that the customer is required to pay a premium under the supply agreement, an amount equal to such premium is required to be paid in respect of the note. Payments are applied toward accrued interest first and then principal. JBS USA to distribute to JBS USA Holdings payments received from this customer in respect of premium pursuant to the agreement to allow JBS USA Holdings to satisfy its obligations due under the promissory note in accordance with its terms. Amounts outstanding under the promissory note are recorded as long term liabilities in the financial statements of JBS USA Holdings and payments or other reductions in obligations are recoded as the realization of deferred revenue.

On December 29, 2008, JBS USA Holdings, Inc., was renamed JBS USA Holdings, LLC and converted from a C Corporation to a Limited Liability Company. As a result of the conversion in legal form, the outstanding share which was 100% owned by JBS USA Holdings, Inc was converted into a single member interest held by JBS USA Holdings, Inc.

Beginning in mid-April 2009 the world press began publicizing the occurrence of regionalized influenza outbreaks which were linked on a preliminary basis to a hybrid avian/swine/human virus. As a result commencing on April 14, 2009 several foreign countries including Russia, Thailand, Ukraine and Mainland China closed their borders to some or all pork produced in the affected states in the USA or other affected regions in the world. The company is not able to assess whether or when the influenza outbreak might lessen or whether or when additional countries might impose restrictions on the importation of pork products from the USA, nor whether or when the existing import bans might be lifted.

F-142

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholder

JBS Packerland, Inc.

We have audited the accompanying consolidated balance sheet of Smithfield Beef Group, Inc. (now known as JBS Packerland, Inc.) and subsidiaries as of April 27, 2008, and the related consolidated statements of operations, changes in stockholder’s equity, and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We did not audit the financial statements of Five Rivers Ranch Cattle Feeding LLC (a corporation in which the Company has a 50% interest). Those financial statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for Five Rivers Ranch Cattle Feeding LLC, is based on the report of the other auditors as explained in Note 5.

In our opinion, based on our audit and the report of other auditors, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Smithfield Beef Group, Inc. and subsidiaries at April 27, 2008, and the consolidated results of their operations and their cash flows for the year then ended, in conformity with U.S. generally accepted accounting principles.

/s/ ERNST & YOUNG LLP

Milwaukee, WI

March 31, 2009

F-143

Smithfield Beef Group, Inc.

Consolidated balance sheet

April 27, 2008

(dollars in thousands)



Assets

Current assets:
Cash	$ 56
Accounts receivable, less allowances of $1,131	110,754
Inventories	234,935
Deferred income taxes	6,233
Prepaid expenses and other current assets	10,314

Total current assets	362,292
Property, plant and equipment, net	143,889
Investment in Five Rivers Ranch Cattle Feeding LLC	157,561
Investment in other joint ventures	1,057
Goodwill	115,921
Intangible assets	4,252
Other assets	6,019


	$790,991


Liabilities and stockholder’s equity

Current liabilities:
Accounts payable	$ 70,051
Accrued payroll and benefits	19,661
Other accrued liabilities	28,642
Current portion of long-term debt due third parties	1,247

Total current liabilities	119,601
Long-term debt due Smithfield Foods, Inc.	503,741
Long-term debt due third parties	736
Deferred income taxes	20,359
Other long-term liabilities	21,316

Commitments and contingencies

Stockholder’s equity:
Class A Common stock, $.01 par value; 15,000 shares authorized, 1,000 shares issued and outstanding	—
Additional paid-in capital	242,640
Accumulated deficit	(115,038	)
Accumulated other comprehensive loss	(2,364	)

Total stockholder’s equity	125,238


	$790,991

See accompanying notes.

F-144

Smithfield Beef Group, Inc.

Consolidated statement of operations

For the year ended April 27, 2008

(Dollars in thousands)


Net sales	$2,909,214
Cost of sales	2,802,848

Gross profit	106,366

Operating costs and expenses:
Selling, general and administrative expenses	61,879
Corporate service fees from Smithfield Foods, Inc.	16,180
Royalty fees to Smithfield Foods, Inc.	4,953

Total operating costs and expenses	83,012
Gain on sale of property, plant and equipment	2,140

Income from operations	25,494

Other income (expense):
Interest income	726
Interest expense:
Smithfield Foods, Inc.	(41,486	)
Third parties	(278	)
Equity in income of Five Rivers Ranch Cattle Feeding LLC	12,853
Equity in income of other joint ventures	147

Loss before income taxes	(2,544	)
Provision for income taxes	536

Net loss	$ (3,080	)

See accompanying notes.

F-145

Smithfield Beef Group, Inc.

Consolidated statement of changes in stockholder’s equity

For the year ended April 27, 2008

(Dollars in thousands)


	Class a common stock		Additional Paid-in capital	Accumulated deficit		Accumulated other comprehensive loss		Total Stockholder’s equity
	Number of shares	Par value	Additional Paid-in capital	Accumulated deficit		Accumulated other comprehensive loss		Total Stockholder’s equity

Balance at April 29, 2007	1,000	$—	$242,640	$(111,958	)	$(2,491	)	$128,191
Comprehensive loss
Net loss	—	—	—	(3,080	)	—		(3,080	)
Proportionate loss on derivatives held by Five Rivers Ranch Cattle Feeding LLC	—	—	—	—		127		127

Total comprehensive loss								(2,953	)

Balance at April 27, 2008	1,000	$—	$242,640	$(115,038	)	$(2,364	)	$125,238

See accompanying notes.

F-146

Smithfield Beef Group, Inc.

Consolidated statement of cash flows

For the year ended April 27, 2008

(Dollars in thousands)



Operating activities
Net loss	$(3,080	)

Adjustment to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	18,659
Gain on sale of property, plant and equipment	(2,140	)
Equity in income of Five Rivers Ranch Cattle Feeding, LLC	(12,853	)
Equity in income of other joint ventures	(147	)
Deferred income taxes	(303	)
Changes in operating assets and liabilities:
Accounts receivable	(12,875	)
Inventories	99,456
Prepaid expenses and other current assets	(1,423	)
Accounts payable	1,202
Accrued liabilities	(171	)
Other noncurrent assets and liabilities	(7,079	)

Cash provided by operating activities	79,246

Investing activities
Additions to property, plant and equipment	(12,910	)
Proceeds from sale of property, plant and equipment	5,961
Other	42

Cash used in investing activities	(6,907	)

Financing activities
Net payments under debt agreement with Smithfield Foods, Inc.	(76,178	)
Payments on debt due third parties	(1,105	)

Cash used in financing activities	(77,283	)

Decrease in cash	(4,944	)
Cash at beginning of the year	5,000

Cash at the end of the year	$56


Supplemental disclosures of cash flow information
Cash paid for interest to third parties	$269

See accompanying notes.

F-147

Smithfield Beef Group, Inc.

Notes to consolidated financial statements

April 27, 2008

1. Description of the business

Basis of presentation

Smithfield Beef Group, Inc. (the Company or Smithfield Beef Group) now known as JBS Packerland, Inc., processes, prepares, packages and delivers fresh, further-processed and value-added beef products for sale to customers in the United States and international markets from four beef processing facilities. Smithfield Beef Group sells beef products to customers in the foodservice, international, further processor and retail distribution channels. Smithfield Beef Group also produces and sells by-products that are derived from its beef processing operations and variety meats to customers in various industries.

Sale of the company

On October 23, 2008, Smithfield Foods, Inc., (the owner of Smithfield Beef Group prior to this date) completed the sale of Smithfield Beef Group, to a wholly-owned subsidiary of JBS S.A., a company organized and existing under the laws of Brazil, for $565 million, net of postclosing adjustments. The sale included 100% of Five Rivers Ranch Cattle Feeding LLC (Five Rivers), a 50/50 joint venture with Continental Grain Company (CGC).

2. Significant accounting polices

Principles of consolidation

The consolidated financial statements include all wholly-owned subsidiaries. The Company’s investments in Five Rivers, Five Star Cattle Solutions, LLC and Mountain View Rendering Co. LLC are accounted for under the equity method. The Company has a 50% ownership in each of these entities. All intercompany transactions and balances have been eliminated.

The Company’s fiscal year consists of either 52 or 53 weeks, ending on the Sunday nearest April 30^th. The Company’s fiscal year ended April 27, 2008, consisted of 52 weeks.

Employees

Certain hourly employees of the Company’s production facilities are represented by a variety of labor unions, with labor agreements having various expiration dates. The Company has one union contract expiring in fiscal 2009. Union employees represent approximately 42% of the total employees of the Company at April 27, 2008.

Use of estimates

The preparation of 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 financial statements and accompanying notes. Actual results could differ from those estimates.

F-148

Smithfield Beef Group, Inc.

Notes to consolidated financial statements

Financial instruments

The carrying value of the Company’s financial instruments, including cash, accounts receivable, accounts payable and long-term debt at April 27, 2008, approximates fair value.

Accounts receivable

The Company has a diversified customer base, which includes customers located in foreign countries. The Company controls credit risk related to accounts receivable through credit appraisals, credit limits, letters of credit, and monitoring procedures. The Company evaluates the collectability of its accounts receivable balance based on a general analysis of past due receivables and a specific analysis of certain customers that management believes will be unable to meet their financial obligations due to economic conditions, industry-specific conditions, historical or anticipated performance, and other relevant circumstances. The Company continuously performs credit evaluations and reviews of its customer base. The Company believes this process effectively addresses its exposure to accounts receivable write-offs; however, if circumstances related to changes in the economy, industry, or customer conditions change, the Company may need to subsequently adjust the allowance for doubtful accounts. The Company adheres to normal industry collection terms of net seven days.

Inventories

Inventories consist primarily of product, live cattle, and manufacturing supplies. Product inventories are considered commodities and are valued based on quoted commodity prices, which approximate net realizable value less cost to complete and disposal costs. Product inventories are relieved from inventory utilizing the first-in, first-out method. Live cattle includes the purchase cost of the cattle, direct materials, supplies, and feed. Cattle are reclassified from live cattle to carcass inventory at time of slaughter. Manufacturing supplies are valued at the lower of first-in, first-out cost, average cost or market.

Property, plant and equipment, net

Property, plant and equipment is stated at cost, and is depreciated on a straight-line basis over the estimated useful lives of the assets as follows:


Buildings and improvements		20 – 40 years
Machinery and equipment		5 – 10 years
Automobiles and trucks		3 – 5 years
Furniture and fixtures		5 years
Computer hardware		5 years
Leasehold improvements		Shorter of useful life or the lease term

Depreciation expense is included as either cost of sales or selling, general and administrative expenses, as appropriate, and totaled $17.9 million in fiscal 2008. Repairs and maintenance charges are expensed as incurred and totaled $20.1 million in fiscal 2008. Improvements that

F-149

Smithfield Beef Group, Inc.

Notes to consolidated financial statements

materially extend the life of the asset are capitalized. Gains and losses from dispositions or retirements of property, plant and equipment are recognized in the period they occur. Interest is capitalized on property, plant and equipment during the construction period. There was no interest capitalized in fiscal 2008.

The Company periodically assesses the recoverability of long-lived assets, including property and equipment, in accordance with the provisions of Statement of Financial Accounting Standards (SFAS) No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. This statement requires that all long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by comparison of the carrying value of such assets to the undiscounted future cash flows expected to be generated by the assets. If the carrying value of an asset exceeds its estimated undiscounted future cash flows, an impairment provision is recognized to the extent that the carrying amount of the asset exceeds its fair value. Assets to be disposed of are reported at the lower of the carrying amount or the fair value of the asset, less costs of disposition. Management considers such factors as current results, trends and future prospects, current market value, and other economic and regulatory factors in performing these analyses. The Company determined that no long-lived assets were impaired as of April 27, 2008.

Goodwill and intangible assets

Goodwill represents the excess of the purchase price over the fair value of identifiable net assets of businesses acquired. Indefinite-lived intangible assets consist of tradenames.

Goodwill and indefinite-lived intangible assets are tested for impairment annually in the fourth quarter, or sooner if impairment indicators arise in accordance with SFAS No. 142, Goodwill and Other Intangible Assets. The fair value of indefinite-lived intangible assets is estimated based upon discounted future cash flow projections. In reviewing goodwill for impairment, potential impairment is identified by comparing the estimated fair value of a reporting unit to its carrying value. The fair value of a reporting unit is estimated by applying valuation multiples or estimating future discounted cash flows. The selection of multiples is dependent upon assumptions regarding future levels of operating performance as well as business trends, prospects and market and economic conditions. When estimating future discounted cash flows, the Company considers the assumptions that hypothetical marketplace participants would use in estimating future cash flows. In addition, where applicable, an appropriate discount rate is used, based on the Company’s cost of capital or location-specific economic factors. When the fair value is less than the carrying value of the net assets of a reporting unit, including goodwill, an impairment loss may be recognized. The Company has determined that goodwill and indefinite-lived assets were not impaired as of April 27, 2008.

Intangible assets with finite lives consist of patents, which are amortized over their estimated useful life of 15 years. Patents, net of accumulated amortization of $0.5 million, were $1.1 million at April 27, 2008. Patent amortization expense for the fiscal year ended April 27, 2008, totaled $0.1 million and is estimated to be approximately the same amount in each of the subsequent five years.

F-150

Smithfield Beef Group, Inc.

Notes to consolidated financial statements

Investments

The Company records its share of earnings and losses from its equity method investments in “Equity in income (loss) of affiliates” in the accompanying consolidated statement of operations. The Company considers whether the fair values of any of the equity-method investments have declined below their carrying value whenever adverse events or changes in circumstances indicate that recorded values may not be recoverable. If the Company considers any such decline to be other than temporary, then a write-down of the investment would be recorded to its estimated fair value. The Company has determined that no write-downs were necessary as of April 27, 2008.

Income taxes

The Company is included in the consolidated U.S. federal income tax return of Smithfield Foods, Inc. A formal tax-sharing agreement between Smithfield Foods, Inc. and the Company does not exist. The benefit for income taxes in the accompanying consolidated statement of operations has been calculated as if a consolidated federal and appropriate state income tax returns had been filed separately by the Company. Deferred income taxes are provided on the differences in the book and tax basis of assets and liabilities at the statutory tax rates expected to be in effect when such temporary differences are expected to reverse. A valuation allowance is provided on the tax benefits otherwise associated with certain tax attributes unless it is considered more likely than not that the benefits will be realized. Smithfield Foods, Inc. pays domestic taxes on behalf of the Company and reflects the funding through an intercompany payable account.

