10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

FORM 10-Q

(MARK ONE)

(X)	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934
	For the quarterly period ended April 30, 2004

OR

(  )	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from                    to
	Commission file number 1-14977

Sanderson Farms, Inc.

(Exact name of registrant as specified in its charter)

Mississippi	64-0615843
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

225 North Thirteenth Avenue Laurel, Mississippi	39440
(Address of principal executive offices)	(Zip Code)

(601) 649-4030

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report.)

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

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

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:

     Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes (  ) No (  )

APPLICABLE ONLY TO CORPORATE ISSUERS:

     Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. Common Stock, $1 Per Share Par Value—19,845,370 shares outstanding as of April 30, 2004.

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INDEX

SANDERSON FARMS, INC. AND SUBSIDIARIES

 EX-3.7 BYLAWS OF THE REGISTRANT

 EX-10.1 AGREEMENT DATED 1/4/04

 EX-10.2 NINTH AMENDMENT DATED 5/18/04

 EX-15 ACCOUNTANTS LETTER

 EX-31.1 CERTIFICATION OF CEO

 EX-31.2 CERTIFICATION OF CFO

 EX-32.1 SECTIOIN 1350 CERTIFICATION

 EX-32.2 SECTION 1350 CERTIFICATION

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

SANDERSON FARMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	April 30,			October 31,
	2004			2003
	(Unaudited)			(Note 1)
	(In thousands)
Assets
Current assets:
Cash and cash equivalents	$	51,174		$	22,224
Accounts receivables, net		48,489			46,195
Inventories		76,544			61,753
Prepaid expenses		13,491			13,001
Total current assets		189,698			143,173
Property, plant and equipment		388,569			376,234
Less accumulated depreciation		(232,057	)		(221,010	)
		156,512			155,224
Other assets		2,034			508
Total assets	$	348,244		$	298,905
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued expenses	$	50,677		$	56,573
Current maturities of long- term debt		10,670			4,364
Total current liabilities		61,347			60,937
Long-term debt, less current maturities		15,178			21,604
Claims payable		2,600			2,600
Deferred income taxes		17,005			16,665
Stockholders’ equity:
Preferred Stock:
Series A Junior Participating Preferred Stock, $100 par value: authorized 500,000 shares; none issued
Par value to be determined by the Board of Directors: authorized 4,500,000 shares; none issued
Common Stock, $1 par value: authorized 100,000,000 shares; issued and outstanding shares - 19,845,370 and 13,013,876 at April 30, 2004 and October 31, 2003, respectively		19,845			13,014
Paid-in capital		3,278			1,949
Retained earnings		228,991			182,136
Total stockholders’ equity		252,114			197,099
Total liabilities and stockholders’ equity	$	348,244		$	298,905

See notes to condensed consolidated financial statements.

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SANDERSON FARMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

	Three Months Ended						Six Months Ended
	April 30,						April 30,
	2004			2003			2004			2003
	(In thousands, except per share data)
Net sales	$	272,710		$	201,184		$	499,151		$	385,372
Cost and expenses:
Cost of sales		203,495			172,803			387,293			340,396
Selling, general and administrative		14,243			7,059			25,503			14,250
		217,738			179,862			412,796			354,646
OPERATING INCOME		54,972			21,322			86,355			30,726
Other income (expense):
Interest income		50			12			95			26
Interest expense		(432	)		(694	)		(864	)		(1,432	)
Other		5			41			7			(37	)
		(377	)		(641	)		(762	)		(1,443	)
INCOME BEFORE INCOME TAXES		54,595			20,681			85,593			29,283
Income tax expense		21,158			7,865			33,170			11,130
NET INCOME	$	33,437		$	12,816		$	52,423		$	18,153
Earnings per share:
Basic	$	1.69		$	.66		$	2.67		$	.93
Diluted	$	1.67		$	.65		$	2.64		$	.92
Dividends per share	$	.08		$	.07		$	.16		$	.13
Weighted average shares outstanding:
Basic		19,753			19,413			19,655			19,464
Diluted		19,972			19,678			19,893			19,750

     See notes to condensed consolidated financial statements.

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SANDERSON FARMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Six Months Ended
	April 30,
	2004			2003
	(In thousands)
Operating activities
Net income	$	52,423		$	18,153
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		12,937			12,122
Tax benefit from exercise of stock options		2,834			0
Change in assets and liabilities:
Accounts receivable, net		(2,294	)		3,802
Inventories		(14,791	)		(4,232	)
Refundable income taxes		0			2,764
Other assets		(169	)		(8	)
Accounts payable and accrued expenses		(5,896	)		(6,649	)
Total adjustments		(7,379	)		7,799
Net cash provided by operating activities		45,044			25,952
Investing activities
Other investment		(1,597	)		0
Capital expenditures		(14,182	)		(18,131	)
Net proceeds from sales of property and equipment		47			408
Net cash used in investing activities		(15,732	)		(17,723	)
Financing activities
Principal payments on long-term debt		(120	)		(3,014	)
Net change in revolving credit		0			8,000
Purchase and retirement of common stock (900 shares in 2004 and 144,000 shares in 2003)		(33	)		(2,860	)
Net proceeds from common stock issued (272,768 shares in 2004 and 3,000 shares in 2003)		2,953			28
Dividends paid		(3,162	)		(2,589	)
Net cash used in financing activities		(362	)		(435	)
Net change in cash and cash equivalents		28,950			7,794
Cash and cash equivalents at beginning of period		22,224			9,542
Cash and cash equivalents at end of period	$	51,174		$	17,336

See notes to condensed consolidated financial statements.

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SANDERSON FARMS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

April 30, 2004

NOTE 1 — BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments consisting of normal recurring accruals considered necessary for a fair presentation have been included. Operating results for the three and six-month periods ended April 30, 2004 are not necessarily indicative of the results that may be expected for the year ending October 31, 2004.

The consolidated balance sheet at October 31, 2003 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. For further information, reference is made to the consolidated financial statements and footnotes thereto included in the Company’s annual report on Form 10-K for the year ended October 31, 2003.

NOTE 2—INVENTORIES

Inventories consisted of the following:

	April 30,		October 31,
	2004		2003
	(In thousands)
Live poultry-broilers and breeders	$	44,331	$	35,938
Feed, eggs and other		8,419		6,821
Processed poultry		13,673		8,939
Processed food		5,937		5,653
Packaging materials		4,184		4,402
	$	76,544	$	61,753

NOTE 3–-COST OF SALES

During the first quarter of fiscal 2004 and fiscal 2003, the Company recognized $287,000 and $6.2 million, respectively, from vendor settlements pertaining to overcharges for vitamins and methionine purchased by the Company over a number of years. During the second quarter of fiscal 2003, the Company recognized $6.0 million related to these same settlements. There were no recoveries during the second fiscal of 2004, and the Company believes such recoveries are complete. The settlements are reflected in the accompanying condensed consolidated financial statements as a reduction of cost of sales in the three-month period ending April 30, 2003 and six-month periods ending April 30, 2004 and 2003.

NOTE 4–STOCK SPLIT

On January 29, 2004, the Board of Directors declared a 3 for 2 stock split to be effected in the form of a 50% stock dividend. This dividend was paid February 26, 2004 to stockholders of record on February 10, 2004. Share and per share data in this report has been adjusted to reflect this stock split. Cash was paid in lieu of fractional shares.

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INDEPENDENT ACCOUNTANTS’ REVIEW REPORT

The Board of Directors and Stockholders

Sanderson Farms, Inc.

We have reviewed the accompanying condensed consolidated balance sheet of Sanderson Farms, Inc. and subsidiaries as of April 30, 2004, and the related condensed consolidated statements of income and cash flows for the three-month and six-month periods ended April 30, 2004 and 2003, and the condensed consolidated statements of cash flows for the six-month periods ended April 30, 2004 and 2003. These financial statements are the responsibility of the Company’s management.

We conducted our reviews in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data, and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit in accordance with auditing standards generally accepted in the United States, which will be performed for the full year with the objective of expressing an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should be made to the accompanying condensed consolidated financial statements referred to above for them to be in conformity with accounting principles generally accepted in the United States.

We previously audited, in accordance with auditing standards generally accepted in the United States, the consolidated balance sheet of Sanderson Farms, Inc. and subsidiaries as of October 31, 2003, and the related consolidated statements of income, stockholders’ equity and cash flows for the year then ended (not presented herein) and in our report dated December 9, 2003, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of October 31, 2003, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

/s/Ernst and Young LLP

New Orleans, Louisiana
May 21, 2004

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General

The following Discussion and Analysis should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations included in Item 7 of the Company’s Annual Report on Form 10-K for its fiscal year ended October 31, 2003.