The determination of the provision for income taxes requires significant judgment, the use of estimates, and the interpretation and application of complex tax laws. Significant judgment is required in assessing the timing and amounts of deductible and taxable items. Reserves are established when, despite the Company’s belief that its tax return positions are fully supportable, the Company believes that certain positions may be successfully challenged. When facts and circumstances change, these reserves are adjusted through the provision for income taxes.

In July 2006, the Financial Accounting Standards Board issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes (FIN 48), which clarifies the accounting for income taxes by prescribing the minimum recognition threshold that a tax position is required to meet before being recognized in the financial statements. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The Company adopted FIN 48 effective April 30, 2007. The Company accrues interest and penalties related to unrecognized tax benefits as other noncurrent liabilities and recognizes the related expense as income tax expense.

Derivative financial instruments and hedging activities

The Company uses various raw materials, primarily live cattle and corn, which are actively traded on commodity exchanges. The Company hedges these commodities when it determines conditions are appropriate to mitigate these price risks. While such hedging may limit the

F-151

Smithfield Beef Group, Inc.

Notes to consolidated financial statements

Company’s ability to participate in gains from favorable commodity fluctuations, it also tends to reduce the risk of loss from adverse changes in raw material prices. The Company attempts to closely match the commodity contract terms with the hedged item.

The Company accounts for derivative financial instruments in accordance with SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, which requires companies to recognize all of their derivative instruments as either assets or liabilities in the balance sheet at fair value. The accounting for changes in the fair value of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and, further, on the type of hedging relationship. For those derivative instruments that are designated and qualify as hedging instruments, a company must designate the hedging instrument, based upon the exposure being hedged, as either a fair value hedge, cash flow hedge, or a hedge of a net investment in a foreign operation. Since none of the Company’s derivative instruments were designated as hedges in accordance with SFAS No. 133, the gain or loss related to the change in fair value for each derivative instrument is recognized in operations during the period of change. For the year ended April 27, 2008, the Company recognized a gain of $24.8 million, which is included in cost of sales in the accompanying consolidated statement of operations related to derivative financial instruments. As of April 27, 2008, the fair value of derivative financial instruments was $2.6 million and is included in prepaid expenses and other current assets in the accompanying consolidated balance sheet.

The Company records its proportionate share of the fair value of derivative financial instruments entered into by Five Rivers through other comprehensive loss as these derivative financial instruments are accounted for under hedge accounting.

Self-insurance programs

The Company is self-insured for certain levels of general and vehicle liability, property, workers’ compensation, product recall and healthcare coverage. The cost of these self-insurance programs is accrued based upon estimated settlements for known and anticipated claims. Any resulting adjustments to previously recorded reserves are reflected in operations.

Revenue recognition

The Company recognizes revenues from product sales when title passes upon delivery to its customers. Revenue is recorded at the invoice price for each product, net of estimated returns and sales incentives provided to customers. Sales incentives include various rebate and trade allowance programs with customers, primarily discounts and rebates based on achievement of specified volume or growth in volume levels.

Advertising and promotional costs

Advertising costs are expensed as incurred. Promotional sponsorship costs are expensed as the promotional events occur. Advertising and promotional costs totaled $2.2 million in fiscal 2008.

F-152

Smithfield Beef Group, Inc.

Notes to consolidated financial statements

Shipping and handling costs

Shipping and handling costs charged to customers are included in net sales, and the related costs are included in cost of sales.

Segment reporting

The Company operates in one segment: the raising, processing and packaging of beef products for sale to customers in the United States and international markets.

Recent accounting pronouncements

In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities—an amendment of FASB Statement No. 133. SFAS No. 161 requires (1) qualitative disclosures about objectives for using derivatives by primary underlying risk exposure; (2) information about the volume of derivative activity; (3) tabular disclosures about the balance sheet location and gross fair value of derivative instruments, and income statement and other comprehensive income location and amounts of gains and losses on derivative instruments by contract type; and (4) disclosures about credit-risk-related contingent features in derivative agreements. SFAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. Management believes the adoption of this pronouncement will not have a material impact on the Company’s consolidated financial statements.

In December 2007, the FASB issued SFAS No. 141R, Business Combinations (SFAS No. 141R). SFAS No. 141R establishes principles and disclosure requirements on how to recognize, measure and present the assets acquired, the liabilities assumed, any noncontrolling interests in the acquired company, and any goodwill recognized in a business combination. The objective of SFAS No. 141R is to improve the information included in financial reports about the nature and financial effects of business combinations. This statement is effective for business combinations with an acquisition date on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. Management believes the adoption of this pronouncement will not have a material impact on the Company’s consolidated financial statements.

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51 (SFAS No. 160). SFAS No. 160 establishes accounting and reporting standards for a noncontrolling (minority) interest in a subsidiary and for the deconsolidation of a subsidiary. This statement clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity and should be reported as equity in the consolidated financial statements, rather than as a liability or in the mezzanine section between liabilities and equity. SFAS No. 160 also requires consolidated net income to be reported at amounts that include the amounts attributable to both the parent and the noncontrolling interest. SFAS No. 160 is effective for fiscal years beginning on or after December 15, 2008. Management believes the adoption of this pronouncement will not have a material impact on the Company’s consolidated financial statements.

F-153

Smithfield Beef Group, Inc.

Notes to consolidated financial statements

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (SFAS No. 157). SFAS No. 157 defines fair value, establishes a framework for measuring fair value in accounting principles generally accepted in the United States, and expands disclosures about fair value measurements. It does not require any new fair value measurements. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years for financial assets and liabilities, and for fiscal years beginning after November 15, 2008, for nonfinancial assets and liabilities. Management believes the adoption of this pronouncement will not have a material impact on the Company’s consolidated financial statements.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities. SFAS No. 159 permits entities to choose to measure many financial instruments, and certain other items, at fair value. SFAS No. 159 applies to reporting periods beginning after November 15, 2007. Management believes the adoption of this pronouncement will not have a material impact on the Company’s consolidated financial statements.

3. Inventories

The components of inventories at April 27, 2008, net of reserves of $1.5 million, are as follows (in thousands):


Live cattle		$146,325

Product inventories:
Fresh and packaged meats		56,010
Carcass inventory		15,238
Manufacturing supplies		14,582
Other		2,780

		$234,935

The sale of the Smithfield Beef Group as discussed in Note 1, excluded substantially all live cattle inventories held by the Company and Five Rivers as of the transaction date. Live cattle owned by Five Rivers on the transaction date were transferred to a new 50/50 joint venture between Smithfield Foods, Inc. and CGC, while live cattle owned by Smithfield Beef Group on the transaction date were transferred to a subsidiary of Smithfield Foods, Inc. The excluded live cattle will be raised by JBS Packerland, Inc. for a negotiated fee and then sold at maturity at market-based prices. Proceeds from the sale of the excluded live cattle will be paid in cash to the Smithfield Foods, Inc./CGC joint venture or to Smithfield Foods, Inc., as appropriate. The live cattle inventories are expected to be sold within six months after the transaction date, with substantially all live cattle sold within 12 months after the transaction date.

F-154

Smithfield Beef Group, Inc.

Notes to consolidated financial statements

4. Property, plant and equipment, net

Property, plant and equipment, net consist of the following at April 27, 2008 (in thousands):


Land	$ 13,946
Buildings and improvements	90,619
Machinery and equipment	127,021
Automobiles and trucks	5,629
Furniture and fixtures	3,581
Computer hardware	2,835
Leasehold improvements	176
Construction in progress	14,032

	257,839
Accumulated depreciation	(113,950	)

	$143,889

On December 21, 2007, the Company sold the land and buildings of its Showcase facility, located in Philadelphia, PA, for approximately $5.2 million. As a result of the sale, the Company recorded a gain of approximately $2.3 million. In addition, the Company paid approximately $5.8 million to exit its equipment lease agreement with a third party and purchase all the leased equipment.

The sale of the Smithfield Beef Group, as discussed in Note 1, excluded certain land and land improvements that totaled $9.2 million at April 27, 2008.

5. Investment in Five Rivers

In fiscal 2006, Smithfield Beef Group and CGC formed Five Rivers, a 50/50 joint venture. Five Rivers is a stand-alone operating company, independent from the Company and CGC, currently headquartered in Greeley, Colorado, with a total of ten feedlots located in Colorado, Idaho, Kansas, Oklahoma and Texas. Five Rivers sells cattle to multiple U.S. beef packing firms using a variety of marketing methods. Five Rivers has a fiscal year ended March 31, 2008, and was audited by other auditors.

For its 50% interest in Five Rivers, the Company has contributed cash of $106.3 million and net assets of $44.7 million. There currently exists a difference between the carrying amount of the Company’s investment in Five Rivers and the Company’s proportionate share of its underlying equity in the net assets of Five Rivers primarily due to the difference in the fair value of cash and net assets contributed by the Company in relation to its ownership interest in Five Rivers.

F-155

Smithfield Beef Group, Inc.

Notes to consolidated financial statements

Following is a reconciliation of the investment in Five Rivers and equity in income of Five Rivers as of and for the year ended April 27, 2008, from the report of other auditors to the amounts included in the accompanying financial statements (in thousands):


50% interest in the net assets of Five Rivers at March 31, 2008 (per report of other auditors)	$157,385
Excess of the cost of investment over the amount of underlying equity in net assets of Five Rivers	22,828
50% interest in the loss of Five Rivers for the month ended April 27, 2008	(5,736	)
50% interest in other comprehensive loss of Five Rivers for the month ended April 27, 2008	(16,916	)

Investment in Five Rivers at April 27, 2008	$157,561

Equity in income of Five Rivers for the year ended March 31, 2008 (per report of other auditors)	$ 18,729
Less proportionate share of the income of Five Rivers for the month ended April 29, 2007	(140	)
Plus proportionate share of the loss of Five Rivers for the month ended April 27, 2008	(5,736	)

Equity in income of Five Rivers for the year ended April 27, 2008	$ 12,853

Five Rivers meets the definition of a significant subsidiary (per Regulation S-X) with respect to the Company. Condensed financial statements for Five Rivers as of March 31, 2008, and for the year ended March 31, 2008, are presented below (in thousands):


Current assets		$ 647,245
Noncurrent assets		103,936
Current liabilities		436,242
Noncurrent liabilities		170
Revenues		$1,657,103
Costs and expenses		1,593,731
Operating income		63,372
Net income		37,457

6. Other assets

Other assets consist of the following at April 27, 2008 (in thousands):


Other assets:
Aircraft		$2,065
Deposit		725
Tax benefit related to uncertain tax positions		2,057
Computer software		380
Other noncurrent assets		792


		$6,019

F-156

Smithfield Beef Group, Inc.

Notes to consolidated financial statements

Other assets include the Company’s 25% ownership interest in an aircraft and a deposit with the Arizona Department of Water Resources for water rights related to its facility in Tolleson, Arizona. The ownership interest in the aircraft was purchased on December 31, 2004 for $2.6 million and is being depreciated over its useful life of 20 years. Amortization of capitalized computer software was $0.7 million in fiscal 2008.

7. Long-term debt

Long-term debt consists of the following at April 27, 2008 (in thousands):



Long-term debt due Smithfield Foods, Inc.:
Debt due Smithfield Foods, Inc.		$304,316
Term notes due SFFC, Inc.		199,425

		$503,741


Other long-term debt due third parties:
Note payable		$ 989
Other		994


		1,983
Less current portion		1,247

		$736

The Company had a lending arrangement with Smithfield Foods, Inc., under which Smithfield Foods, Inc. financed the working capital needs of the Company. Amounts outstanding under the facility bore interest at rates ranging between 4.5% and 7% as of April 27, 2008. The lending agreement did not have a stated maturity date nor did it contain any financial covenants. The debt with Smithfield Foods, Inc. has been classified as long term based on the intent of Smithfield Foods, Inc. for these amounts not to be repaid in the next fiscal year.

On January 1, 2007, the Company entered into a series of term notes with SFFC, Inc. (a wholly owned subsidiary of Smithfield Foods, Inc.) totaling $199.4 million. The term notes bear interest at 7.75% and are due December 31, 2016. The term notes do not contain any financial covenants.

In connection with the purchase of Murco, Inc., now known as JBS Plainwell, Inc., the Company issued a note payable (Note) to the former owner for $13.3 million. Principal and interest payments under the Note are due weekly, decreasing from $30,000 to $20,000 over the life of the Note. As the Note does not bear interest, the Company discounted the estimated future cash flows under the Note and adjusted the carrying value of the Note to $8.2 million at the purchase date, which approximated the fair value of the Note. The effective interest rate on the Note is 10% and the Note matures May 12, 2009.

F-157

Smithfield Beef Group, Inc.

Notes to consolidated financial statements

8. Income taxes

Significant components of the provision for income taxes for the year ended April 27, 2008, are as follows (in thousands):



Current tax expense (benefit):
Federal	$(1,034	)
State	1,873

	839

Deferred tax benefit:
Federal	(273	)
State	(30	)

	(303	)

	$ 536

A reconciliation of income tax benefit computed at the federal statutory rate to the provision for income taxes is as follows (in thousands):


Federal income tax benefit at statutory rate	$(890	)
State income taxes, net of federal tax benefit	617
Manufacturer’s production deduction	(274	)
Increase in uncertain tax positions, net	944
Other	139

	$536

F-158

Smithfield Beef Group, Inc.

Notes to consolidated financial statements

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts for income tax reporting purposes. Significant components of the Company’s deferred income tax assets and liabilities as of April 27, 2008, are as follows (in thousands):



Deferred tax assets:
State net operating losses	$ 9,486
Accrued liabilities	9,124
Employee benefits	865
Inventories	514
Allowances	924
Valuation allowance	(7,490	)

Total deferred tax assets	13,423

Deferred tax liabilities:
Property, plant and equipment	(19,621	)
Investments	(4,878	)
Intangible assets	(3,050	)

Total deferred tax liabilities	(27,549	)

Net deferred tax liabilities	$(14,126	)

Deferred tax assets and liabilities are recorded in the accompanying consolidated balance sheet as follows:


Current deferred tax assets	$ 6,233
Noncurrent deferred tax liabilities	(20,359	)
Total deferred tax assets	$(14,126	)

The Company had state net operating loss carryforwards of $189.7 million at April 27, 2008. A partial valuation allowance has been established against the state net operating loss carryforwards at April 27, 2008, as the Company does not believe it is more likely than not that the carryforward will be utilized in full prior to expiration. State net operating losses generally begin to expire 5 to 20 years after they are generated.

A reconciliation of the beginning and ending liability for uncertain tax positions is as follows (in thousands):


Balance as of April 30, 2007	$5,592
Additions for tax positions taken in the current year	993
Additions for tax positions taken in prior years	125
Settlements with taxing authorities	(2,310	)
Lapse of statute of limitations	(174	)

Balance as of April 27, 2008	$4,226

F-159

Smithfield Beef Group, Inc.

Notes to consolidated financial statements

The Company operates in multiple taxing jurisdictions within the United States, and is subject to audits from various tax authorities. As of April 27, 2008, the liability for uncertain tax positions included $1.5 million of accrued interest and penalties. The Company recognized $0.5 million of interest expense in tax expense during fiscal 2008. As of April 27, 2008, the liability for uncertain tax positions included $3.7 million that, if recognized, would impact the effective tax rate.

9. Other accrued liabilities

Other accrued liabilities consist of the following at April 27, 2008 (in thousands):


Feed		$12,108
Self-insurance reserves		3,000
Utilities		2,898
Freight		2,084
Customer programs		1,120
Litigation-related matters		935
Property taxes		724
Legal and professional fees		483
Other		5,290

		$28,642

10. Retirement plans

The Company sponsors three defined contribution plans, which cover the majority of full-time truck drivers, salaried and office personnel, and certain hourly plant employees under a multiple-employer plan administered by Smithfield Foods, Inc. Contributions under the plans are based on miles driven by certain truck drivers and on a percentage of salary or rate per hour for other personnel. Retirement benefits are based upon the amount allocated to each individual’s separate account and are fully funded. Total expense related to these plans were $1.5 million in fiscal 2008.

F-160

Smithfield Beef Group, Inc.

Notes to consolidated financial statements

11. Commitments

The Company leases tractors, trailers, automobiles, railcars, buildings and equipment under operating lease agreements. Certain of the lease agreements contain renewal or purchase options as well as rental escalation clauses. The lessor assigned its rights under one of the building leases to Smithfield Foods, Inc. concurrent with the sale of Smithfield Beef Group. Future minimum rental payments for leases having initial or remaining noncancelable lease terms in excess of one year are presented below and reflect the assignment of the building lease to Smithfield Foods, Inc. (in thousands):


	Related-party	Third parties	Total

Fiscal Year
2009	$780	$5,571	$6,351
2010	780	4,351	5,131
2011	780	3,946	4,726
2012	780	3,069	3,849
2013	780	2,116	2,896
Thereafter	15,784	10,720	26,504

	$19,684	$29,773	$49,457

Total rental expense for operating leases was $10.2 million in fiscal 2008.

As of April 27, 2008, the Company had capital expenditure commitments of approximately $6.6 million. The Company also has purchase commitments with certain cattle producers that obligate the Company to purchase all of the cattle that these producers deliver. The Company has entered into commodity forward contracts that obligate the Company to purchase a fixed amount of cattle at fixed prices. As of April 27, 2008, the Company had $490.3 million of commodity forward contracts for the purchase of live cattle. As of April 27, 2008, the Company was also committed to purchase approximately $3.0 million of fixed forward corn contracts. The Company believes the risk of default or nonperformance on contracts with counterparties is not significant.

12. Related-party transactions

The Company has a trademark and license agreement with SF Investments, Inc. (a wholly owned subsidiary of Smithfield Foods, Inc.) for the right to use certain trademarks of Smithfield Foods, Inc. in connection with the sale of certain food products. The Company made royalty payments of $5.0 million during fiscal 2008 related to this agreement.

Through an informal agreement with its parent, Smithfield Foods, Inc., the Company was provided certain administrative services by Smithfield Foods, Inc. During fiscal 2008, the Company was charged $16.2 million under this arrangement.

F-161

Smithfield Beef Group, Inc.

Notes to consolidated financial statements

13. Regulations and litigation

The Company is subject to various laws and regulations administered by federal, state and other government entities, including the Environmental Protection Agency (EPA) and corresponding state agencies, as well as the United States Department of Agriculture, the United States Food and Drug Administration, the United States Occupational Safety and Health Administration and similar agencies in foreign countries. The Company believes that it is in compliance with these laws and regulations in all material respects and that continued compliance with these laws and regulations will not have a material adverse effect on its financial position or results of operations or cash flows.

In February 2003, the EPA promulgated regulations under the Clean Water Act governing confined animal feeding operations (CAFOs). Among other things, these regulations impose obligations on CAFOs to manage animal waste in ways intended to reduce the impact on water quality. These new regulations were challenged in federal court by both industry and environmental groups. Although a 2005 decision by the court invalidated several provisions of the regulations, they remain largely intact.

From time to time and in the ordinary course of its business, the Company is named as a defendant in legal proceedings related to various issues, including worker’s compensation claims, tort claims and contractual disputes. While the resolution of such matters may have an impact on the Company’s financial results for the period in which they are resolved, the Company believes that the ultimate disposition of these matters will not, individually or in the aggregate, have a material adverse effect upon its business or consolidated financial statements.

F-162

Report of independent registered public accounting firm

To the Board of Managers and Members of

Five Rivers Ranch Cattle Feeding LLC

Loveland, Colorado

We have audited the accompanying balance sheet of Five Rivers Ranch Cattle Feeding LLC (the “Company”) as of March 31, 2008, and the related statements of operations, members’ equity and comprehensive income (loss), and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (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. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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, such financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2008, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

/s/ Deloitte & Touche LLP

Denver, Colorado

May 30, 2008

F-163

Five Rivers Ranch Cattle Feeding LLC

Balance sheet

as of March 31, 2008

(in thousands)


		2008


Assets
CURRENT ASSETS:
Cash and cash equivalents		$ 3
Receivables		13,667
Receivables—affiliates		3,152
Inventory		600,161
Advance deposits on cattle		1,567
Derivative asset		27,792
Prepaid expenses and other current assets		903

Total current assets		647,245

PROPERTY, PLANT, AND EQUIPMENT:
Land and land improvements		65,581
Buildings		8,898
Machinery, equipment, and fixtures		33,347
Capitalized software		636
Construction-in-progress		2,009

Total property, plant, and equipment		110,471
Less accumulated depreciation		22,132

Net property, plant, and equipment		88,339
INTANGIBLE ASSETS		12,144
OTHER ASSETS		3,453

TOTAL		$751,181

Liabilities and Members’ Equity
CURRENT LIABILITIES:
Cash overdraft		$ 11,171
Borrowings on margin accounts		10,012
Accounts payable		9,156
Accrued liabilities		5,197
Derivative liability		5,406
Revolving line of credit		395,300

Total current liabilities		436,242
Deferred compensation		170

Total liabilities		436,412

COMMITMENTS AND CONTINGENCIES (Note 7)
MEMBERS’ EQUITY:
Members’ equity paid-in capital		274,416
Accumulated other comprehensive income		29,104
Retained earnings		11,249

Total members’ equity		314,769

TOTAL		$751,181

See notes to financial statements.

F-164

Five Rivers Ranch Cattle Feeding LLC

Statement of operations

for the year ended March 31, 2008

(in thousands)


	2008


REVENUES:
Live cattle sales	$1,537,178
Feedlot sales	95,057
Other	24,868

Total revenues	1,657,103


COST AND EXPENSES:
Cost of sales	1,578,635
General and administrative expenses	15,179
Gain on disposal of assets	(83	)

Total cost and expenses	1,593,731

OPERATING INCOME	63,372


OTHER (INCOME) EXPENSE:
Interest expense and other financing costs	28,893
Interest and investment income	(1,095	)
Loss on involuntary conversion of assets	109
Other income	(190	)
Gain on settlement	(1,802	)

Total other expense—net	25,915

NET INCOME	$ 37,457

See notes to financial statements.

F-165

Five Rivers Ranch Cattle Feeding LLC

Statement of members’ equity and comprehensive income (loss)

for the year ended March 31, 2008

(In thousands)


	Members’ Equity, Paid-In Capital	Comprehensive Income	Retained Earnings (Accumulated Deficit)		Accumulated Other Comprehensive Income (Loss)		Total

BALANCE—April 1, 2007	$274,416		$(26,208	)	$(8,634	)	$239,574

Comprehensive income:
Net income		$37,457	37,457				37,457
Other comprehensive income:
Net gain on cash flow hedges		29,104
Reclassification adjustment for losses included in net income		8,634

Other comprehensive income		37,738			37,738		37,738

Comprehensive income		$75,195

BALANCE—March 31, 2008	$274,416		$11,249		$29,104		$314,769

See notes to financial statements.

F-166

Five Rivers Ranch Cattle Feeding LLC

Statement of cash flows

For the year ended March 31, 2008

(in thousands)


	2008


CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$37,457
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization	9,637
Gain on disposal of assets	(83	)
Loss on involuntary conversion of assets	109
Gain on involuntary conversion of assets	(1,200	)
Equity in earnings of investee	(267	)
Dividends received from investee	375
Changes in operating assets and liabilities:
Cash overdraft	(3,192	)
Inventory	(96,054	)
Derivative instruments	2,105
Receivables	(1,307	)
Prepaid expenses and other assets	19,973
Accounts payable, accrued liabilities, and deferred liabilities	793

Net cash used in operating activities	(31,654	)


CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of assets	139
Insurance proceeds related to fixed assets	1,200
Investment in unaffiliated company	(500	)
Additions to property, plant, and equipment	(13,883	)

Net cash used in investing activities	(13,044	)


CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in revolving line of credit	34,700
Equity contributions by Members
Net increase in borrowings on margin accounts with brokers	10,012
Other	(17	)

Net cash provided by financing activities	44,695

NET DECREASE IN CASH AND CASH EQUIVALENTS	(3	)
CASH AND CASH EQUIVALENTS—Beginning of period	6

CASH AND CASH EQUIVALENTS—End of period	$ 3

Cash paid during the period for interest	$28,103

See notes to financial statements.

F-167

Five Rivers Ranch Cattle Feeding LLC

Notes to financial statements

As of and for the year ended March 31, 2008

1. Nature of business

Business and Basis of Presentation—Five Rivers Ranch Cattle Feeding LLC (the “Company”) is a limited liability company organized on May 20, 2005, in the state of Delaware. Prior to May 20, 2005, the assets and liabilities of the Company were owned by ContiBeef LLC (“ContiBeef”), a wholly owned subsidiary of Continental Grain Company (“CGC”), and MF Cattle Feeding, Inc. (“MF”). ContiBeef is a wholly-owned subsidiary of Continental Grain Company, and MF is a wholly-owned subsidiary of Cattle Production Systems, Inc. (“CPS”), whose parent company is Smithfield Beef Group, Inc. (“Smithfield Beef”), which is a wholly-owned subsidiary of Smithfield Foods, Inc. On May 20, 2005, the operating assets and certain liabilities of ContiBeef and MF were transferred to the Company at net book value in exchange for equity interests in the Company. The Company is a 50/50 joint venture between ContiBeef and MF (the “Members”). The Members exercise joint control over the Company.

The Company is engaged in the raising of feeder cattle for the Company and for outside customers, and the sale of live cattle to meat packing companies (“packers”). The Company’s sales and cost of sales are significantly affected by market price fluctuations of its principal products sold and of its principal commodity inputs—feeder cattle and corn. Feedlot operations are located in Idaho, Texas, Colorado, Kansas, and Oklahoma.

The Company owns a 50% interest in Northern Colorado Feed, LLC, which is an unconsolidated subsidiary accounted for under the equity method. The contributed investment to Five Rivers was approximately $1 million, which is recorded within Other Assets in the balance sheets. The Company’s share of earnings in the investment for the year ended March 31, 2008 was approximately $267,000 and is recorded in interest and investment income in the statement of operations. During the year ended March 31, 2008, the Company received dividends of approximately $375,000.

During 2008 the Company began a strategic alliance with Southfork Solutions, Inc. (“Southfork”) which included the purchase of 500,000 shares of Southfork stock through a private placement. Southfork is in the process of developing animal identification technology in which Five Rivers’ locations are serving as test sites. This investment is accounted for under the cost method and carried a balance of $500,000 as of March 31, 2008 and is recorded within Other Assets in the balance sheet.

On March 5, 2008, Smithfield Foods, Inc. announced that it signed a definitive agreement to sell Smithfield Beef Group, Inc., including 100% of the ownership of Five Rivers, to JBS S.A. (“JBS”) Smithfield Foods and CGC entered into an agreement providing that, immediately before the closing of the JBS transaction, Smithfield Beef will acquire from CGC the 50% of Five Rivers that it does not presently own in return for 2.167 million shares of Smithfield common stock. Live cattle currently owned by Five Rivers will be transferred to a new 50/50 joint venture between Smithfield Foods and CGC. The excluded live cattle will be raised by JBS after closing for a negotiated fee and then sold at maturity at market-based prices. Proceeds from the sale of the excluded live cattle will be paid in cash to the Smithfield Foods/CGC joint venture.

F-168

Five Rivers Ranch Cattle Feeding LLC

Notes to financial statements

2. Significant accounting policies

Revenue Recognition—The Company sells live cattle to packers located primarily in Colorado, Idaho, Nebraska, Kansas and Texas. Revenue is recognized when live cattle are shipped to customers, based on terms as set forth by The Packers and Stockyards Act of 1921. The Company records transactions based on lot by lot accounting, recognizing revenue as cattle are shipped or on delivery depending on the terms of the sale, and will adjust revenues to reflect the results of the grading process as reported to the Company by the packer. Risk of loss transfers to the packer upon shipment, unless the Company has hired the transporter for shipment, in which case risk of loss transfers at delivery. Hotel revenue charged to customers for cattle feeding and care is recognized on a daily basis and is recorded in feedlot sales in the statement of operations. Animal feed supplement sold to third parties is recognized when the product is delivered and is recorded in feedlot sales in the statement of operations.