This Quarterly Report, and other periodic reports filed by the Company under the Securities Exchange Act of 1934, and other written or oral statements made by it or on its behalf, may include forward-looking statements, which are based on a number of assumptions about future events and are subject to various risks, uncertainties and other factors that may cause actual results to differ materially from the views, beliefs and estimates expressed in such statements. These risks, uncertainties and other factors include, but are not limited to the following:

(1) Changes in the market price for the Company’s finished products and feed grains, both of which may fluctuate substantially and exhibit cyclical characteristics typically associated with commodity markets.

(2) Changes in economic and business conditions, monetary and fiscal policies or the amount of growth, stagnation or recession in the global or U.S. economies, either of which may affect the value of inventories, the collectability of accounts receivable or the financial integrity of customers.

(3) Changes in the political or economic climate, trade policies, laws and regulations or the domestic poultry industry of countries to which the Company or other companies in the poultry industry ship product, and other changes that might limit the Company’s or the industry’s access to foreign markets.

(4) Changes in laws, regulations, and other activities in government agencies and similar organizations applicable to the Company and the poultry industry and changes in laws, regulations and other activities in government agencies and similar organizations related to food safety.

(5) Various inventory risks due to changes in market conditions.

(6) Changes in and effects of competition, which is significant in all markets in which the Company competes, and the effectiveness of marketing and advertising programs. The Company competes with regional and national firms, some of which have greater financial and marketing resources than the Company.

(7) Changes in accounting policies and practices adopted voluntarily by the Company or required to be adopted by accounting principles generally accepted in the United States.

(8) Disease outbreaks affecting the production performance and/or marketability of the Company’s poultry products.

(9) Changes in the availability and cost of labor and growers.

Readers are cautioned not to place undue reliance on forward-looking statements made by or on behalf of Sanderson Farms. Each such statement speaks only as of the day it was made. The Company undertakes no obligation to update or to revise

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any forward-looking statements. The factors described above cannot be controlled by the Company. When used in this quarterly report, the words “believes”, “estimates”, “plans”, “expects”, “should”, “outlook”, and “anticipates” and similar expressions as they relate to the Company or its management are intended to identify forward-looking statements.

The Company’s poultry operations are integrated through its control of all functions relative to the production of its chicken products, including hatching egg production, hatching, feed manufacturing, raising chickens to marketable age (“grow out”), processing, and marketing. Consistent with the poultry industry, the Company’s profitability is substantially impacted by the market prices for its finished products and feed grains, both of which may fluctuate substantially and exhibit cyclical characteristics typically associated with commodity markets. Other costs, excluding feed grains, related to the profitability of the Company’s poultry operations, including hatching egg production, hatching, growing, and processing cost, are responsive to efficient cost containment programs and management practices.

The Company believes that value-added products are subject to less price volatility and generate higher, more consistent profit margins than whole chickens ice packed and shipped in bulk form. To reduce its exposure to market cyclicality that has historically characterized commodity chicken market prices, the Company has increasingly concentrated on the production and marketing of value-added product lines with emphasis on product quality, customer service and brand recognition. Nevertheless, market prices continue to have a significant influence on prices of the Company’s chicken products. The Company adds value to its poultry products by performing one or more processing steps beyond the stage where the whole chicken is first saleable as a finished product, such as cutting, deep chilling, packaging and labeling the product. The Company believes that one of its major strengths is its ability to change its product mix to meet customer demands.

The Company’s processed and prepared foods product line includes over 100 institutional and consumer packaged food items that it sells nationally and regionally, primarily to distributors, food service establishments and retailers. A majority of the prepared food items are made to the specifications of food service users.

On January 29, 2004, the Company announced a three-for-two stock split to be effected as a 50% stock dividend. The new shares were distributed on February 26, 2004, to stockholders of record as of close of business on February 10, 2004. Per share information in this Quarterly Report reflects the stock split. Cash was paid in lieu of fractional shares.

EXECUTIVE OVERVIEW OF RESULTS

Results for the second quarter and six months ended April 30, 2004 were driven primarily by unusually high chicken market prices during periods of the year when chicken prices are historically at their seasonal lows. The first six months of the Company’s fiscal year includes the holiday season and winter months when domestic demand for chicken is normally softer than during other times of the year. During the first half of fiscal 2004, however, driven by strong domestic demand for chicken, poultry prices hit twelve month highs. While feed ingredient prices were also higher than the first six months of fiscal 2003, these higher costs were more than offset by stronger chicken market prices. Higher chicken prices also more than offset higher advertising costs incurred as part of the Company’s new advertising and marketing program. The Company knows from past experience that chicken and grain prices will change, and such changes may be substantial. The Company cannot predict when or in what amounts such changes will occur.

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RESULT OF OPERATIONS

During the second quarter of fiscal 2004 net sales were $272.7 million, an increase of $71.5 million or 35.5% when compared to net sales during the second quarter of fiscal 2003 of $201.2 million. Net sales of poultry products were $247.9 million, an increase of $75.0 million or 43.4%. During the second quarter of fiscal 2004 as compared to the second quarter of fiscal 2003 the average sales price of the Company’s poultry products increased 34.1%. In addition, the pounds of poultry products sold by the Company increased approximately 6.9% primarily from an increase in the average live weight of chickens processed at the Company’s Hammond, Louisiana processing plant and an increase in the number of birds processed at the Company’s Collins Mississippi processing plant. During the second quarter of fiscal 2004 as compared to the second quarter of fiscal 2003, the Company and industry experienced significant improvement in the market prices of poultry products. For example, a simple average of the Georgia dock price for whole chickens increased 15.0%, while market prices for leg quarters and jumbo wings increased 77.0% and 91.5%, respectively. Market prices for boneless breast meat and breast tenders increased 39.4% and 74.3% during these same periods. The market prices for these same products continue to show strength during May 2004. Net sales of prepared food products decreased $3.5 million or 12.3% for the second quarter of fiscal 2004 as compared to the second quarter of fiscal 2003.

For the first six months of fiscal 2004 net sales were $499.1 million or 29.5% higher than net sales for the first six months of fiscal 2003 of $385.4 million. Net sales of poultry products increased $116.4 million or 35.4%. This increase resulted from an increase in the Company’s net sales price of poultry products sold of 26.5% and an increase in the pounds of poultry products sold of 7.0%. A simple average of the Georgia dock price for whole chickens increased 13.2%. Market prices for tenders and boneless breast meat increased 57.1% and 30.0%, respectively. Market prices for other parts were also significantly higher during the six months ended April 30, 2004 as compared to the six months ended April 30, 2003. The increase in pounds of poultry products sold for the first six months of fiscal 2004 as compared to the first six months of fiscal 2003 resulted primarily from an increase in the average live weight of chickens processed at the Company’s Hammond, Louisiana processing plant and an increase in the number of birds processed at the Company’s Collins Mississippi processing plant. Net sales of prepared food products decreased $2.7 million or 4.7% during the first half of fiscal 2004 as compared to the first half of fiscal 2003.

Cost of sales for the quarter ended April 30, 2004 increased $30.7 or 17.8% to $203.5 million. This increase is reflective of the additional volume of poultry products sold and an increase in the cost of feed grains. Market prices for corn and soybean meal during the second quarter of fiscal 2004 were significantly higher, rising approximately 20.8% and 55.7%, respectively. The Company believes feed grain costs will be approximately $25.0 million higher during the second half of fiscal 2004 when compared to the first half of fiscal 2004. The Company’s cost of sales during the second quarter of fiscal 2003 was reduced by vitamin and methionine settlement proceeds of $6.0 million. There were no recoveries during the second fiscal quarter of 2004, and the Company believes such recoveries are complete. Cost of sales of prepared food products increased 6.5%, primarily as a result of higher poultry prices. The prepared foods operation purchases most of its chicken from the Company’s poultry operations, and such chicken is a major component of its raw materials.

The Company’s cost of sales for the first half of fiscal 2004 as compared to the first half of fiscal 2003 increased $46.9 million to $387.3 million. Cost of sales of poultry products increased $42.6 million or 14.6%. The increase in cost of sales of poultry products resulted primarily from increased costs of feed

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grains and additional pounds of poultry products sold. In addition, the Company’s cost of sales for the six months ended April 30, 2004 and the six months ended April 30, 2003 were reduced by vitamin and methionine settlement proceeds of $287,000 and $12.2 million, respectively. There were no recoveries during the second fiscal quarter of 2004, and the Company believes such recoveries are complete. Market prices for corn and soybean meal during the first half of fiscal 2004 as compared to the first half of fiscal 2003 increased 13.1% and 49.5%, respectively. The Company believes feed grain costs will be approximately $25.0 million higher during the second half of fiscal 2004 as compared to the first half of fiscal 2004. Cost of sales of prepared food products increased 8.8% primarily as a result of higher poultry prices that are purchased from the Company’s poultry operations and are a major component of its raw materials.