Derivative Instruments—The Company enters into futures and option contracts for the purpose of hedging exposures to changes in commodity prices, primarily live cattle, feeder cattle, and corn. These contracts are accounted for as derivatives in accordance with Statement of Financial Accounting Standards (SFAS) No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended. This statement requires the Company to record all derivatives on the balance sheet. The Company has reflected derivatives at fair value. Derivatives that are not accounted for as hedges must be adjusted to fair value through current earnings. For derivatives designated as cash flow hedges and used to hedge an anticipated transaction, changes in the fair value of the derivatives are deferred in the balance sheet in accumulated other comprehensive income (loss) to the extent the hedge is effective in mitigating the exposure to the related anticipated transaction. Any ineffectiveness associated with the hedge, along with gains and losses on derivatives not designated as hedges, are recognized immediately in the statement of operations within other revenues. Amounts deferred within accumulated other comprehensive income (loss) are recognized in the statement of operations within cost of sales upon the completion of the related hedged transaction.

Cash and Cash Equivalents—Cash equivalents are composed of all highly liquid investments with original maturities of three months or less. Book overdrafts are reclassified to current liabilities.

Margin Accounts—The Company maintains margin deposits with brokers as collateral on open positions in derivative instruments. These deposits are not included in the balance of cash and cash equivalents as the balances, when positive, are not able to be withdrawn by the Company at any time. When the Company’s derivative positions are in an asset position the Company is allowed to borrow against the margin accounts. As of March 31, 2008 the Company had net borrowings on margin accounts with brokers.

Inventories—Live cattle inventories and inventories of feed, silage, processing supplies, and medication are stated at the lower of cost (first-in, first-out) or market.

Property, Plant, and Equipment—Property, plant, and equipment are stated at cost. Depreciation of property, plant, and equipment is provided by the straight-line method over the estimated useful lives of 25 years for farm buildings, 10 to 30 years for land improvements and buildings,

F-169

Five Rivers Ranch Cattle Feeding LLC

Notes to financial statements

and 2 to 12 years for machinery, equipment, furniture, and purchased software. Expenditures for maintenance and repairs are charged to expense as incurred. Depreciation expense for the year ended March 31, 2008 was $8.7 million.

Intangible Assets—The Company has recorded intangible assets in the form of water rights with indefinite lives at the Kuner and Gilcrest feedlots which were contributed to the Company by MF. This intangible asset is recorded at its carryover basis of $12.1 million. The Company’s annual impairment testing date coincides with its fiscal year-end. If an assessment indicates impairment, the impaired asset is written down to its fair value based on the best information available in accordance with SFAS 142, Goodwill and Other Intangible Assets. There were no impairments recorded for the year ended March 31, 2008.

Debt Issuance Costs—Debt issuance costs of $4.5 million are capitalized and are being amortized over the terms of the related loan agreements using the straight-line method. Accumulated amortization of the debt issuance costs was approximately $2.7 million at March 31, 2008.

Impairment of Long-Lived Assets—The Company continually evaluates the carrying value of its long-lived assets for events or changes in circumstances which may indicate that the carrying value may not be recoverable in accordance with SFAS 144, Accounting for the Impairment or Disposal of Long-Lived Assets.

Income Taxes—The Company is treated as a flow-through entity for income tax purposes and, therefore, the Company’s taxable income is included in the Members’ respective consolidated U.S. federal income tax returns. The Company is not allocated any current or deferred U.S. federal income expense (benefit) arising from the Company’s operations included in the Members’ results.

Self-Insurance Accruals—The Company is self-insured for expected losses under its workers compensation and automobile liability programs. Reserves recorded for workers compensation and automobile liability claims were $1,038,000 at March 31, 2008 based upon estimates of the ultimate costs to settle incurred claims, both reported and unreported.

Accounting Estimates—The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Recent Accounting Pronouncements—In September, 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 157, Fair Value Measurements. This Statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (“GAAP”), and expands disclosures about fair value measurements. In developing this standard, the FASB considered the need for increased consistency and comparability in fair value measurements and for expanded disclosures about fair value measurements. The definition of fair value is the price that would be received to sell an asset or paid to transfer a liability in an

F-170

Five Rivers Ranch Cattle Feeding LLC

Notes to financial statements

orderly transaction between market participants at the measurement date (exit price.) The emphasis on fair value is that it is a market-based measurement, and the statement clarifies that market participant assumptions include assumptions about risk, therefore, a measurement that does not include an adjustment for risk would not represent a fair value measurement if market participants would include one in pricing the related asset or liability. The guidance in this statement applies to derivatives and other financial instruments measured at fair value under Statement 133 at initial recognition and in all subsequent periods. This Statement is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. FASB Staff Position No. FAS 157-2, Effective Date of FASB Statement No. 157, issued in February 2008, defers the effective date of SFAS No. 157 for one year for certain nonfinancial assets and nonfinancial liabilities measured at fair value, except those that are recognized or disclosed at fair value in the financial statements on a regular basis. The Company is currently evaluating the effect that these Statements will have on the Company’s financial statements.

In February 2007 the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities. This Statement permits entities to choose to measure many financial instruments and certain other items at fair value with the associated unrealized gain/loss in earnings. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related financial assets and liabilities differently without having to apply complex hedge accounting provisions. This Statement is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. The Company is currently evaluating the effect that this Statement will have on the Company’s financial statements.

In March 2008, the FASB issued Statement No. 161, Disclosure about Derivative Instruments and Hedging Activities—an amendment to FASB Statement No. 133 (“SFAS 161”). The adoption of SFAS 161 is not expected to have an impact on the Company’s consolidated financial statements, other than additional disclosures. SFAS 161 expands annual disclosures about derivative and hedging activities that are intended to better convey the purpose of derivative use and the risks managed. SFAS 161 is effective for fiscal years and interim periods beginning after November 15, 2008.

In December 2007, the FASB issued Statement No. 160, Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51 (“SFAS 160”). As the Company owns 100% of its consolidated subsidiaries and it does not currently have any minority interests, the Company does not expect the adoption of SFAS 160 to have an impact on its consolidated financial statements. This statement amends ARB No. 51 and intends to improve the relevance, comparability, and transparency of the financial information that a reporting entity provides in its consolidated financial statements by establishing accounting and reporting standards of the portion of equity in a subsidiary not attributable, directly or indirectly, to a parent. SFAS 160 is effective for fiscal years beginning on or after December 15, 2008.

In December 2007, the FASB issued Statement No. 141R, Business Combinations (“SFAS 141R”). SFAS 141R may have an impact on the Company’s consolidated financial statements when

F-171

Five Rivers Ranch Cattle Feeding LLC

Notes to financial statements

effective, but the nature and magnitude of the specific effects will depend upon the nature, terms and size of the acquisitions the Company consummates after the effective date. SFAS 141R establishes principles and requirements for how the acquirer of a business recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree. The statement also provides guidance for recognizing and measuring the goodwill acquired in business combinations and determines what information to disclose to enable users of the financial statement to evaluate the nature and financial effects of the business combination. SFAS 141R is effective for financial statements issued for fiscal years beginning after December 15, 2008.

In June 2006, the FASB issued FASB Interpretation No. 48 (FIN 48), Accounting for Uncertainty in Income Taxes. FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with FASB Statement No. 109, Accounting for Income Taxes. FIN 48 requires the evaluation of tax positions taken by the Company to determine whether it is “more-likely-than-not” that those tax positions will be ultimately sustained. A tax liability and expense must be recorded in respect of any tax position that, in Management’s judgment, will not be fully realized. In February 2008 the FASB issued FASB Staff Position No. FIN 48-2 which deferred the effective date for certain non-public enterprises to fiscal years beginning after December 31, 2007. The Company has evaluated the implications of FIN 48 and does not currently anticipate any impact to the Company’s financial statements. The Company will continue to monitor the Company’s tax positions prospectively for potential future impacts

3. Receivables

Receivables at March 31, 2008 were as follows (in thousands):


		2008

Trade		$13,584
Affiliates		3,152
Employee advances		82
Other		1

Total receivables		$16,819

4. Inventory

Inventory balances at March 31, 2008 were as follows (in thousands):


		2008

Livestock		$574,082
Silage		13,657
Feed		10,356
Medication and other		2,066

Total inventory		$600,161

F-172

Five Rivers Ranch Cattle Feeding LLC

Notes to financial statements

5. Accrued liabilities

Accrued liabilities at March 31, 2008 were as follows (in thousands):


		2008

Employee compensation, bonus, and benefits		$2,820
Reserve for workers compensation and automobile liability insurance		1,038
Interest		286
Other		1,053

Total		$5,197

6. Debt

On May 20, 2005, the Company entered into a $550 million revolving credit agreement (the “facility”) with a maturity date of May 20, 2010. During April 2006, the line of credit was reduced by $25 million as provided for in the credit agreement. At March 31, 2008, the Company was utilizing $395.3 million of the facility, and had an outstanding letter of credit of $1.5 million leaving $128.2 million in unused line of credit with $116.8 million available to be borrowed by the Company according to the terms of the credit agreement. Borrowings under the facility bear interest at variable rates based on LIBOR (4.45% at March 31, 2008). The Company’s policy is to pay down the outstanding principal balance of the line of credit and to borrow additional amounts to finance working capital requirements. Accordingly, the Company classifies the debt as a current liability in the balance sheet. The credit agreement is collateralized by certain fixed assets, accounts receivable and inventories of the Company. Among other requirements, the Facility requires the Company to maintain certain financial ratios, minimum levels of net worth, and establish limitations on certain types of payments, including dividends, investments, and capital expenditures. The Company is in compliance with all covenants.

7. Commitments and contingencies

Operating Leases—The Company utilizes buildings and equipment which are leased under operating lease agreements, extending through March 2013. The following is a schedule of the future minimum obligations under the operating leases that have initial or remaining non-cancelable lease terms in excess of one year at March 31, 2008 (in thousands):


Years Ending March 31

2009		$ 325
2010		261
2011		211
2012		211
2013		189
Thereafter		142

Total		$1,339

F-173

Five Rivers Ranch Cattle Feeding LLC

Notes to financial statements

Rent expense under all operating leases was approximately $1.4 million for the year ended March 31, 2008. The initial term of the Loveland office lease is seven years with one five-year extension. There is also a separate lease for 2,254 square feet of adjoining office space that is currently being occupied by Five Star Cattle Systems, a MF subsidiary. The lease allows for 3% annual escalations, and includes the tenant’s pro rata share of operating expenses.

Legal Matters—As of March 31, 2008 there were no pending legal matters against the Company, however, the Company is a party to a proceeding currently pending with the Colorado Ground Water Commission (“GWC”) in which Pioneer Irrigation District and others have requested a modification of the boundaries of a designated ground water basin in which the Yuma feedyard of the Company is located. This case is scheduled for a three-week hearing in front of the GWC’s hearing office beginning on June 2, 2008. If the petitioners fully prevail the Company would be required to supply water to the North Fork to replace the withdrawals of ground water from wells serving the Yuma feedyard, or cease withdrawals from those wells. Replacement water would have to be secured. It is not possible to estimate the amount of potential loss at this time.

Loss on Involuntary Conversion of Assets—During February 2008, the Company wrote off a loader that was destroyed by fire at the Grant County Feedyard. An involuntary conversion loss of approximately $109,000 was recognized.

During March 2007, the Company wrote off a retention pond after routine inspections revealed active seeps on three of the four embankments. A loss of approximately $434,000 was recognized and the engineering firm and all parties relevant to the construction of the pond were notified that we intend to build a new pond and hold them responsible for the costs. On April 22, 2008, the Company filed a complaint in the United States District Court for the District of Kansas against KLA Environmental Services, Inc. and Stoppel Dirt, Inc. seeking damages.

8. Related party transactions

On May 20, 2005, the Company entered into the Conti Services Agreement whereby the Company would be provided certain services by ContiGroup Companies, Inc. for $1 million annually. Expenses for the year ended March 31, 2008 were $450,000. The Company also feeds cattle for CPS. At March 31, 2008 approximately 37,000 head were on feed for CPS. There was an outstanding receivable due the Company from CPS of $2.9 million at March 31, 2008, and revenue recognized during the year ended March 31, 2008 was $59.3 million. The Company permits employees and their relatives to enter into feeding agreements at the individual feedyards, with the consent of the feedyard General Managers and with Executive Management approval. For the year ended March 31, 2008 this activity totaled $1.5 million.

9. Significant customers

Outside customers accounted for approximately 10% of the total cattle on feed at the Company’s feedyards, at March 31, 2008. CPS was the largest single customer accounting for the majority of customer cattle on feed at March 31, 2008. Company cattle are committed under marketing

F-174

Five Rivers Ranch Cattle Feeding LLC

Notes to financial statements

agreements to Swift and Company, Cargill Meat Solutions Corporation, and National Beef. During the year ended March 31, 2008, approximately 54% of company cattle were sold to Swift, 14% to Cargill, and 32% to National Beef.

10. Employee benefit plans

Defined Contribution Plans—Effective April 2006, the Company sponsored a defined contribution plan (401(k) Plan), administered by Vanguard. All employees may participate by contributing a portion of their annual earnings to the plan. The Company’s contributions are based on each participant’s level of contribution and cannot exceed the maximum allowable for tax purposes. Total contributions were approximately $571,000 for the year ended March 31, 2008.

Deferred Compensation Plans—The Company granted certain key members of Five Rivers’ management team participation in the Five Rivers Long-Term Incentive Plans, which covers the three years ending March 31, 2008, 2009 and 2010 (the 2008 Plan) and the three years ending March 31, 2007, 2008 and 2009 (the 2007 Plan). The performance measure for the plan is return on net assets (RONA), with a hurdle rate of 9% RONA and a target rate of 12.0% RONA. There is no cap for the bonus pool, but vesting occurs at a rate of 33.3% at the end of each fiscal year. The targets were not met for the 2007 plan, but the 2008 target was met, and there is an accrual of approximately $170,000 in long-term liabilities for this plan.