Selling general and administrative costs increased $7.2 million during the second quarter of fiscal 2004 as compared to the same quarter of fiscal 2003. Selling general and administrative costs increased $11.3 million during the first half of fiscal 2004 as compared to the first half of fiscal 2003. The increase during the second quarter and first six months of fiscal 2004 is the result of the Company’s new advertising and marketing initiatives started during the first quarter of fiscal 2004 and increased reserves for the “phantom” stock plan. In addition, the Company incurred additional costs during the second quarter and first six months of fiscal 2004 as compared to the same periods during fiscal 2003 for its employee stock ownership plan and bonus award program.

The Company’s operating income for the quarter and six-month period ended April 30, 2004 of $55.0 million and $86.4 million, respectively, resulted from the favorable market for poultry products and continued strong operating performance. These factors enabled the Company to more than offset increased feed costs and the benefit received from additional settlement proceeds received during the first six months of fiscal 2003 as compared to the first six months of fiscal 2004.

During the second quarter of fiscal 2004, interest expense was $432,000 as compared to $694,000 during the second quarter of fiscal 2003. Interest expense was $864,000 during the first six months of fiscal 2004 as compared to $1.4 million during the first six months of fiscal 2003. The decrease for the quarter and six months ended April 30, 2004 as compared to the same periods ended April 30, 2003 reflects lower outstanding debt. The Company expects this trend to continue during the remainder of fiscal 2004.

The effective tax rate for the Company during the three months and six months ended April 30, 2004 and April 30, 2003 was approximately 38.75% and 38.0% respectively.

Net income for the three months ended April 30, 2004 was $33.4 million or $1.67 per fully diluted share as compared to $12.8 million or $.65 per fully diluted share for the quarter ended April 30, 2003. Net income for the first half of fiscal 2004 totaled $52.4 million, or $2.64 per diluted share, compared with net income of $18.1 million, or $.92 per diluted share, for the first half of fiscal 2003. During the first quarter of fiscal 2004, the Company recognized $177,000, net of income taxes, for Sanderson Farms’ share in the partial settlement of lawsuits against vitamin and methionine suppliers for overcharges, compared with total similar recoveries of $7.6 million, net of income taxes, or $0.38 per diluted share, during the first half of fiscal 2003.

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LIQUIDITY AND CAPITAL RESOURCES

As of April 30, 2004, the Company’s working capital was $128.4 million and its current ratio was 3.1 to 1. The Company’s working capital at October 31, 2003 was $82.2 million and its current ratio was 2.3 to 1. During the first six months of fiscal 2004, the Company spent approximately $14.2 million on planned capital projects. In addition, during the first quarter of fiscal 2004 the Company invested approximately $1.6 million in an existing company with other poultry producers for the processing and marketing of spent hens. Our ownership interest is less than 10%, and the Company will account for this investment on a cost basis.

On January 29, 2004, the Company announced a three-for-two stock split to be effected as a 50% stock dividend. The new shares were distributed on February 26, 2004, to stockholders of record as of close of business on February 10, 2004.

The Company’s capital budget for existing operations for fiscal 2004 is approximately $31.6 million. The fiscal 2004 capital budget includes cost of renovations and changes and additions to existing processing facilities to allow better product flows and product mix for more product flexibility, $4.5 million to begin construction of a new General Office and $4.5 million for a lease to replace an existing aircraft. The Company expects that working capital and cash flows from operations will be sufficient in fiscal 2004 to fund the anticipated capital expenditures. However, if needed, the Company has available $100 million under its revolving credit agreement as of April 30, 2004.

In addition to the capital budget for existing operations, the Company announced on May 25, 2004 its plans to construct a new poultry processing complex in south Georgia. The poultry complex will include a feedmill, hatchery, processing plant and wastewater treatment facility. The new complex will have capacity to process 1.2 million birds per week, and at full capacity will employ approximately 1,700 people and will require 130 contract growers. The Company expects to invest approximately $96 million in the Georgia complex and anticipates that associated contract producers will invest an additional $85.0 million in production facilities. The Company announced its plans to begin construction of the new facility during the summer of 2004 with initial operations scheduled to begin during the Company’s fourth fiscal quarter of 2005. Of the total capital budget for the Georgia complex, the Company expects to spend approximately $5.4 million during fiscal 2004 with a majority of the balance of those capital expenditures to be made during fiscal 2005.

On May 18, 2004, the Company entered into the ninth amendment to its revolving credit facility. The amendment, among other things, increased allowed capital expenditures to allow for the construction of the Georgia complex, changed the net worth covenant to reflect the Company’s new dividend rate, extended the committed revolver to five years rather than to three, reduced the interest rate charged on amounts outstanding, and removed a letter of credit commitment related to certain industrial development bonds outstanding.

On April 26, 2004, the Company gave notice to U.S. Bank National Association, as trustee under the Indenture of Trust dated as of November 1, 1995 related to the Robinson County Industrial Development Corporation Variable Rate Demand Industrial Development Revenue Bonds (Sanderson Farms, Inc. Project) Series 1995 (“Bonds”), of the Company’s intent to exercise its right to call all of the Bonds for optional redemption on June 1, 2004 (the “Redemption Date”) at a redemption price of 100% of the principal amount of the Bonds plus accrued interest to the Redemption Date. The Trustee has given notice to the holder of the Bonds of the Company’s intent to redeem the Bonds on June 1, 2004. As of April 30, 2004, $6.3 million of the Bonds were outstanding and will be redeemed on June 1, 2004.

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The Company regularly evaluates both internal and external growth opportunities, including acquisition opportunities and the possible construction of new production assets, and conducts due diligence activities in connection with such opportunities. The cost and terms of any financing to be raised in conjunction with any growth opportunity, including the Company’s ability to raise debt or equity capital on terms and at costs satisfactory to the Company, and the effect of such opportunities on the Company’s balance sheet, are critical considerations in any such evaluation.

Critical Accounting Policies and Estimates

     The preparation of financial statements in accordance with accounting standards generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of 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 these estimates and assumptions, and the differences could be material.

     The Company’s Summary of Significant Accounting Policies, as described in Note 1 of the Notes to the Consolidated Financial Statements that are filed with the Company’s latest report on Form 10-K, should be read in conjunction with this Management’s Discussion and Analysis of Financial Condition and Results of Operations. Management believes that the critical accounting policies and estimates that are material to the Company’s Consolidated Financial Statements are those described below.

Allowance for Doubtful Accounts

     In the normal course of business, the Company extends credit to its customers on a short-term basis. Although credit risks associated with our customers are considered minimal, the Company routinely reviews its accounts receivable balances and makes provisions for probable doubtful accounts. In circumstances where management is aware of a specific customer’s inability to meet its financial obligations to the Company, a specific reserve is recorded to reduce the receivable to the amount expected to be collected. If circumstances change (i.e., higher than expected defaults or an unexpected material adverse change in a major customer’s ability to meet its financial obligations to us), our estimates of the recoverability of amounts due us could be reduced by a material amount, and the allowance for doubtful accounts and related bad debt expense would increase by the same amount.

Inventories

     Processed food and poultry inventories and inventories of feed, eggs, medication and packaging supplies are stated at the lower of cost (first-in, first-out method) or market. If market prices for poultry or feed grains move substantially lower, the Company would record adjustments to write down the carrying values of processed poultry and feed inventories to fair market value, which would increase the Company’s costs of sales.

     Live poultry inventories of broilers are stated at the lower of cost or market and breeders at cost less accumulated amortization. The cost associated with broiler inventories, consisting principally of chicks, feed, medicine and payments to the growers who raise the chicks for us, are accumulated during the growing period. The cost associated with breeder inventories, consisting principally of breeder chicks, feed, medicine and grower payments are accumulated during the growing period. Capitalized breeder costs are then amortized over nine months using the straight-line method. Mortality of broilers and breeders is charged to cost of sales as incurred. If market prices for

13

chicks, feed or medicine or if grower payments increase (or decrease) during the period, the Company could have an increase (or decrease) in the market value of its inventory as well as an increase (or decrease) in costs of sales. Should the Company decide that the nine month amortization period used to amortize the breeder costs is no longer appropriate as a result of operational changes, a shorter (or longer) amortization period could increase (or decrease) the costs of sales recorded in future periods. High mortality from disease or extreme temperatures would result in abnormal charges to cost of sales to write-down live poultry inventories.

Long-Lived Assets

     Depreciable long-lived assets are primarily comprised of buildings and machinery and equipment. Depreciation is provided by the straight-line method over the estimated useful lives, which are 19 to 39 years for buildings and 3 to 7 years for machinery and equipment. An increase or decrease in the estimated useful lives would result in changes to depreciation expense.

     The Company continually reevaluates the carrying value of its long-lived assets for events or changes in circumstances that indicate that the carrying value may not be recoverable. As part of this re-evaluation, the Company estimates the future cash flows expected to result from the use of the asset and its eventual disposal. If the sum of the expected future cash flows (undiscounted and without interest charges) is less than the carrying amount of the asset, an impairment loss is recognized to reduce the carrying value of the long-lived asset to the estimated fair value of the asset. If the Company’s assumptions with respect to the future expected cash flows associated with the use of long-lived assets currently recorded change, then the Company’s determination that no impairment charges are necessary may change and result in the Company recording an impairment charge in a future period.