11. Derivative instruments and hedging activity

The Company is exposed to market risk, such as changes in commodity prices for its main raw materials—feeder cattle and corn, and its finished product—live cattle. The Company’s exposure to commodity price risk relates to raw material and finished product price fluctuations caused by supply conditions, weather, economic conditions, and other factors. To manage volatility associated with these exposures, the Company may enter into derivative transactions pursuant to established Company policies. Generally, the Company utilizes commodity futures and option contracts to reduce the volatility of commodity input prices on corn and feeder cattle and commodity prices on live cattle. Options are used to economically hedge a portion of the market risk, even though the Company has elected not to designate these positions as accounting hedges. The Company enters into futures and options transactions with established brokers.

The Company considers its use of derivative instruments to be an economic hedge against changing prices. At March 31, 2008 all open derivative contracts were recorded at fair value in accordance with SFAS No. 133. These contracts are recorded within current assets when the unrealized value is a gain and within current liabilities when the unrealized value is a loss. The Company designates contracts for the future purchase or sale of certain commodities as normal purchase normal sales and thus these contracts are not marked-to-market. The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk management objectives and strategies for undertaking the hedge transactions. The Company links all hedges to forecasted transactions and assesses whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in cash flows of hedged items, both at the inception of the hedge and on an ongoing basis.

F-175

Five Rivers Ranch Cattle Feeding LLC

Notes to financial statements

Trading Activities—During 2008 the Company had the following derivative activities, which while economic hedges, were not accounted for as hedges and whose gains or losses are reflected in “Other revenues” on the Statement of Operations:

•

Corn Purchases—As of March 31, 2008 the Company had open derivative contracts on 3.605 million bushels of corn to hedge or unwind pricing on future purchases at various feedyards. At March 31, 2008 these positions had a net unrealized loss of approximately $195,000. During the year ended March 31, 2008, the Company recorded $1.6 million in realized gains on these positions.

•

Feeder Cattle Purchases—As of March 31, 2008 the Company had open derivative contracts on 8.5 million pounds of feeder cattle to hedge purchases at various feedyards. At March 31, 2008 these positions carried an unrealized net gain of $168,000. During the year ended March 31, 2008 realized losses were approximately $295,000.

•

Live Cattle Sales—As of March 31, 2008 the Company had open derivative contracts on 230.92 million pounds of live cattle to hedge future sales at various feedyards. At March 31, 2008 these positions had net unrealized losses of approximately $4.8 million. During the year ended March 31, 2008, the Company recorded $14.9 million in realized gains on these positions.

•

Natural Gas Purchases—During the year ended March 31, 2008 there were no hedging activities relating to natural gas.

•

Soybean Meal Purchases—As of March 31, 2008 the Company had no open derivative contracts on soybean meal. Realized gains and losses during 2008 were immaterial.

Hedging Activities—During the year ended March 31, 2008 the Company had the following derivatives which were appropriately designated and accounted for as hedges:

•

Feeder Cattle Purchases—As of March 31, 2008, the Company had no open derivative contracts of feeder cattle. During the year ended March 31, 2008, the Company realized $1.9 million in losses on feeder cattle hedges. Of this, $2.0 million of losses have been recorded in cost of sales, and approximately $95,000 of gains have been recorded in other revenues due to ineffectiveness on these hedges.

•

Live Cattle Sales—As of March 31, 2008, the Company had open derivative contracts on 542.5 million pounds of live cattle to hedge future sales at various feedyards which are being accounted for as a cash flow hedge. These positions had an unrealized gain of $27.2 million which was recorded in AOCI. During the year ended March 31, 2008, the Company realized $37.4 million in gains on live cattle hedges. Of this, $1.9 million of gains are deferred in AOCI at year end, $29.1 million of gains have been recorded in cost of sales, and $6.4 million of gains have been recorded in other revenues due to ineffectiveness on these hedges.

At March 31, 2008 there was $29.1 million recorded within accumulated other comprehensive income for deferred hedging gains to be recognized in fiscal year 2009. These gains will be

F-176

Five Rivers Ranch Cattle Feeding LLC

Notes to financial statements

recorded as either effective or ineffective hedges as live cattle are marketed. The maximum length of time that the Company hedges its exposure to the variability in future cash flows is approximately 12 months.

12. Fair value of financial instruments

The fair value of the Company’s debt approximates market value as its line of credit bears interest at floating market rates based on LIBOR. Open derivative contracts are marked to market on a daily basis and are recorded in the balance sheet. For cash and cash equivalents, trade receivables, and accounts payable, the carrying amount is a reasonable estimate of fair value due to their term to maturity.

13. Gilcrest fire

On February 9, 2006, a fire occurred in the generator room which connects to the Motor Control Center for the Gilcrest Feedlot feed mill, which the Company has accounted for as an involuntary conversion. At March 31, 2007, approximately $1.2 million had been spent to replace and repair the capital assets destroyed by the fire, and the Company had received $500,000 in insurance proceeds. It is expected that the cost of all property damage will be recovered, less the $100,000 deductible. During 2007, an additional $1.0 million was spent for cleanup and to return the mill to operating capacity, including the costs of generator rental, fuel, installing new wiring, and hauling feed from the Kuner Feedlot. During 2008 the Company received a final settlement of $2.0 million in insurance proceeds.

* * * * * *

F-177

Smithfield Beef Group, Inc.

Condensed consolidated balance sheet

(Unaudited)

July 27, 2008

(dollars in thousands)


Assets
Current assets:
Cash	$ 99
Accounts receivable, less allowances of $2,139	117,836
Inventories	202,412
Deferred income taxes	6,233
Prepaid expenses and other current assets	10,079

Total current assets	336,659

Property, plant, and equipment, net	142,889
Investment in Five Rivers Ranch Cattle Feeding LLC	155,469
Investment in other joint ventures	1,186
Goodwill	115,921
Intangible assets	4,227
Other assets	5,948

	$762,299

Liabilities and stockholder’s equity
Current liabilities:
Accounts payable	$63,172
Accrued payroll and benefits	20,390
Other accrued liabilities	41,986
Current portion of long-term debt due third parties	1,009

Total current liabilities	126,557

Long-term debt due Smithfield Foods, Inc.	456,649
Long-term debt due third parties	734
Deferred income taxes	20,359
Other long-term liabilities	21,198

Commitments and contingencies

Stockholder’s equity:
Class A Common stock, $.01 par value, 15,000 shares authorized, 1,000 shares issued and outstanding	—
Additional paid-in capital	242,640
Accumulated deficit	(103,800	)
Accumulated other comprehensive loss	(2,038	)

Total stockholder’s equity	136,802

	$762,299

See accompanying notes.

F-178

Smithfield Beef Group, Inc.

Condensed consolidated statements of operations

(unaudited)

July 27, 2008

(dollars in thousands)


	Quarter ended
	July 27, 2008		July 29, 2007

Net sales	$819,717		$754,733
Cost of sales	763,734		735,259

Gross profit	55,983		19,474

Operating costs and expenses:
Selling, general and administrative expenses	20,165		15,387
Corporate service fees from Smithfield Foods, Inc.	4,531		3,111
Royalty fees to Smithfield Foods, Inc.	1,639		1,269

Total operating cost and expenses	26,335		19,767

Income (loss) from operations	29,648		(293	)

Other income (expense):
Interest income	89		206
Interest expense:
Smithfield Foods, Inc.	(9,784	)	(10,408	)
Third parties	(88	)	(206	)
Equity in income (loss) of Five Rivers Ranch Cattle Feeding LLC	(2,417	)	5,031
Equity in income of other joint ventures	130		396

Income (loss) before income taxes	17,578		(5,274	)
Provision (benefit) for income taxes	6,340		(1,970	)

Net income (loss)	$11,238		$(3,304	)

See accompanying notes.

F-179

Smithfield Beef Group, Inc.

Condensed consolidated statements of cash flows

(unaudited)

July 27, 2008

(dollars in thousands)


	Quarter ended
	July 27, 2008			July 29, 2007

Operating activities
Net income (loss)	$	11,238		$	(3,304	)
Adjustment to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		4,578			4,536
Gain on sale of equipment		—			(4	)
Equity in (income) loss of Five Rivers Ranch Cattle Feeding, LLC		2,417			(5,031	)
Equity in income of other joint ventures		(130	)		(396	)
Changes in operating assets and liabilities:
Accounts receivable		(7,082	)		(11,773	)
Inventories		32,523			49,113
Prepaid expenses and other current assets		235			1,650
Accounts payable		(6,879	)		(8,063	)
Accrued liabilities		14,073			10,881
Other noncurrent assets and liabilities		(203	)		40

Cash provided by operating activities		50,770			37,649

Investing activities
Additions to property, plant and equipment		(3,601	)		(2,992	)
Proceeds from sale of property, plant and equipment		—			90
Other		206			13

Cash used in investing activities		(3,395	)		(2,889	)

Financing activities
Net payments under debt agreement with Smithfield Foods, Inc.		(47,092	)		(36,231	)
Payments on debt due third parties		(240	)		(215	)

Cash used in financing activities		(47,332	)		(36,446	)


Increase (decrease) in cash		43			(1,686	)
Cash at beginning of period		56			5,000

Cash at end of period	$	99		$	3,314


Supplemental disclosures of cash flow information
Cash paid for interest to third parties	$	46		$	70

See accompanying notes.

F-180

Smithfield Beef Group, Inc.

Notes to condensed consolidated financial statements

(Unaudited)

July 27, 2008

1. Description of the business

Basis of presentation

Sale of the company

The unaudited condensed consolidated financial statements of the Company included herein have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulation, although the Company believes that the disclosures are adequate to make the information presented not misleading. In the opinion of management, the condensed consolidated financial statements include all adjustments (consisting only of normal recurring adjustments) necessary for a fair statement of the results of operations for the interim periods. It is suggested that these condensed consolidated financial statements be read in conjunction with the audited consolidated financial statements of the Company, including the notes thereto for the year ended April 27, 2008, included elsewhere in this filing. The Company’s financial information included herein is not necessarily indicative of the financial position, results of operations and cash flows of the Company that may be expected in the future.

Principles of consolidation

The condensed consolidated financial statements include all wholly-owned subsidiaries. The Company’s investments in Five Rivers, Five Star Cattle Solutions, LLC and Mountain View Rendering Co. LLC are accounted for under the equity method. The Company has a 50% ownership in each of these entities. All intercompany transactions and balances have been eliminated.

F-181

Smithfield Beef Group, Inc.

Notes to condensed consolidated financial statements

The Company’s fiscal year consists of 52 or 53 weeks, ending on the Sunday nearest April 30th. The quarters ended July 27, 2008 and July 29, 2007, each consisted of 13 weeks.

2. Other comprehensive loss

Other comprehensive loss includes the net income or loss of the Company plus the Company’s proportionate share of the fair value of derivative financial instruments entered into by Five Rivers, which are accounted for under hedge accounting. Other comprehensive income (loss) totaled $11.6 million and $(10.6) million for the quarters ended at July 27, 2008 and July 29, 2007, respectively.

3. Inventories

The components of inventories at July 27, 2008, net of reserves of $1.4 million, are as follows (in thousands):


Live cattle		$106,751
Product inventories:
Fresh and packaged meats		62,935
Carcass inventory		14,679
Manufacturing supplies		14,728
Other		3,319

		$202,412

F-182

Smithfield Beef Group, Inc.

Notes to condensed consolidated financial statements

4. Property, plant and equipment, net

Property, plant and equipment, net consist of the following at July 27, 2008 (in thousands):


Land	$ 13,946
Buildings and improvements	72,725
Machinery and equipment	146,400
Automobiles and trucks	5,784
Furniture and fixtures	3,581
Computer hardware	2,835
Leasehold improvements	176
Construction in progress	15,796

	261,243
Accumulated depreciation	(118,354	)

	$ 142,889

The sale of the Smithfield Beef Group, as discussed in Note 1, excluded certain land and land improvements that totaled $9.6 million at July 27, 2008.

5. Investment in Five Rivers

Five Rivers meets the definition of a significant subsidiary (per Regulation S-X) with respect to the Company. Condensed statements of operations for Five Rivers are presented below:


	Quarter Ended
	June 30, 2008		June 30, 2007

Net sales	$363,688		$304,100
Cost and expenses	380,263		288,339
Operating income (loss)	(16,575	)	15,761
Net income (loss)	(20,933	)	9,479

F-183

Smithfield Beef Group, Inc.

Notes to condensed consolidated financial statements

6. Other assets

Other assets consists of the following at July 27, 2008 (in thousands):


Other assets:
Aircraft		$2,032
Deposit		725
Tax benefit related to uncertain tax positions		2,156
Computer software		285
Other noncurrent assets		750

		$5,948

7. Long-term debt

Long-term debt consists of the following at July 27, 2008 (in thousands):


Long-term debt due Smithfield Foods Inc.:
Debt due Smithfield Foods, Inc.	$	257,224
Term notes due SFFC, Inc.		199,425

	$	456,649


Other long-term debt due third parties:
Note payable	$	751
Other		992

		1,743
Less current portion		1,009


	$	734

The Company had a lending arrangement with Smithfield Foods, Inc. under which Smithfield Foods, Inc. finances the working capital needs of the Company. Amounts outstanding under the facility bore interest at rates ranging between 4.2% and 7% as of July 27, 2008. The lending arrangement did not have a stated maturity date nor did it contain any financial covenants. The debt with Smithfield Foods, Inc. has been classified as long term based on the intent of Smithfield Foods, Inc. for these amounts not to be repaid in the next fiscal year.

In connection with the purchase of Murco Inc., now known as JBS Plainwell, Inc., the Company issued a note payable (Note) to the former owner for $13.3 million. Principal and interest payments under the Note are due weekly, decreasing from $30,000 to $20,000 over the life of the Note. As the Note does not bear interest, the Company discounted the estimated future cash flows under the Note and adjusted the carrying value of the Note to $8.2 million at the purchase date, which approximated the fair value of the Note. The effective interest rate on the Note is 10% and the Note matures May 12, 2009.

F-184

Smithfield Beef Group, Inc.