Accrued Self Insurance

     Insurance expense for workers’ compensation benefits and employee-related health care benefits are estimated using historical experience and actuarial estimates. Stop-loss coverage is maintained with third party insurers to limit the Company’s total exposure. Management regularly reviews the assumptions used to recognize periodic expenses. If historical experience proves not to be a good indicator of future expenses, if management were to use different actuarial assumptions, or if there is a negative trend in the Company’s claims history, there could be a significant increase (or decrease) in cost of sales depending on whether these expenses increased or decreased, respectively.

Income Taxes

     The Company determines its effective tax rate by estimating its permanent differences resulting from differing treatment of items for financial and income tax purposes. The Company is periodically audited by taxing authorities and considers any adjustments made as a result of the audits in considering the tax expense. Any audit adjustments affecting permanent differences could have an impact on the Company’s effective tax rate.

Contingencies

     The Company is a party to a number of legal proceedings as discussed in Note 10 of our consolidated financial statements filed with our most recent Form 10-K. We recognize the costs of legal defense in the periods incurred. A determination of the amount of reserves required, if any, for these matters is made after considerable analysis of each individual case. At this time, the Company has not accrued any reserve for any of these matters. Further reserves may be required due to changes in the Company’s assumptions, the effectiveness

14

of legal strategies, or other factors beyond the Company’s control. Future results of operations may be materially affected by the creation of or changes to reserves.

New Accounting Pronouncements

     In January 2003, the Financial Accounting Standards Board issued Interpretation No. 46, “Consolidation of Variable Interest Entities, an interpretation of Accounting Research Bulletin No. 51.” Interpretation No. 46 requires consolidation of entities when an enterprise absorbs a majority of the entity’s expected losses, receives a majority of the entity’s expected residual returns, or both, as a result of ownership, contractual or other financial interests in the entity. Currently, entities are generally consolidated by an enterprise when it has a controlling financial interest through ownership of a majority voting interest in the entity. The consolidation requirements of this pronouncement are effective for the first reporting period ending after March 31, 2004. The Company does not absorb losses or enjoy returns from any entity other than its subsidiaries, all of which are wholly owned and consolidated with the Company, therefore the adoption of FIN 46 did not have a material impact on the Company.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

     The Company is a purchaser of certain commodities, primarily corn and soybean meal, for use in manufacturing feed for its chickens. As a result, the Company’s earnings are affected by changes in the price and availability of such feed ingredients. Feed grains are subject to volatile price changes caused by factors described below that include weather, size of harvest, transportation and storage costs and the agricultural policies of the United States and foreign governments. The price fluctuations of feed grains have a direct and material effect on the Company’s profitability.

     Generally, the Company purchases its corn, soybean meal and other feed ingredients for prompt delivery to its feed mills at market prices at the time of such purchases. The Company sometimes will purchase feed ingredients for deferred delivery that typically ranges from one month to six months after the time of purchase. The grain purchases are made directly with our usual grain suppliers, which are companies in the regular business of supplying grain to end users, and do not involve options to purchase. Such purchases occur when senior management concludes that market factors indicate that prices at the time the grain is needed are likely to be higher than current prices, or where, based on current and expected market prices for the Company’s poultry products, management believes it can purchase feed ingredients at prices that will allow the Company to earn a reasonable return for its shareholders. Market factors considered by management in determining whether or not and to what extent to buy grain for deferred delivery include:

• Current market prices;

• Current and predicted weather patterns in the United States, South America, China and other grain producing areas, as such weather patterns might affect the planting, growing, harvesting and yield of feed grains;

• The expected size of the harvest of feed grains in the United States and other grain producing areas of the world as reported by governmental and private sources;

15

• Current and expected changes to the agricultural policies of the United States and foreign governments;

• The relative strength of United States currency and expected changes therein as it might impact the ability of foreign countries to buy United States feed grain commodities;

• The current and expected volumes of export of feed grain commodities as reported by governmental and private sources;

• The current and expected use of available feed grains for uses other than as livestock feed grains (such as the use of corn for the production of ethanol, which use is impacted by the price of crude oil); and

• Current and expected market prices for the Company’s poultry products.

     The Company purchases physical grain, not financial instruments such as puts, calls or straddles that derive their value from the value of physical grain. Thus, the Company does not use derivative financial instruments as defined by SFAS 133, “Accounting for Derivatives for Instruments and Hedging Activities.” The Company does not enter into any derivative transactions or purchase any grain-related contracts other than the physical grain contracts described above.

     The cost of feed grains is recognized in cost of sales, on a first-in-first-out basis, at the same time that the sales of the chickens that consume the feed grains are recognized.

     The Company’s interest expense is sensitive to changes in the general level of U.S. interest rates. The Company maintains certain of its debt as fixed rate in nature to mitigate the impact of fluctuations in interest rates. The fair value of the Company’s fixed rate debt approximates the carrying amount at April 30, 2004. At April 30, 2004, $6.3 million of the Company’s debt had a variable interest rate. Management believes the potential effects of near-term changes in interest rates on the Company’s debt is not material.

     The Company is a party to no other market risk sensitive instruments requiring disclosure.

     Item 4. Controls and Procedures

     The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s Securities Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

     As of April 30, 2004, an evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on that evaluation, the Company’s management, including the Chief Executive Officer and Chief Financial Officer, concluded that the Company’s disclosure controls and

16

procedures were effective as of April 30, 2004. There have been no changes in the Company’s internal control over financial reporting during the fiscal quarter ended April 30, 2004 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

     PART II. OTHER INFORMATION

     Item 1. Legal Proceedings

          On May 19, 2003, a lawsuit was filed on behalf of 74 individual plaintiffs in the United States District Court for the Southern District of Mississippi alleging an “intentional pattern and practice of race discrimination and hostile environment in violation of Title VII and Section 1981 rights.” This lawsuit alleges that Sanderson Farms, in its capacity as an employer, has “engaged in (and continues to engage in) a pattern and practice of intentional unlawful employment discrimination and intentional unlawful employment practices at its plants, locations, off-premises work sites, offices, and facilities in Pike County, Mississippi...in violation of Title VII of the Civil Rights Act of 1964 (as amended)... .” The action further alleges that “Sanderson Farms has willfully, deliberately, intentionally, and with malice deprived black workers in its employ of the full and equal benefits of all laws in violation of the Civil Rights Act.. .” On June 6, 2003, thirteen additional plaintiffs joined in the pending lawsuit by the filing of a First Amended Complaint. This brings the total number of plaintiffs to 87.

          The plaintiffs in this lawsuit seek, among other things, back pay and other compensation in the amount of $500,000 each and unspecified punitive damages. The Company will aggressively defend the lawsuit. The Company has a policy of zero tolerance with respect to discrimination of any type, and preliminarily investigated the complaints alleged in this lawsuit when they were brought as EEOC charges. This investigation, which is ongoing, has substantiated none of the complaints alleged in the lawsuit, and the Company believes the charges are without merit. On July 21, 2003, the Company filed a Motion to Dismiss or, alternatively, Motion for Summary Judgment or Motion for More Definite Statement. The plaintiffs filed a response to that motion, and the Company filed its rebuttal to the plaintiffs’ response on August 21, 2003. On December 17, 2003, the court entered its order denying the Company’s motion for summary judgment, but granting its motion for more definite statement. The court also ordered that the union representing some of the plaintiffs be joined as a defendant. The court gave the plaintiffs until January 26, 2004 to amend their complaint to more specifically set out their claims. Although the Company’s motion to dismiss was denied, the court’s order permits the Company to refile its dispositive motions after the plaintiffs file an amended complaint. On January 27, 2004, 84 of the 87 plaintiffs filed their Second Amended Complaint. The remaining three plaintiffs voluntarily dismissed their claims. The Company filed its answer to the plaintiffs’ second amended complaint on March 26, 2004, denying any and all liability and setting forth numerous affirmative defenses. The matter was previously reported in the Company’s quarterly report on form 10-Q for the quarter ended January 31, 2004. The Company intends to vigorously defend this action. This matter is pending.

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

     At the 2004 Annual Meeting of Shareholders of Sanderson Farms, Inc. held February 26, 2004, the shareholders elected the following persons to the Company’s Board of Directors to serve until the 2007 Annual Meeting of

17

Shareholders, or until their successors are elected and qualified, by the votes indicated below:

Name	For		Withheld
Robert Buck Sanderson		9,447,181		1,874,712
Donald W. Zacharias		11,112,293		209,600
William R. Sanderson		9,450,696		1,871,197
Gail Jones Pittman		11,128,643		193,250

     By a vote of 11,279,344 for, 37,671 against, and 3,966 abstaining, the shareholders ratified the Board’s selection of Ernst & Young LLP as the Company’s independent auditors for the fiscal year ending October 31, 2004.