Notes to condensed consolidated financial statements

8. Income taxes

The provision (benefit) for income taxes for the fiscal quarters ended July 27, 2008 and July 29, 2007, are based on an estimated income tax rate for the respective full fiscal year. The estimated annual effective income tax rate is determined excluding the effect of significant unusual items or items that are reported net of their related tax effects. The tax effect of significant unusual items is reflected in the period in which they occur.

A reconciliation of the beginning and ending liability for uncertain tax positions is as follows (in thousands):


Balance as of April 28, 2008		$4,226
Additions for tax positions taken in prior years		124

Balance as of July 27, 2008		$4,350

The Company operates in multiple taxing jurisdictions within the United States, and is subject to audits from various tax authorities. As of July 27, 2008, the liability for uncertain tax positions included $1.5 million of accrued interest. The Company recognized $49,000 and $66,000 of interest expense in tax expense during the quarters ended July 27, 2008 and July 29, 2007, respectively. As of July 27, 2008, the liability for uncertain tax positions included $3.7 million that, if recognized, would impact the effective tax rate.

9. Other accrued liabilities

Other accrued liabilities consist of the following at July 27, 2008 (in thousands):


Feed		$11,520
Derivative financial instruments		10,829
Self-insurance reserves		3,000
Utilities		2,739
Freight		2,434
Customer programs		1,220
Litigation-related matters		1,535
Property taxes		1,123
Legal and professional fees		623
Other		6,963

		$41,986

10. Related-party transactions

The Company has a trademark and license agreement with SF Investments, Inc. (a wholly owned subsidiary of Smithfield Foods, Inc.) for the right to use certain trademarks of Smithfield Foods, Inc. in connection with the sale of certain food products. The Company made royalty payments related to this agreement of $1.6 million and $1.3 million during the quarters ended July 27, 2008 and July 29, 2007, respectively.

F-185

Smithfield Beef Group, Inc.

Notes to condensed consolidated financial statements

Through an informal agreement with its parent, Smithfield Foods, Inc., the Company was provided certain administrative services by Smithfield Foods, Inc. Under this arrangement, the Company was charged $4.5 million and $3.1 million during the quarters ended July 27, 2008 and July 29, 2007, respectively.

11. Regulations and litigation

12. Fair value measurements

The Company adopted Statement of Financial Accounting Standards (SFAS) No. 157, Fair Value Measurements, on April 28, 2008. SFAS No. 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. SFAS No. 157 establishes a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. The fair value hierarchy gives the highest priority to quoted market prices (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of inputs used to measure fair value are as follows:

•

Level 1—Quoted prices in active markets for identical assets or liabilities accessible by the reporting entity.

•

Level 2—Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

F-186

Smithfield Beef Group, Inc.

Notes to condensed consolidated financial statements

•

Level 3—Unobservable for an asset or liability. Unobservable inputs should only be used to the extent observable inputs are not available.

The Company’s derivative financial instruments as of July 27, 2008, were measured at fair value based on Level 1 inputs.

F-187

Five Rivers Ranch Cattle Feeding LLC

Balance sheets

(in thousands)


	(Unaudited)
	September 30, 2008			March 31, 2008


Assets

Current assets
Cash	$	4		$	3
Accounts receivable		13,612			16,819
Inventories		631,885			600,161
Prepaid expenses		2,986			2,470
Derivative financial instruments		13,951			27,792

Total current assets		662,438			647,245

Property, plant and equipment, net		88,875			88,339
Water rights		12,144			12,144
Deferred financing costs, net		3,359			2,291
Other investments		1,695			1,162

Total assets	$	768,511		$	751,181


Liabilities and Members’ Equity

Current liabilities
Note payable	$	444,100		$	395,300
Borrowings on margin accounts		7,154			10,012
Bank overdraft		18,935			11,171
Accounts payable		20,791			9,156
Accrued expenses		4,502			5,197
Derivative financial instruments		3,310			5,406

Total current liabilities		498,792			436,242
Deferred compensation		170			170

Total liabilities		498,962			436,412


Commitments

Members’ equity
Members’ equity		274,416			274,416
Retained earnings (accumulated deficit)		(21,700	)		11,249
Accumulated other comprehensive income		16,833			29,104

Total members’ equity		269,549			314,769

Total liabilities and members’ equity	$	768,511		$	751,181

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

F-188

Five Rivers Ranch Cattle Feeding LLC

Statements of operations

(in thousands)


	(Unaudited) Six Months Ended September 30,
	2008		2007

Revenues	$850,947		$769,843
Cost of revenues	864,019		718,588

Gross profit (loss)	(13,072	)	51,255


Operating expenses
Selling, general and administrative expenses	6,762		7,289
Depreciation and amortization expense	4,607		4,292

Total operating expenses	11,369		11,581

Income (loss) from operations	(24,441	)	39,674


Other income (expenses)
Interest income	161		479
Earnings from unconsolidated affiliate	65		142
Other income	117		1,916
Interest expense	(8,851	)	(15,428	)

Total other expense, net	(8,508	)	(12,891	)

Net income (loss)	$ (32,949	)	$ 26,783

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

F-189

Five Rivers Ranch Cattle Feeding LLC

Statements of members’ equity

Six months ended September 30, 2008 and 2007

(Unaudited)

(in thousands)


	Members’ Equity	Retained Earnings (Accumulated Deficit)		Accumulated Other Comprehensive Income (Loss)		Total


Six months ended September 30, 2007
Balance, March 31, 2007	$274,416	$(26,208	)	$(8,634	)	$239,574


Comprehensive income:
Net income	—	26,783		—		26,783
Net gain on cash flow hedges	—	—		(9,870	)	(9,870	)
Reclassification adjustment for losses included in net income	—	—		8,634		8,634

Comprehensive income						25,547

Balance, September 30, 2007	$274,416	$575		$(9,870	)	$265,121


Six months ended September 30, 2008
Balance, March 31, 2008	$274,416	$11,249		$29,104		$314,769


Comprehensive loss:
Net loss	—	(32,949	)	—		(32,949	)
Net gain on cash flow hedges	—	—		16,833		16,833
Reclassification adjustment for gains included in net loss	—	—		(29,104	)	(29,104	)

Comprehensive loss						(45,220	)

Balance, September 30, 2008	$274,416	$(21,700	)	$16,833		$269,549

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

F-190

Five Rivers Ranch Cattle Feeding LLC

Statements of cash flows

(in thousands)


	(Unaudited) Six Months Ended September 30,
	2008			2007

Cash flows from operating activities:
Net income (loss)	$	(32,949	)	$	26,783
Adjustments to reconcile net income (loss) to net cash used by operating activities:
Depreciation and amortization		4,607			4,292
Amortization of deferred financing costs		455			455
Equity in earnings of unconsolidated affiliate		(65	)		(142	)
Change in derivative fair value		(526	)		(10,122	)
Change in operating assets and liabilities:
Accounts receivable		3,207			(3,847	)
Inventories		(31,724	)		(140,759	)
Prepaid expenses		(450	)		(1,194	)
Other assets		—			250
Accounts payable		10,939			20,343

Net cash used in operating activities		(46,506	)		(103,941	)

Cash flows from investing activity:
Purchase of property, plant and equipment		(5,199	)		(7,561	)
Investment in Southfork Solutions, Inc.		(100	)		(120	)

Net cash used in investing activities		(5,299	)		(7,681	)

Cash flows from financing activities:
Capitalized debt fees		(1,903	)		—
Bank overdraft		7,764			12,018
Proceeds from note payable, net		48,800			99,600
Borrowings on margin account, net		(2,858	)		—

Net cash provided by investing activities		51,803			111,618

Decrease in cash		(2	)		(4	)
Cash at beginning of period		6			6

Cash at end of period	$	4		$	2

Cash paid for interest	$	8,429		$	11,086

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

F-191

Five Rivers Ranch Cattle Feeding LLC

Unaudited notes to financial statements

1. Organization and nature of operation

Five Rivers Ranch Cattle Feeding LLC (“the Company”) is a limited liability company organized on May 20, 2005, in the state of Delaware. The Company is a 50/50 joint venture between ContiBeef LLC (“ContiBeef”) and MF Cattle Feeding, Inc. (“MF”) (the “Members”). The Members exercise joint control over the Company. ContiBeef is a wholly-owned subsidiary of Continental Grain Company, and MF is a wholly-owned subsidiary of Cattle Production Systems, Inc. whose parent company is Smithfield Beef Group, Inc. (“Smithfield Beef”), which is a wholly-owned subsidiary of Smithfield Foods, Inc. On May 20, 2005, the operating assets and certain liabilities of ContiBeef and MF were transferred to the Company at net book value in exchange for equity interests in the Company.

The Company was engaged in raising feeder cattle for itself and for outside customers, and then ultimately selling the cattle to meat packing companies (“packers”). Feedlot operations are located in Idaho, Texas, Colorado, Kansas, and Oklahoma.

2. Summary of significant accounting policies

Interim Periods and Basis of Presentation—The Company’s fiscal year-end is on March 31^st. The information included in these financial statements reflects all adjustments which are, in the opinion of management, necessary for a fair presentation of the Company’s financial position and results of operations for the interim periods presented. Balance sheet amounts are as of September 30, 2008 and March 31, 2008 and operating result amounts are for the six months ended September 30, 2008 and 2007, and include all normal and recurring adjustments that we considered necessary for the fair summarized presentation of our financial position and operating results. Revenues, expenses, assets and liabilities can vary during each quarter of the year. Therefore, the results and trends in these interim financial statements may not necessarily be indicative of the operating results for the full fiscal year.

Accounts Receivable—Accounts receivable are primarily from feedlot customers for their share of feed, medicine, and other supplies for the care of those cattle and billed to the feedlot customer every month. Based on past history and the ability to collect final feed bills from the packers upon shipment of the finished cattle, the Company has no history of bad debt. Accordingly, at September 30, 2008 and March 31, 2008, an allowance for doubtful accounts was not required.

Inventories—Inventories of livestock, feed, silage, processing supplies, and medication are stated at the lower of cost (first-in, first-out or “FIFO”) or market. Farm inventory is stated a lower of cost (FIFO) or market and includes seeds and other costs related to the production of the next season’s crops. Parts, medication and other inventories are stated at average cost.

Property, Plant and Equipment—Property, plant and equipment was stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of 25 years for farm buildings, 10 to 30 years for land improvements and buildings, and 2 to 12 years for machinery, equipment, furniture, and purchased software. Maintenance and repairs are expensed as incurred, while betterments and expenditures that materially improve or extend the life of an asset are capitalized. Upon retirement or sale of an asset, its cost and related accumulated

F-192

Five Rivers Ranch Cattle Feeding LLC

Unaudited notes to financial statements

depreciation are removed from the respective asset account and any resulting gain or loss is reflected in the statement of operations in the period realized. The costs of developing internal-use software are capitalized and amortized when placed in service over the expected useful life of the software. Major renewals and improvements that extend the useful life of the asset are capitalized while maintenance and repairs are expensed as incurred. The Company has historically and currently accounts for planned major maintenance activities as they are incurred in accordance with the guidance in the Financial Accounting Standards Board (“FASB”) FASB Staff Position (“FSP”) AUG Air-1: “Accounting for Planned Major Maintenance Activities.” The applicable interest charges incurred during the construction of assets if material are capitalized. In accordance with Statement of Financial Accounting Standard (“SFAS”) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” the Company assesses the recoverability of long-lived assets whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. When future undiscounted cash flows of assets are estimated to be insufficient to recover their related carrying value, the Company compares the asset’s estimated future cash flows, discounted to present value using a risk-adjusted discount rate, to its current carrying value and records a provision for impairment as appropriate.

Depreciation and amortization expense for the six months ended September 30, 2008 and September 30, 2007 totaled $4.6 million and $4.3 million, respectively.

Deferred Financing Costs—Debt financing costs totaling $4.5 million were capitalized and are being amortized over the terms of the related loan agreements using the straight-line method. Accumulated amortization of the debt financing costs was $3.1 million at September 30, 2008 and $2.7 million at March 31, 2008, respectively.

Bank Overdraft—The majority of the Company’s bank accounts are zero balance accounts where cash needs are funded as checks are presented for payment by the holder. Checks issued pending clearance that result in overdraft balances for accounting purposes are included in the change in the related balance and are reflected as a financing activity on the statement of cash flows.

Self-Insurance Accruals—The Company is self-insured for employee medical and dental benefits and purchases insurance policies with deductibles for certain losses relating to worker’s compensation and general liability. The Company has purchased stop-loss coverage in order to limit its exposure to any significant levels of certain claims. Self-insured losses are accrued based upon periodic third party actuarial reports of the aggregate uninsured claims incurred using actuarial assumptions accepted in the insurance industry and the Company’s historical experience rates. The Company has recorded a prepaid asset with an offsetting liability to reflect the amounts estimated as due for claims incurred and accrued but not yet paid to the claimant by the third party insurance company in accordance with SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities.”

Derivatives and Hedging Activities—The Company accounts for its derivatives and hedging activities in accordance with SFAS No. 133, “Accounting for Derivative Financial Instruments and Hedging Activities,” (“SFAS No. 133”), and its related amendment, SFAS No. 138, “Accounting for Certain Derivative Instruments and Certain Hedging Activities.” The Company uses derivatives

F-193

Five Rivers Ranch Cattle Feeding LLC

Unaudited notes to financial statements

(e.g., futures and options) for the purpose of mitigating exposure to changes in commodity prices. The fair value of each derivative is recognized in the balance sheet within current assets or current liabilities. Changes in the fair value of derivatives are recognized immediately in the statements of operations.

Income Taxes—The Company is treated as a flow-through entity for income tax purposes and, therefore, the Company’s taxable income is included in the Members’ respective consolidated U.S. federal income tax returns. The Company is not allocated any current or deferred U.S. federal income expense (benefit) arising from the Company’s operations included in the Members’ results.

Revenue Recognition—The Company sells live cattle to packers located primarily in the Plains states. Revenue is generally recognized when live cattle are shipped to customers, based on terms as set forth by The Packers and Stockyards Act of 1921. The Company records transactions based on lot by lot accounting, generally recognizing revenue as cattle are shipped or on delivery depending on the terms of the sale, and will adjust revenues to reflect the results of the grading process as reported to the Company by the packer. The risk of loss transfers to the packer upon shipment, unless the Company has hired the transporter for shipment, in which case risk of loss transfers at delivery. Hotel revenue charged to customers for cattle feeding and care is recognized on a daily basis and is recorded in feedlot sales in the statements of operations. Animal feed supplement sold to third parties is recognized when the product is delivered and is recorded in feedlot sales in the statement of operations.