Item 5. Other Information

     (b) On February 26, 2004, the Company’s Board of Directors adopted a charter for the Board’s Nominating and Governance Committee (the “Committee”). The charter provides that the Committee will consider nominees for director proposed by the Company’s stockholders, and it sets forth procedures that stockholders who are not also officers or directors of the Company must follow in order to submit proposed nominees. The procedures include submitting a written notice of the proposed nominee to the Committee at the Company’s general offices that contains certain information about the stockholder and the proposed nominee. Stockholders wishing to propose nominees to the Committee for consideration at the Company’s annual meeting of stockholders must submit notice of their proposed nominee to the Committee no later than September 15 of the year prior to the annual meeting. However, the charter does not affect the right of a stockholder to nominate persons for election as director from the floor at any annual or special meeting of stockholders called for that purpose by following the advance notification procedures set forth in Article III, Section 9 of the Company’s bylaws. The charter also sets forth the minimum qualifications, skills and qualities that the Committee believes must be met by a committee-recommended nominee and are necessary for a director of the Company to possess, and describes the procedures the Committee follows in evaluating proposed nominees.

Item 6. Exhibits and Reports on Form 8-K

(a) The following exhibits are filed with this report.

Exhibit 3.1 Articles of Incorporation of the Registrant dated October 19, 1978. (Incorporated by reference to Exhibit 4.1 filed with the registration statement on Form S-8 filed by the Registrant on July 15, 2002, Registration No. 333-92412.)

Exhibit 3.2 Articles of Amendment, dated March 23, 1987, to the Articles of Incorporation of the Registrant. (Incorporated by reference to Exhibit 4.2 filed with the registration statement on Form S-8 filed by the Registrant on July 15, 2002, Registration No. 333-92412.)

Exhibit 3.3 Articles of Amendment, dated April 21, 1989, to the Articles of Incorporation of the Registrant. (Incorporated by reference to Exhibit 4.3 filed with the registration statement on Form S-8 filed by the Registrant on July 15, 2002, Registration No. 333-92412.)

Exhibit 3.4 Certificate of Designations of Series A Junior Participating Preferred Stock of the Registrant dated April 21, 1989. (Incorporated by reference to Exhibit 4.4 filed with the registration statement on

18

Form S-8 filed by the Registrant on July 15, 2002, Registration No. 333-92412.)

Exhibit 3.5 Article of Amendment, dated February 20, 1992, to the Articles of Incorporation of the Registrant. (Incorporated by reference to Exhibit 4.5 filed with the registration statement on Form S-8 filed by the Registrant on July 15, 2002, Registration No. 333-92412.)

Exhibit 3.6 Article of Amendment, dated February 27, 1997, to the Articles of Incorporation of the Registrant. (Incorporated by reference to Exhibit 4.6 filed with the registration statement on Form S-8 filed by the Registrant on July 15, 2002, Registration No. 333-92412.)

Exhibit 3.7* Bylaws of the Registrant, amended and restated as of February 26, 2004.

Exhibit 10.1* Agreement dated January 4, 2004 between Sanderson Farms, Inc. (McComb Production Division) and the United Food and Commercial Workers International Union, AFL-CIO.

Exhibit 10.2* Ninth Amendment dated May 18, 2004 to Credit Agreement dated as of July 31,1996, as amended, among Sanderson Farms, Inc., Harris Trust and Savings Bank, as agent for the Banks, and Harris Trust and Savings Bank, SunTrust Bank, AmSouth Bank and Trustmark National Bank.

Exhibit 15* Accountants’ Letter re: Unaudited Financial Information.

Exhibit 31.1* Certification of Chief Executive Officer.

Exhibit 31.2* Certification of Chief Financial Officer.

Exhibit 32.1** Section 1350 Certification.

Exhibit 32.2** Section 1350 Certification.

* Filed herewith.

** Furnished herewith.

(b) The following current reports on Form 8-K were filed during the three months ended April 30, 2004:

On March 1, 2004, the Company filed a current report on Form 8-K dated February 24, 2004 furnishing, pursuant to Item 12, a press release announcing its earnings for the first fiscal quarter ended January 31, 2004 and a transcript of the Company’s conference call discussing its earnings for the quarter. The report contained the following unaudited financial statements:

• Condensed consolidated balance sheets – October 31, 2003 and January 31, 2004

• Condensed consolidated statements of income – Three months ended January 31, 2004 and 2003

On April 14, 2004, the Company filed a current report on Form 8-K dated April 14, 2004 furnishing , pursuant to Item 5, a press release concerning a “warning letter” it received from the Food and Drug Administration.

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SIGNATURES

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

	SANDERSON FARMS, INC.
	(Registrant)
Date: May 25, 2004	By:	/s/ D. Michael Cockrell
		Treasurer and Chief
		Financial Officer
Date: May 25, 2004	By:	/s/ James A. Grimes
		Secretary and Principal
		Accounting Officer

20

INDEX TO EXHIBITS

Exhibit
Number	Description of Exhibit
3.1	Articles of Incorporation of the Registrant dated October 19, 1978. (Incorporated by reference to Exhibit 4.1 filed with the registration statement on Form S-8 filed by the Registrant on July 15, 2002, Registration No. 333-92412.)
3.2	Articles of Amendment, dated March 23, 1987, to the Articles of Incorporation of the Registrant. (Incorporated by reference to Exhibit 4.2 filed with the registration statement on Form S-8 filed by the Registrant on July 15, 2002, Registration No. 333-92412.)
3.3	Articles of Amendment, dated April 21, 1989, to the Articles of Incorporation of the Registrant. (Incorporated by reference to Exhibit 4.3 filed with the registration statement on Form S-8 filed by the Registrant on July 15, 2002, Registration No. 333-92412.)
3.4	Certificate of Designations of Series A Junior Participating Preferred Stock of the Registrant dated April 21, 1989. (Incorporated by reference to Exhibit 4.4 filed with the registration statement on Form S-8 filed by the Registrant on July 15, 2002, Registration No. 333-92412.)
3.5	Article of Amendment, dated February 20, 1992, to the Articles of Incorporation of the Registrant. (Incorporated by reference to Exhibit 4.5 filed with the registration statement on Form S-8 filed by the Registrant on July 15, 2002, Registration No. 333-92412.)
3.6	Article of Amendment, dated February 27, 1997, to the Articles of Incorporation of the Registrant. (Incorporated by reference to Exhibit 4.6 filed with the registration statement on Form S-8 filed by the Registrant on July 15, 2002, Registration No. 333-92412.)
3.7*	Bylaws of the Registrant, amended and restated as of February 26, 2004
10.1*	Agreement dated January 4, 2004 to between Sanderson Farms, Inc. (McComb Production Division) and the United Food and Commercial Workers International Union, AFL-CIO.
10.2*	Ninth Amendment dated May 18, 2004 to Credit Agreement dated as of July 31,1996, as amended, among Sanderson Farms, Inc., Harris Trust and Savings Bank, as agent for the Banks, and Harris Trust and Savings Bank, SunTrust Bank, AmSouth Bank and Trustmark National Bank.
15*	Accountants’ Letter re: Unaudited Financial Information.
31.1*	Certification of Chief Executive Officer
31.2*	Certification of Chief Financial Officer
32.1**	Section 1350 Certification.
32.2**	Section 1350 Certification.

* Filed herewith.

21

** Furnished herewith.

22

EX-3.7

Exhibit 3.7*

                                   BY-LAWS OF
                              SANDERSON FARMS, INC.
                 (As amended and restated on February 26, 2004)

      Article I. Name and the Location

      Section 1. The name of this corporation shall be Sanderson Farms, Inc.

      Section 2. Its principal office shall be located in Laurel, Mississippi.

      Section 3. Other offices for the transaction of business shall be located
in such other places as the Board of Directors may from time to time determine.

      Article II. Capital Stock

      Section 1. The amount of capital stock shall be such amount as is
authorized by the Articles of Incorporation.

      Section 2. All certificates of stock shall be signed by the Chairman of
the Board, the President and the Secretary and shall be sealed with the
corporate seal. Such signatures and seal may be facsimile if the certificate is
signed by the corporation's transfer agent or registrar.

      Section 3. Transfers of stock shall be made only on the books of the
corporation or the books of the duly appointed transfer agent; an old
certificate, properly endorsed, shall be surrendered and cancelled before a new
certificate is issued.

      Section 4. In case of loss or destruction of a certificate of stock, no
new certificate shall be issued in lieu thereof except upon satisfactory proof
of affidavit of such loss or destruction; and upon the giving of satisfactory
security, by bond or otherwise (if the Board of Directors so requires), against
loss to the corporation.