Advertising Costs—Advertising costs are expensed as incurred. Advertising costs were $67 thousand and $99 thousand for the six months ended September 30, 2008 and 2007, respectively.

Use of Estimates—The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America, requires the Company to make estimates and assumptions that affect certain reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. In preparing these financial statements, the Company has made its best estimates and judgments of certain amounts included in the financial statements, giving due consideration to materiality. Changes in the estimates and assumptions used by the Company could have significant impact on the Company’s financial results. Actual results could differ from those estimates. Significant estimates with regard to these financial statements include the estimate of asset useful lives and insurance accruals.

Concentration of Business and Credit Risk—Substantially all of the Company’s business is on a credit basis. The Company extends credit to cattle feeding customers based on the fact that cattle are held in our feedyards, shipped directly to packers, and the packers will deduct final feedbills from any proceeds due to the customer. The demand for the Company’s product and service is dependent upon the general economy, cost of feeder cattle, live cattle, corn and other feedstocks, weather, and other factors that may affect the pricing of food commodities.

F-194

Five Rivers Ranch Cattle Feeding LLC

Unaudited notes to financial statements

Fair Value of Financial Instruments—The carrying amounts of the Company’s financial instruments, including cash, trade receivables, and payables, approximate their fair values due to the short-term nature of the instruments. The fair value of the Company’s debt approximates market value as its line of credit bears interest at floating market rates based on LIBOR. Open derivative contracts are traded on the Chicago Mercantile Exchange and are marked to market on a daily basis and are recorded in the balance sheet.

Recent Accounting Pronouncements—In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities.” SFAS No. 161 provides for enhanced disclosures about the use of derivatives and their impact on a Company’s financial position and results of operations. This statement is effective for the Company’s fiscal year 2009. The Company does not expect the adoption of SFAS No. 161 to have a material impact on its financial position, results of operations, or cash flows.

In December 2007, the FASB issued SFAS No. 141(R) “Business Combinations.” SFAS No. 141(R) requires the acquiring entity in a business combination to recognize all assets acquired and liabilities assumed in the transaction and any non-controlling interest in the acquiree at the acquisition date, measured at fair value at that date. This includes the measurement of the acquirer’s shares issued as consideration in a business combination, the recognition of contingent consideration, the accounting for pre-acquisition gains and loss contingencies, the recognition of capitalized in–process research and development, the accounting for acquisition related restructuring cost accruals, the treatment of acquisition related transaction costs and the recognition of changes in the acquirer’s income tax valuation allowance and deferred taxes. One significant change in this statement is the requirement to expense direct costs of the transaction, which under existing standards are included in the purchase price of the acquired company. This statement also established disclosure requirements to enable the evaluation of the nature and financial effect of the business combination. SFAS No. 141(R) is effective for business combinations consummated after December 31, 2008. The statement also requires that any adjustments to uncertain tax positions from business combinations consummated prior to December 31, 2008 no longer be recorded as an adjustment to goodwill, but be reported in income.

3. Accounts receivable

Accounts receivable at September 30, 2008 and March 31, 2008, were as follows (in thousands):


	September 30, 2008	March 31, 2008

Trade	$13,547	$16,736
Employee advances	65	83

Total accounts receivables	$13,612	$16,819

F-195

Five Rivers Ranch Cattle Feeding LLC

Unaudited notes to financial statements

4. Inventories

Inventory balances at September 30, 2008 and March 31, 2008, were as follows (in thousands):


	September 30, 2008	March 31, 2008

Livestock	$591,972	$574,082
Silage	20,415	13,657
Planting seeds and supplies	444	365
Parts	740	718
Feed	17,032	10,356
Medication and other	1,282	983

Total inventory	$631,885	$600,161

5. Property, plant and equipment

Property, plant and equipment at September 30, 2008 and March 31, 2008 were as follows (in thousands):


	September 30, 2008		March 31, 2008

Land and improvements	$66,995		$65,580
Buildings	9,045		8,898
Machinery, equipment and fixtures	35,878		33,348
Capitalized software	636		636
Construction-in-progress	2,888		2,009


	115,442		110,471
Accumulated depreciation	(26,567	)	(22,132	)

Total property and equipment, net	$88,875		$88,339

6. Water rights

The Company has recorded intangible assets in the form of water rights with indefinite lives at the Kuner and Gilcrest feedlots. This intangible asset is recorded at its carryover basis of $12.1 million. The Company’s annual impairment testing date coincides with its fiscal year-end. If an assessment indicates impairment, the impaired asset is written down to its fair value based on the best information available in accordance with SFAS 142, “Goodwill and Other Intangible Assets.” There were no impairments recorded as of September 30, 2008 and March 31, 2008.

F-196

Five Rivers Ranch Cattle Feeding LLC

Unaudited notes to financial statements

7. Other investments

Investments at September 30, 2008 and March 31, 2008 are as follows (in thousands):


	September 30, 2008	March 31, 2008

50% interest—Northern Colorado Feed, LLC	$1,085	$1,033
500,000 common shares—Southfork Solutions, Inc.	600	500
Membership	10	10

Total other investments	$1,695	$1,543

Northern Colorado Feed, LLC—The Company owns a 50% interest in Northern Colorado Feed, LLC, which is an unconsolidated affiliate accounted for under the equity method. Investments in entities in which we lack control but have the ability to exercise significant influence over operating and financial policies are accounted for on the equity method. Under the equity method, the investment, originally recorded at cost, (fair value at date of acquisition) is adjusted to recognize our share of the net earnings or losses of the affiliate as they occur. The Company’s share of earnings in the investment for the six months ended September 30, 2008 and 2007 totaled $67 thousand and $142 thousand, respectively.

Southfork Solutions, Inc.—The Company considers their investment in Southfork Solutions available-for-sale as defined in SFAS No. 115. “Accounting for Certain Investments in Debt and Equity Securities.” Accordingly, this investment is considered an available for sale security recorded at fair value. Fair value was estimated using valuation methodologies based on available and observable market information. Such valuation methodologies include reviewing the value ascribed to the most recent financing proposal by Southfork Solutions and reviewing their underlying financial performance. Southfork Solutions is a privately held company that is developing technology for animal identification and tracking purposes.

Membership—The Company has a membership with Feeders’ Advantage LLC, a Idaho limited liability corporation which is 50% owned by MWI Veterinary Supply Co., a wholly owned subsidiary of MWI Veterinary Supply, Inc. The remaining 50% is owned by various members, each paying $10 thousand for membership. As a requirement of membership, each member is required to purchase all of its veterinary supplies from MWI Veterinary Supply.

8. Accrued liabilities

Accrued liabilities at September 30, 2008 and March 31, 2008, were as follows (in thousands):


	September 30, 2008	March 31, 2008

Employee compensation, bonus and benefits	$1,509	$2,820
Reserve for workers compensation and automobile liability insurance	1,441	1,038
Interest	—	286
Other	1,552	1,053

Total accrued liabilities	$4,502	$5,197

F-197

Five Rivers Ranch Cattle Feeding LLC

Unaudited notes to financial statements

9. Note payable

The Company entered into a $550 million revolving credit agreement (the “Facility”) with a maturity date of May 20, 2010. During April 2006, the line of credit was reduced by $25 million as provided for in the credit agreement. At September 30, 2008, the Company was utilizing $444.1 million of the Facility, and had an outstanding letter of credit of $1.5 million leaving $79.4 million in unused line of credit with $31.1 million available to be borrowed by the Company according to the terms of the credit agreement. At March 31, 2008, the Company was utilizing $395.3 million of the Facility, and had an outstanding letter of credit of approximately $1.5 million leaving $128.24 million in unused line of credit with $116.8 million available to be borrowed by the Company according to the terms of the credit agreement. Borrowings under the Facility bear interest at variable rates based on LIBOR. The Company’s policy is to pay down the outstanding principal balance of the line of credit and to borrow additional amounts to finance working capital requirements. Accordingly, the Company classifies the debt as a current liability in the balance sheet. The credit agreement is collateralized by certain fixed assets, accounts receivable and inventories of the Company. Among other requirements, the Facility requires the Company to maintain certain financial ratios, minimum levels of net worth, and establish limitations on certain types of payments, including dividends, investments, and capital expenditures. The Company is in compliance with all covenants.

10. Commitments

The Company utilizes in its operations buildings and equipment which are leased under operating lease agreements, extending through March 2013. The following is a schedule of the future minimum obligations under the operating leases that have initial or remaining non-cancelable lease terms in excess of one year at September 30, 2008 (in thousands):


Periods ending September 30		Amount

2008		$329
2009		218
2010		202
2011		206
2012		211
Thereafter		165

Total		$1,331

Rent expense under all operating leases was approximately $.7 million and $.7 million for the six months ended September 30, 2008 and 2007, respectively. The initial term of the Loveland office lease is seven years with one five-year extension. There is also a separate lease for 2,254 square feet of adjoining office space that is currently being occupied by Five Star Cattle Systems, a MF Cattle Feeding, Inc. subsidiary. The lease allows for 3% annual escalations, and includes the tenant’s pro rata share of operating expenses.

F-198

Five Rivers Ranch Cattle Feeding LLC

Unaudited notes to financial statements

11. Related party transactions

The Company has an agreement with ContiBeef whereby ContiBeef would provide certain services by ContiGroup Companies, Inc. for $1 million annually. Expenses for the six months ended September 30, 2008 and 2007 were $265 thousand and $390 thousand, respectively.

12. Significant customers

Outside customers accounted for 3% and 16% of the total cattle on feed at the Company’s feedyards for the six months ended September 30, 2008 and 2007, respectively.

13. Employee benefit plans

The Company sponsored a defined contribution plan 401(k) Plan, administered by The Vanguard Group. All employees may participate by contributing a portion of their annual earnings to the plan. The Company’s contributions are based on each participant’s level of contribution and cannot exceed the maximum allowable for tax purposes. Total contributions were approximately $105 thousand and $86 thousand for the six month period ended September 30, 2008 and 2007, respectively.

14. Derivative instruments and hedging activity

Options are used to economically hedge a portion of the market risk, even though the Company has elected not to designate these positions as accounting hedges. The Company enters into futures and options transactions with established brokers.

The Company considers its use of derivative instruments to be an economic hedge against changing prices. At September 30, 2008 and March 31, 2008, all open derivative contracts were recorded at fair value in accordance with SFAS No. 133. These contracts are recorded within current assets when the unrealized value is a gain and within current liabilities when the unrealized value is a loss. The Company designates contracts for the future purchase or sale of certain commodities as normal purchase normal sales and thus these contracts are not marked-to-market. The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk management objectives and strategies for undertaking the hedge transactions. The Company links all hedges to forecasted transactions and

F-199

Five Rivers Ranch Cattle Feeding LLC

Unaudited notes to financial statements

assesses whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in cash flows of hedged items, both at the inception of the hedge and on an ongoing basis.

Trading Activities—During the six months ended September 30, 2008 and 2007, the Company had the following derivative activities, which while economic hedges, were not accounted for as hedges and whose gains or losses are reflected in “Other revenues” on the Statements of Operations:

•

Corn Purchases—As of September 30, 2008 and 2007, the Company had open derivative contracts on 700 thousand and 11.5 million bushels of corn, respectively, to hedge or unwind pricing on future purchases at various feedyards. At September 30, 2008 and 2007, these positions had unrealized losses totaling $557 thousand and $224 thousand, respectively. During the six months ended September 30, 2008, the Company recorded $474 thousand in realized gains on these positions. During the six months ended September 30, 2007, the Company recorded $14 thousand in realized losses on these positions.

•

Feeder Cattle Purchases—As of September 30, 2008, the Company had open derivative contracts on 300,000 pounds of feeder cattle to hedge purchases at various feedyards which carried an unrealized loss of $8 thousand. At September 30, 2007, there were no open positions on feeder cattle that were not designated as accounting hedges, and realized losses totaling $418 thousand were recorded for the six months then ended.

•

Live Cattle Sales—As of September 30, 2008 and 2007, the Company had open derivative contracts on 220.4 million and 166.7 million pounds of live cattle, respectively, to hedge future sales at various feedyards. At September 30, 2008 and 2007, these positions had net unrealized losses totaling $2.3 million and $4.3 million, respectively. During the six months ended September 30, 2008 and 2007, the Company recorded realized gains on these positions of $10.8 million and $10.9 million, respectively.

•

Natural Gas Purchases—During the six months ended September 30, 2008, the Company recorded $23 thousand in unrealized losses on natural gas contracts to hedge future purchases at various feedyards. As of September 30, 2007, there were no open derivative contracts on natural gas.

•

Soybean Meal Purchases—During the six months ended September 30, 2007, the Company recorded $96 thousand in realized gains on soybean meal. There was no soybean meal derivative contracts traded for the period ended September 30, 2008.

Hedging Activities—During the six months ended September 30, 2008 and 2007, the Company had the following derivatives which were appropriately designated and accounted for as hedges:

•

Feeder Cattle Purchases—As of September 30, 2008 and 2007, the Company had no open derivative contracts on feeder cattle. For the six months ended September 30, 2007, the Company recorded $229 thousand in realized gains on feeder cattle hedges which have been recorded in other income due to ineffectiveness of these hedges.

F-200

Five Rivers Ranch Cattle Feeding LLC

Unaudited notes to financial statements

•

Live Cattle Sales—As of September 30, 2008, the Company had open derivative contracts on 164.6 million pounds of live cattle to hedge future sales at various feedyards which are being accounted for as cash flow hedges. These positions had unrealized gains totaling $13.5 million and realized gains totaling $3.3 million which were recorded in accumulated other comprehensive loss. During the six months ended September 30, 2008, the Company realized $13.0 million in losses on live cattle hedges. Of this, $3.7 million of losses have been recorded in cost of sales, and $9.3 million of losses have been recorded in other income due to ineffectiveness of these hedges.