      Article III. Stockholder meetings

      Section 1. The annual meeting of stockholders shall be held each year on
such day in the month of February, or in such other month, as the Board of
Directors shall determine, at the principal office of the corporation or at such
other suitable place, within or without the State of Mississippi, and at such
convenient time as may be determined by the Board of Directors. At the annual
meeting the stockholders shall elect directors to serve until their successors
have been elected and have qualified.

      Section 2. A special meeting of the stockholders, to be held at any place
at which the annual stockholders' meeting may be held, may be called at any time
by the Chairman, the Vice Chairman (if appointed), the President or the Board of
Directors. It shall be the duty of the Chairman, the Vice Chairman (if
appointed), the President or the Board of Directors to call such a meeting
whenever so requested or demanded by one or more stockholders holding 10% or
more of all the shares entitled to vote on any issue proposed to be considered
at the special meeting.

      Section 3. Notice of the place, day and hour of all annual and special
stockholders' meetings shall be given by the Secretary of the corporation to
each



stockholder entitled to vote at the meeting not fewer than ten (10) nor more
than sixty (60) days before the date of the meeting by electronic transmission
to the stockholder in a manner authorized by the stockholder or by mailing said
notice, with postage thereon prepaid, to the address of such stockholder
appearing on the stock records of the corporation. In the case of a special
meeting, the notice shall also state the purpose or purposes for which the
meeting is called.

      Section 4. For the purpose of determining stockholders entitled to notice
of or to vote at any meeting of stockholders or any adjournment thereof, or
entitled to demand a special meeting or to receive payment of any dividend, or
in order to make a determination of stockholders for any other proper purpose,
the Board of Directors of the corporation may fix the record date for such
purpose, but such record date may not be more than seventy (70) days before the
meeting or action requiring a determination of stockholders. If no record date
is fixed for the determination of stockholders entitled to notice of or to vote
at a meeting of stockholders, or stockholders entitled to demand a special
meeting or to receive payment of a dividend, or for any other proper purpose,
the close of business on the day before the day on which notice of the meeting
is mailed or the date on which the resolution of the Board of Directors
declaring such dividend is adopted, as the case may be, shall be the record date
for such determination of stockholders. When a determination of stockholders
entitled to notice of or to vote at any meeting of stockholders has been made as
provided in this section, such determination shall be effective for any
adjournment of the meeting unless the Board of Directors fixes a new record
date, which it must do if the meeting is adjourned to a date more than one
hundred, twenty (120) days after the date fixed for the original meeting.

      Section 5. The officer or agent having charge of the stock transfer books
for shares of the corporation shall make, no later than two (2) business days
after notice of the meeting is given for which the list was prepared, an
alphabetical list of the names of all its stockholders entitled to notice of a
stockholders' meeting. The list must be arranged by voting group (and within
each voting group by class or series of shares) and show the address of and
number of shares held by each stockholder. Such list shall be available at the
principal office of the corporation and shall be subject to inspection by any
stockholder at any time during usual business hours. Such list shall also be
available at the place identified in the meeting notice in the city where the
meeting will be held and shall be subject to the inspection of any stockholder
continuously through the meeting. The original stock transfer books shall be
prima facie evidence as to who are stockholders entitled to examine such list or
transfer books or to vote at any meeting of stockholders.

      Section 6. The Chairman of the Board shall preside at all stockholder
meetings. In the event the Chairman is unable to preside, the next available

                                       2


officer shall be authorized to preside in this order: Vice Chairman (if
appointed), President, Executive Vice President (if appointed), Vice President
(by seniority if more than one is appointed), Secretary or Treasurer.

      Section 7. Each outstanding share, regardless of class, shall be entitled
to one vote on each matter submitted to a vote at a meeting of stockholders,
except to the extent that the voting rights of the shares of preferred stock are
limited or denied by the Articles of Incorporation, the Board of Directors or as
permitted by law.

      A stockholder may vote either in person or by proxy appointed by
electronic transmission or in writing by the stockholder or by his duly
authorized attorney-in-fact. No proxy shall be valid after eleven (11) months
from the date of its execution, unless otherwise provided in the proxy.

      Shares standing in the name of another corporation, domestic or foreign
but not a corporation the majority of the outstanding shares of which are owned,
directly or indirectly, by this corporation, may be voted by any duly elected
officer, or any duly appointed agent, in person or by proxy, or as the Board of
Directors of this corporation may otherwise determine.

      Shares held by an administrator, executor, guardian or conservator may be
voted by him, either in person or by proxy, without a transfer of such shares
into his name.

      Shares standing in the name of a trustee may be voted by him, either in
person or by proxy, but no trustee shall be entitled to vote shares held by him
without a transfer of such shares into his name.

      Shares standing in the name of a receiver may be voted by such receiver,
and shares held by or under the control of a receiver may be voted by such
receiver without the transfer thereof into his name if authority so to do be
contained in an appropriate order of the court by which such receiver was
appointed.

      A stockholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.

      Redeemable shares are not entitled to vote after notice of redemption is
mailed to the holders and a sum sufficient to redeem the shares has been
deposited with a bank, trust company or other financial institution under an
irrevocable obligation to pay the holders the redemption price on surrender of
the shares.

      Section 8. A majority of the votes represented in person or by proxy
entitled to be cast on a matter by the voting stockholders shall constitute a
quorum for the transaction of business at a meeting of stockholders. If a quorum
exists, action on a matter (other than the election of directors) by the
stockholders shall be approved if the votes cast favoring the action exceed the
votes cast opposing the action, unless the Articles of Incorporation, the
By-laws or the law requires a greater number of affirmative votes.

                                       3


      Once a share is represented for any purpose at a meeting, it is deemed
present for quorum purposes for the remainder of the meeting and for any
adjournment of that meeting unless a new record date is or must be set for that
adjourned meeting.

      An amendment to the Articles of Incorporation that adds, changes or
deletes a greater quorum or voting requirement must meet the same quorum
requirement and be adopted by the same vote required to take action under the
quorum and voting requirements then in effect or proposed to be adopted,
whichever is greater.

      Directors shall be elected at such annual meeting of stockholders at which
their terms expire or at any special meeting of stockholders called for that
purpose by the affirmative vote of a majority, and not a plurality, of the
shares entitled to vote and represented, in person or by proxy, at such meeting
at which a quorum is present. There shall be no cumulative voting.

      Section 9. Nominations by stockholders for the election of directors may
be made by stockholders from the floor at any annual or special meeting of
stockholders called for the election of directors if timely written notice of
such nominations has been given to the Secretary of the corporation. To be
timely, such notice must be received at the principal office of the corporation
not later than the close of business on the 15th day following the day on which
notice of the date of the meeting is given or made to stockholders in accordance
with these bylaws. A stockholder's notice to the Secretary must set forth or be
accompanied by (i) the name and address of record of the stockholder who intends
to make the nomination; (ii) a representation that the stockholder is a holder
of record of shares of the corporation entitled to vote at such meeting and
intends to appear in person or by proxy at the meeting to nominate the person or
persons specified in the notice; (iii) the name, age, business and residence
addresses, and principal occupation or employment of each nominee; (iv) such
other information regarding each nominee proposed by such stockholder as would
be required to be included in a proxy statement filed by such stockholder
pursuant to the proxy rules of the Securities and Exchange Commission, as then
in effect; (v) the consent of each nominee to serve as a director of the
corporation if elected; and (vi) a representation signed by each proposed
nominee that states that such nominee meets all of the qualifications set forth
in Article IV of these bylaws.

      Section 10. Only business properly brought before stockholders' meetings
in accordance with these bylaws shall be conducted at such meetings. To be
properly brought before a meeting, business must be (a) specified in the notice
of meeting (or any supplement thereto) given by or at the direction of the Board
of Directors, (b) otherwise properly before the meeting by or at the direction
of the Board of Directors, or (c) otherwise (i) properly requested to be brought
before the meeting by a stockholder of record entitled to vote in the election
of directors generally, and (ii) constitute a proper subject to be brought
before

                                       4


such meeting. Any stockholder who wishes to bring a matter (other than the
election of directors) before a meeting of stockholders and is entitled to vote
on such matter must deliver written notice of said stockholder's intent to bring
such matter before the meeting of stockholders so that such notice is received
by the Secretary no later than the close of business on the 15th day following
the date on which notice of the date of the meeting is given or made to
stockholders in accordance with these bylaws.

      A stockholder's notice to the Secretary shall set forth as to each matter
the stockholder proposes to bring before the meeting of stockholders (a) a brief
description of the business desired to be brought before the meeting and the
reasons for conducting such business at the meeting, (b) the name and address,
as they appear on the Corporation's books, of the stockholder intending to
propose such business, (c) the class and number of shares of stock of the
Corporation beneficially owned by the stockholder, and (d) any material interest
of the stockholder in such business. The Chairman of a meeting shall, if the
facts warrant, determine and declare to the meeting that the business was not
properly brought before the meeting in accordance with the provisions hereof
and, if he should so determine, he shall declare such to the meeting and any
such business not properly brought before the meeting shall not be transacted.

      Section 11. Action required or permitted to be taken at a stockholders'
meeting may be taken without a meeting if the action is taken by all the
stockholders entitled to vote on the action. The action must be evidenced by one
or more written consents describing the action taken, signed by all the
stockholders entitled to vote on the action, and delivered to the corporation
for inclusion in the minutes or filing with the corporate records.

      If not otherwise set by the Board of Directors, the record date for
determining stockholders entitled to take action without a meeting is the date
the first stockholder signs the written consent.

      A consent signed under this section has the effect of a meeting vote and
may be described as such in any document.

      Article IV. Directors

      Section 1. All corporate powers shall be exercised by or under the
authority of, and the business and affairs of the corporation managed by or
under the direction of, the Board of Directors, subject to any limitation set
forth in the Articles of Incorporation, which shall consist of fifteen (15)
Directors. A majority of directors in office at any given time shall be
independent directors within the meaning of the rules and regulations of the
NASDAQ Stock Market, Inc. or the principal stock exchange on which the
Corporation's shares are traded or listed. Directors must be at least twenty-one
(21) years of age and be citizens

                                       5


of the United States, although directors need not be stockholders of the
corporation or residents of the state of Mississippi.

      Section 2. The directors shall hold five (5) regular meetings, four (4) of
which shall be held on such quarterly dates as the Board or the Chairman shall
determine from time to time, and shall be held at the principal office of the
corporation in Laurel, Mississippi, or at such other place, within or without
the State of Mississippi, as may be determined by the Chairman of the Board. The
remaining one (1) regular meeting shall be held immediately after, and at the
same place as, the annual meeting of stockholders.

      Section 3. Special meetings of the Board of Directors, to be held at the
principal office of the corporation in Laurel, Mississippi, or at such other
place, within or without the State of Mississippi, as may be determined by the
Board or the Chairman, may be called by the Chairman or by any two members of
the Board of Directors.

      Section 4. Any or all directors may participate in a regular or special
meeting by, or conduct the meeting through the use of, any means of
communication by which all directors participating may simultaneously hear each
other during the meeting. A director participating in a meeting by this means is
deemed to be present in person at the meeting.

      Section 5. Notice as to date, time and place of all regular and special
meetings of the directors shall be given to each director, by the Secretary, at
least two (2) days prior to the time fixed for the meeting. Such notice shall be
given in any manner to each director at his usual address or location and shall
be deemed to be delivered, if mailed, when deposited four (4) days prior to the
time fixed for the meeting in the United States mail, so addressed, with postage
thereon prepaid. A director's attendance at or participation in a meeting shall
constitute a waiver of any required notice of such meeting, unless the director
at the beginning of the meeting (or promptly upon his arrival) objects to
holding the meeting or transacting business at the meeting and does not
hereafter vote for or assent to action taken at the meeting.

                                       6


      Section 6. A quorum for the transaction of business at any regular or
special meeting of the directors shall consist of a majority of the number of
directors fixed by these Bylaws.

      Section 7. The directors shall appoint the officers of the corporation and
fix the salary of the Chairman of the Board and the President; the President, or
in the absence of the President the directors, shall fix the salaries of all
other officers. Appointment of officers shall be made at the directors' meeting
following each annual stockholders' meeting.

      Section 8. Any vacancy on the Board of Directors resulting from the
removal of a director as provided in the Articles of Incorporation shall be
filled by the stockholders; provided that, if the stockholders fail to fill any
such vacancy within ninety (90) days after the date that the director was
removed, then the Board of Directors may fill such vacancy. If a vacancy occurs
on the Board of Directors for reasons other than removal by stockholders,
including a vacancy resulting from an increase in the number of directors: (a)
the stockholders may fill the vacancy; (b) the Board of Directors may fill the
vacancy; or (c) if the directors remaining in office constitute fewer than a
quorum of the Board, they may fill the vacancy by the affirmative vote of a
majority of all the directors remaining in office.

      A vacancy that will occur at a specific later date (by reason of a
resignation effective at a later date) may be filled before the vacancy occurs
but the new director may not take office until the vacancy occurs.

      Section 9. The affirmative vote of a majority of the directors present at
a meeting at which a quorum is present shall be the act of the Board of
Directors, unless the Articles of Incorporation or the By-laws require the vote
of a greater number of directors.

      Section 10. A director of the corporation who is present at a meeting of
the Board of Directors or a committee of the Board of Directors when corporate
action is taken shall be deemed to have assented to the action taken unless: (a)
he objects at the beginning of the meeting (or promptly upon his arrival) to
holding

                                       7


it or transacting business at the meeting; (b) his dissent or abstention from
the action taken is entered in the minutes of the meeting; or (c) he delivers
written notice of his dissent or abstention to the presiding officer of the
meeting before its adjournment or to the corporation immediately after
adjournment of the meeting. The right of dissent or abstention shall not be
available to a director who votes in favor of the action taken.

      Section 11. Any action required or permitted to be taken at a Board of
Directors' meeting may be taken without a meeting if the action is taken by all
members of the Board. The action must be evidenced by one or more written
consents describing the action taken, signed by each director, and included in
the minutes or filed with the corporate records reflecting the action taken.

      Action taken under this section is effective when the last director signs
the consent, unless the consent specifies a different effective date.

      A consent signed under this section has the effect of a meeting vote and
may be described as such in any document.

      Section 12. A director may resign at any time by delivering written notice
to the Board of Directors, its Chairman or to the corporation. A resignation is
effective when the notice is delivered unless the notice specifies a later
effective date.

      The stockholders may remove one or more directors with or without cause
unless otherwise provided by the Articles of Incorporation. The removal of any
director of the corporation elected or appointed by the stockholders of the
corporation or by its Board of Directors shall be effected only by the vote of
not less than two-thirds (2/3) of the total outstanding Common Stock.
Notwithstanding the foregoing, these voting requirements for director removal
shall not apply to any director elected by any class (other than Common Stock)
or series which may be or become entitled to elect a director voting as a
separate class or series, and the removal of such a director shall be governed
by the provisions relating to that class or series.

                                       8


      A director may be removed by the stockholders only at a meeting called for
the purpose of removing him and the meeting notice must state that the purpose,
or one of the purposes, of the meeting is removal of the director.

      Section 13. The Board of Directors may create one or more committees and
appoint members of the Board of Directors to serve on them. Each committee must
have two (2) or more members, who serve at the pleasure of the Board of
Directors. The Audit Committee, the Compensation Committee and the Nominating
and Governance Committee shall be standing committees of the Board of Directors,
each of which shall in due course have separate charters approved by the Board
of Directors. There shall be such other standing and ad hoc committees as the
Board of Directors may time to time create.

      The creation of a committee and appointment of members to it must be
approved by a majority of all the directors in office when the action is taken.

      The provisions of the By-laws which govern meetings, action without
meetings, notice and waiver of notice, and quorum and voting requirements of the
Board of Directors, shall apply to committees and their members as well.

      To the extent specified by the Board of Directors, each committee may
exercise the authority of the Board of Directors.

      A committee may not, however: (a) authorize distributions; (b) approve or
propose to stockholders action that requires approval by stockholders; (c) fill
vacancies on committees of the Board of Directors; (d) amend the Articles of
Incorporation; (e) adopt, amend or repeal by-laws; (f) approve a plan of merger
not requiring stockholder approval; (g) authorize or approve reacquisition of
shares except according to a formula or method prescribed by the Board of
Directors; or (h) authorize or approve the issuance or sale or contract for sale
of shares, or determine the designation and relative rights, preferences and
limitations of a class or series of shares, except that the Board of Directors
may authorize a committee (or a senior executive officer of the corporation) to
do so within limits specifically prescribed by the Board of Directors.

                                       9


      The creation of, delegation of authority to, or action by a committee does
not alone constitute compliance by a director with the standards of conduct
required by law.

      Article V. Officers.

      Section 1. The officers of this corporation shall be a Chairman of the
Board, a Vice Chairman of the Board (if appointed by the Board at its
discretion), a President, an Executive Vice President (if appointed by the Board
at its discretion), one or more Vice Presidents, a Secretary and a Treasurer,
all of whom shall be appointed for the term of one (1) year, and shall hold
office until their successors are duly elected and qualified. Such other
officers and assistant officers as may be deemed necessary may be appointed by
the Board of Directors or by the officers duly appointed by the Board of
Directors. Any two or more offices may be simultaneously held by the same
person.

      Section 2. The officers of the corporation shall be appointed annually by
the Board of Directors at the first meeting of the Board of Directors held after
each annual meeting of the stockholders. Officers of the corporation may also be
appointed by the Board of Directors to serve until the next annual meeting, when
a new office is created by amendment to, or restatement of, these By-Laws or, in
the absence of a resignation, when an incumbent officer cannot perform the
duties conferred upon him by reason of absence or inability or unfitness to
carry out said duties. The appointment of an officer shall not itself create
contract rights. Officers shall serve at the pleasure of the Board of Directors.