As of September 30, 2007, the Company had open derivative contracts on 182 million pounds of live cattle to hedge future sales at various feedyards which were being accounted for as cash flow hedges. These positions had unrealized losses totaling $8.7 million and realized losses totaling $1.3 million which were recorded in accumulated other comprehensive income. During the six months ended September 30, 2007, the Company realized $3 million in gains on live cattle hedges. Of this, $600 thousand of gains have been recorded in cost of sales, and $2.4 million in gains have been recorded in other income due to ineffectiveness on these hedges.

15. Disclosures about fair value of financial instruments

The Company adopted SFAS No. 157, “Fair Value Measurements.” SFAS No. 157 defines fair value, establishes a framework for measuring fair value and requires additional disclosures about fair value measurements. The criterion that is set forth in this standard is applicable to the fair value measurement where it is permitted or required under other accounting pronouncements. SFAS No. 157 defines fair value as the exit price, which is the price that would be received to sell an asset or paid to transfer a liability in a transaction between market participants at the measurement date. SFAS No. 157 establishes a three-tier fair value hierarchy that prioritizes inputs to valuation techniques used for fair value measurement.

•

Level 1 consists of observable market data in an active market for identical assets or liabilities.

•

Level 2 consists of observable market data, other than that included in Level 1, that is either directly or indirectly observable.

•

In the case of multiple inputs being used in fair value measurement, the lowest level input that is significant to the fair value measurement represents the level in the fair value hierarchy in which the fair value measurement is reported. The adoption of SFAS No. 157 has not resulted in any significant changes to the methodologies used for fair value measurement. The Company uses derivatives for the purpose of mitigating exposure to market risk in commodity prices. The Company uses exchange-traded futures and options to hedge grain and natural gas commodities.

F-201

Five Rivers Ranch Cattle Feeding LLC

Unaudited notes to financial statements

The fair value of derivative assets and liabilities are reflected on the balance sheet totaling $13.9 million and $3.3 million, respectively. The fair value measurements are performed on a recurring basis and the level of the fair value hierarchy in which they fall are as follows at September 30, 2008 (in thousands):


Level 1		September 30, 2008


Assets:
Commodity derivatives—total fair value		$13,951


Liabilities:
Commodity derivatives—total fair value		$3,310

16. Subsequent events

On October 23, 2008, Smithfield Foods acquired from Continental Grain Company its 50% ownership interest in the Company and simultaneously on that date JBS USA, Inc. effectively acquired 100% ownership interest in the Company in a transaction accounted for as a purchase. The livestock inventory was retained by Smithfield Foods and Continental Grain Company. The nature of operations of the Company was modified so that in periods following the change of control, the Company will provide cattle feeding services only and will not sell cattle except on behalf of the cattle owners. As a result of this change, certain accounting policies including derivative trading activities were changed by the successor company.

F-202

shares

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Common stock

Prospectus


J.P.Morgan		BofA Merrill Lynch

, 2009

You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with information different from that contained in this prospectus. We are offering to sell, and seeking offers to buy, common stock only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of our common stock.

No action is being taken in any jurisdiction outside the United States and Brazil to permit a public offering of the common stock or possession or distribution of this prospectus in that jurisdiction. Persons who come into possession of this prospectus in jurisdictions outside the United States are required to inform themselves about and to observe any restrictions as to this offering and the distribution of this prospectus applicable to that jurisdiction.

Part II

Information not required in the prospectus

Item 13. Other expenses of issuance and distribution.

The following table sets forth the expenses (other than underwriting compensation expected to be incurred) in connection with this offering. All of such amounts (except the SEC registration fee and FINRA filing fee) are estimated.


SEC registration fee		$111,600
FINRA filing fee		75,500
NYSE listing fee		*
Printing and engraving expenses		*
Legal fees and expenses		*
Accounting fees and expenses		*
Blue Sky fees and expenses (including legal fees)		*
Transfer agent and registrar fees and expenses		*
Miscellaneous		*
Total		$ *

To be completed by amendment.

Item 14. Indemnification of directors and officers.

Upon completion of this offering, the Registrant’s amended and restated certificate of incorporation will contain provisions that eliminate, to the maximum extent permitted by the General Corporation Law of the State of Delaware, the personal liability of the Registrant’s directors and executive officers for monetary damages for breach of their fiduciary duties as directors or officers. The Registrant’s amended and restated certificate of incorporation and bylaws will provide that the Registrant must indemnify its directors and executive officers and may indemnify its employees and other agents to the fullest extent permitted by the General Corporation Law of the State of Delaware.

Sections 145 and 102(b)(7) of the General Corporation Law of the State of Delaware provide that a corporation may indemnify any person made a party to an action by reason of the fact that he or she was a director, executive officer, employee or agent of the corporation or is or was serving at the request of a corporation against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her in connection with such action if he or she acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful, except that, in the case of an action by or in right of the corporation, no indemnification may generally be made in respect of any claim as to which such person is adjudged to be liable to the corporation.

The Registrant has entered into indemnification agreements with its current directors and executive officers, in addition to the indemnification provided for in its amended and restated certificate of incorporation and bylaws, and intends to enter into indemnification agreements with any new directors and executive officers in the future.

The Registrant has purchased and intends to maintain insurance on behalf of each any person who is or was a director or officer of the Registrant against any loss arising from any claim

II-1

asserted against him or her and incurred by him or her in any such capacity, subject to certain exclusions.

The Underwriting Agreement (see Exhibit 1.1 hereto) provides for indemnification by the international underwriters of the Registrant, certain of its stockholders and its executive officers and directors, and by the Registrant of the underwriters, for certain liabilities, including liabilities arising under the Securities Act.

See also the undertakings set out in response to Item 17 herein.

Item 15. Recent sales of unregistered securities.

On April 27, 2009, in a transaction exempt from the registration requirements of the Securities Act of 1933, or the Securities Act, our wholly owned subsidiaries JBS USA, LLC and JBS USA Finance, Inc. issued 11.625% senior unsecured notes due 2014 in an aggregate principal amount of $700.0 million, which, after deducting initial purchaser discounts, commissions and expenses in respect of this offering, generated net proceeds of approximately $650.8 million. The notes were sold to several initial purchasers for whom J.P. Morgan Securities Inc. and Banc of America Securities LLC acted as representatives, and resold by the initial purchasers to qualified institutional buyers in reliance upon Rule 144A under the Securities Act and to persons outside the United States in reliance upon Regulation S of the Securities Act. The proceeds of the note issuance were used to repay $100.0 million of borrowings under our secured revolving credit facility and to repay $550.8 million of the outstanding principal and accrued interest on intercompany loans to us from a subsidiary of JBS S.A.

Item 16. Exhibits and financial statement schedules.

The following Exhibits are filed as part of this Registration Statement.

(a)

Exhibits:

The attached exhibit index is incorporated herein by reference.

(b)

Financial statement schedules.

None.

Item 17. Undertakings.

The undersigned Registrant hereby undertakes to provide to the underwriters at the closing specified in the international underwriting agreement certificates in such denominations and registered in such names as required by the international underwriters to permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the provisions described in Item 14 above, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful

II-2

defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

The undersigned Registrant hereby undertakes that:

(1)

For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

(2)

For purposes of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

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Signatures

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Greeley, State of Colorado, on July 22, 2009.



JBS USA HOLDINGS, INC.

By:		/s/ WESLEY MENDONÇA BATISTA
Name:		Wesley Mendonça Batista
Title:		Chief Executive Officer

Power of attorney

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Wesley Mendonça Batista, as his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign (1) any and all amendments to this Form S-1 (including post-effective amendments) and (2) any registration statement or post-effective amendment thereto to be filed with the Securities and Exchange Commission pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission and any other regulatory authority, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated:



Signature	Title	Date


/s/ WESLEY MENDONÇA BATISTA Wesley Mendonça Batista	President, Chief Executive Officer and Director (Principal Executive Officer)	July 22, 2009

/s/ ANDRÉ NOGUEIRA DE SOUZA André Nogueira de Souza	Chief Financial Officer (Principal Financial and Accounting Officer)	July 22, 2009

/s/ JOESLEY MENDONÇA BATISTA Joesley Mendonça Batista	Director	July 22, 2009

/s/ JOSÉ BATISTA JÚNIOR José Batista Júnior	Director	July 22, 2009

Exhibit index


Exhibit number		Exhibit title

1.1*		Form of Underwriting Agreement
3.1*		Certificate of Incorporation of the Registrant, as currently in effect
3.2*		Form of Amended and Restated Certificate of Incorporation of the Registrant, to be effective upon closing of the offering
3.3*		Bylaws of the Registrant, as currently in effect
3.4*		Form of Amended and Restated Bylaws of the Registrant, to be effective upon closing of the offering
4.1*		Specimen Common Stock Certificate of the Registrant
5.1*		Opinion of White & Case LLP
10.1.1		Indenture by and among JBS USA, LLC, JBS USA Finance, Inc., JBS USA Holdings, Inc., each of the other guarantors named therein, and The Bank of New York Mellon, dated April 27, 2009
10.1.2		Indenture by and between JBS S.A., JPMorgan Chase Bank, N.A., The Bank of Tokyo-Mitsubishi UFJ, Ltd. and J.P. Morgan Bank Luxembourg S.A., dated August 4, 2006
10.1.3		First Supplemental Indenture by and between JBS S.A., JBS Finance Ltd., Flora Produtos de Higiene e Limpeza Ltda., and The Bank of New York Mellon, dated January 31, 2007
10.1.4		Second Supplemental Indenture by and between JBS S.A., JBS Finance Ltd., the Registrant, and The Bank of New York Mellon, dated September 6, 2007
10.1.5		Third Supplemental Indenture by and between JBS S.A., JBS Finance Ltd., and The Bank of New York Mellon, dated August 14, 2008
10.1.6*		Revolving Loan Credit Agreement by and among JBS USA, LLC (formerly JBS USA, Inc.), the other credit parties signatories thereto, General Electric Capital Corporation, GE Capital Markets, Inc., Credit Suisse Securities (USA) LLC, Rabobank Nederland, JPMorgan Securities Inc. and JPMorgan Chase Bank, N.A., dated November 5, 2008
10.1.7*		Amendment No. 1 to Revolving Loan Credit Agreement, dated December 29, 2008
10.1.8*		Amendment No. 2 to Revolving Loan Credit Agreement, dated April 22, 2009
10.1.9*		Guaranty and Security Agreement by and among JBS USA, LLC (formerly JBS USA, Inc.), each other grantor party thereto and General Electric Capital Corporation, dated November 5, 2008
10.1.10*		Amended and Restated Credit Agreement by and among J&F Oklahoma Holdings Inc., Five Rivers Ranch Cattle Feeding, LLC, Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A. “Rabobank Nederland”, New York Branch, each of the banks or other lending institutions which is a signatory thereto, ING Capital LLC, Bank of America, N.A., US Bank National Association, and Wells Fargo Bank, National Association, dated October 7, 2008
10.1.11*		Second Amendment to Amended and Restated Credit Agreement by and among J&F Oklahoma Holdings Inc., Five Rivers Ranch Cattle Feeding LLC, each of the banks or other lending institutions which is a signatory thereto, and Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A. “Rabobank Nederland”, New York Branch, dated October 31, 2008


Exhibit number		Exhibit title

10.1.12*		Amended and Restated Security Agreement by and among J&F Oklahoma Holdings Inc., Five Rivers Ranch Cattle Feeding LLC, any subsidiary of J&F Oklahoma Holdings Inc. and/or Five Rivers Ranch Cattle Feeding LLC that may execute and deliver the Subsidiary Joinder Agreement, and Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A. “Rabobank Nederland”, New York Branch, dated October 7, 2008

10.1.13*		Consolidated, Amended and Restated Intercompany Loan Agreement dated April 27, 2009 by and between JBS HU Liquidity Management LLC and its Swiss branch, JBS HU Liquidity Management LLC Szombathely (HU) Zug Branch, and JBS USA Holdings, Inc.

10.1.14*		Corporate Offer Letter, by and among Swift Australia (Southern) Pty Limited (formerly Tasman Group Services Pty Ltd A.C.N., Baybrick Pty Ltd, JBS Southern Australia Pty Ltd, JBS Southern Holdco Pty Ltd and NAB, dated May 2, 2008

10.1.15*		AUD120,000,000 Facilities Agreement, by and among Swift Australia Pty Ltd, the guarantors specified therein and Australia and New Zealand Banking Group Limited, dated February 26, 2008

10.1.16*†		Raw Material Supply Agreement, by and between JBS USA Holdings, Inc. and Beef Products Inc., dated February 27, 2008

10.1.17*†		First Amendment to Raw Material Supply Agreement entered into between JBS USA Holdings, Inc. and Beef Products Inc. on February 27, 2008, dated October 20, 2008

10.1.18*		Amended and Restated Promissory Note issued by JBS USA Holdings, Inc. in favor of NBPCO Holdings, LLC, in the amount of US$173,191,457.37, dated December 18, 2008

10.1.19*		Cattle Purchase and Sale Agreement by and between JBS USA, LLC and J&F Oklahoma Holdings Inc., dated October 23, 2008

10.1.20*		Cattle Supply and Feeding Agreement by and between Five Rivers Ranch Cattle Feeding LLC and J&F Oklahoma Holdings Inc., dated October 23, 2008

10.1.21*		JBS USA Holdings, Inc. 2009 Stock Incentive Plan

15		Letter of BDO Seidman, LLP regarding unaudited interim financial information

21		List of subsidiaries of the Registrant

23.1		Consent of BDO Seidman, LLP

23.2		Consent of Grant Thornton LLP

23.3		Consent of Ernst & Young LLP

23.4		Consent of Deloitte & Touche LLP

23.5*		Consent of White & Case LLP (included in Exhibit 5.1)

24		Power(s) of attorney (included in the signature pages)

To be filed by amendment.

†

Portions of these documents are expected to be omitted pursuant to a request by the Registrant for confidential treatment.

Certain debt instruments of the Registrant and its subsidiaries have been omitted as exhibits because the amounts involved in such debt instruments are less than 10% of the Registrant’s total assets. Copies of debt instruments for which the related debt is less than 10% of the Registrant’s total assets will be furnished to the Commission upon request.