      Section 3. An officer may resign at any time by delivering notice to the
corporation. A resignation is effective when the notice is delivered unless the
notice specifies a later effective date. If a resignation is made effective at a
later date and the corporation accepts the future effective date, it may fill
the pending vacancy before the effective date if the successor does not take
office until the effective date. An officer's resignation shall not affect the
corporation's contract rights, if any, with the officer.

                                       10


      Section 4. Any officer appointed by the Board of Directors may be removed
by the Board of Directors at any time with or without cause whenever in its
judgment the best interests of the corporation would be served thereby, but such
removal shall not affect the contract rights with the corporation, if any, of
the officer so removed. Any office or assistant officer, if appointed by another
officer, may likewise be removed by such officer.

      Section 5. A vacancy in any office because of death, resignation, removal,
disqualification or otherwise, may be filled by the Board of Directors for the
unexpired portion of the term.

      Section 6. The Chairman of the Board shall preside at all directors'
meetings; shall sign all stock certificates (which signature may be by facsimile
as provided in Article II, Section 2, of these By-laws); and shall have
authority to sign on behalf of the corporation, bills, notes, receipts,
acceptances, endorsements, checks, releases, contracts and documents of every
nature and kind, to issue checks or otherwise draw upon the deposits or credits
of the corporation, excepting dividends, and to do such other acts not
specifically enumerated herein and which are not inconsistent with the purposes
of the business of the corporation and its charter authority or not otherwise
specifically delegated to any other officer.

      Section 7. The Vice Chairman of the Board (if appointed by the Board at
its discretion) shall perform all the duties of the Chairman of the Board at
such times as the Chairman is unable to perform the duties conferred upon him by
reason of absence or inability or unfitness to carry out said duties. The Vice
Chairman shall further perform such duties as may be directed to him by the
Chief Executive Officer or by the Board of Directors.

      Section 8. The President shall be the chief executive officer of the
corporation. He shall sign all stock certificates (which signature may be by
facsimile as provided in Article II, Section 2, of these By-laws) and shall
perform all of the duties of the Chairman of the Board at such times as the
Chairman or Vice Chairman (if appointed) is unable to perform the duties
conferred

                                       11


upon him by reason of absence or inability or unfitness to carry out said
duties. He shall have general supervision over the affairs of the corporation;
shall perform the duties generally conferred upon the chief executive officer of
a corporation, including the authority to conduct the affairs of the corporation
and to carry out the policies thereof; and shall have authority to sign on
behalf of the corporation, bills, notes, receipts, acceptances, endorsements,
checks, releases, contracts and documents of every nature and kind, to issue
checks or otherwise draw upon the deposits or credits of the corporation,
excepting dividends, to extend credit to persons and in amounts as he may deem
advisable, and to do such other acts not specifically enumerated herein and
which are not inconsistent with the purposes of the business of the corporation
and its charter authority or not otherwise specifically delegated to any other
officer. He shall have general charge of the office and the plant or plants of
the corporation, with authority to employ and terminate such office assistants
and employees as he may deem advisable and necessary, and to fix and pay
salaries for such employment. The President shall further perform such duties as
may be directed to him by the Board of Directors and shall have authority to
delegate any of the duties herein set forth.

      Section 9. The Executive Vice President (if appointed by the Board at its
discretion) shall perform all the duties of the President at such times as the
President is unable to perform the duties conferred upon him by reason of
absence or inability or unfitness to carry out said duties. The Executive Vice
President shall further perform such duties as may be directed to him by the
President or by the Board of Directors.

      Section 10. The Vice President(s) shall perform such duties as may be
directed to him(them) by the President or by the Board of Directors.

      Section 11. The Secretary shall issue notices of all directors' and
stockholders' meetings, and shall attend and keep the minutes of the same; shall
have charge of all corporate books, records and papers; shall be the custodian
of the corporate seal; shall authenticate records of the corporation; shall
attest

                                       12


with his signature and impress with the corporate seal all stock certificates
(which signature and seal may be facsimile as provided in Article II, Section 2,
of these By-laws) and written contracts of the corporation, but such attestation
shall not be limited to the Secretary and the absence of such attestation shall
not affect the legal validity of any written contracts; and shall perform all
other such duties as are incidental to his office and that may be specifically
delegated to his office.

      Section 12. The Treasurer shall have custody of all monies and securities
of the corporation, and he shall keep regular books of account and shall submit
them, together with all his vouchers, receipts, records and other papers to the
directors for their examination and approval as often as they may require. The
Treasurer, or such other officer, if any, who has been designated as the chief
financial officer by the Board of Directors, shall have the fiscal
responsibility for the affairs of the corporation, including future operations,
and shall from time to time propose or otherwise institute such fiscal policy as
may be determined by the Board of Directors.

      Section 13. The duties of the Secretary or Treasurer or any part thereof
may be from time to time delegated by the Secretary or Treasurer, with the
consent of the Board of Directors, to an Assistant Secretary or Assistant
Treasurer. The Assistant Secretary or Assistant Treasurer shall have the
authority to perform such acts as may be delegated to him by the Secretary or
Treasurer with the consent of the Board of Directors.

      Section 14. For their services, the Vice Chairman (if appointed), the
Executive Vice President (if appointed), the Vice President(s), the Secretary,
the Treasurer and the Assistant Secretary or Assistant Treasurer (if appointed)
shall each receive such salary and other compensation as may be fixed by the
President, or, in his absence, by the directors.

      Section 15. As assigned and directed by the Board of Directors, the Vice
President(s), the Secretary or the Treasurer shall perform those duties of the
Chairman, the Vice Chairman (if appointed), the President or the Executive Vice

                                       13


President (if appointed) at such times as the Chairman, the Vice Chairman (if
appointed), the President or the Executive Vice President (if appointed) is
unable to perform the duties conferred upon him by reason of absence or
inability or unfitness to carry out said duties.

      Article VI. Indemnification of Directors, Officers and Other Persons

      Section 1. The Corporation shall indemnify its directors, officers, those
employees of the Corporation appointed by the President to serve on the
Corporation's Executive Committee and those employees selected by the Executive
Committee to be the Division Managers, to the fullest extent permitted by law,
except in an action brought directly by the Corporation against such person.

      Section 2. To the extent permitted by law, the right to indemnification
conferred in this Article (a)shall apply to acts or omissions antedating the
adoption of this Article; (b)shall be severable; (c)shall continue as to a
person who has ceased to be such director, officer or employee; and (d) shall
inure to the benefit of the heirs, executors and administrators of such person.

      Section 3. This article may be repealed or amended from time to time by
the Board of Directors with or without shareholder approval; provided however,
that no such repeal or amendment shall limit the right to indemnification
conferred in this Article for liability for acts or omissions which occurred
prior to the time of such repeal or amendment.

      Section 4. If the Corporation indemnifies or advances expenses to a
director under this Article, the Corporation shall, if required by Section
79-4-16.21(a) of the Mississippi Code of 1972, as amended, report the
indemnification or advance in writing to the shareholders with or before the
notice of the next shareholder meeting.

      Article VII. Dividends and Finance.

      Section 1. Dividends may be declared from time to time by resolution of
the Board of Directors; but no dividends shall be paid if, after giving them
effect, (a) the corporation would not be able to pay its debts as they become
due in the usual course of business; or (b) the corporation's total assets would
be less than

                                       14


the sum of its total liabilities plus (unless the Articles of Incorporation
permit otherwise) the amount that would be needed, if the corporation were to be
dissolved at the time of the distribution, to satisfy the preferential rights
upon dissolution of stockholders whose preferential rights are superior to those
receiving the distribution.

      Section 2. The funds of the corporation shall be deposited in those
depository institutions designated by the Board of Directors, and such funds may
be withdrawn upon the check or demand of either the Chairman of the Board, the
President, the Vice President(s), the Secretary or the Treasurer or by authority
granted to some other individual by the Chairman of the Board, the Vice Chairman
of the Board, or the President or the Executive Vice President (if any) and one
other officer of the corporation by appropriate notice directed to any such
banking institution or trust company.

      Article VIII. Contracts and Loans.

      The Board of Directors may authorize any officer or officers, and any
agent or agents to enter into any contract, make any loan or execute and deliver
any instrument in the name of and on behalf of the corporation, and such
authority may be general or confined to a specific instance.

      Article IX. Fiscal Year.

      The fiscal year of the corporation shall end on the 31st day of October in
each year.

      Article X. Corporate Seal.

      The Board of Directors shall provide a corporate seal which shall be
circular in form and shall have inscribed thereon the name of the corporation,
the state of incorporation and the words "Corporate Seal." The seal may be used
by causing it or a facsimile thereof to be impressed or affixed or reproduced or
otherwise.

                                       15


      Article XI. Waiver of Notice.

      Whenever any notice is required to be given to any stockholder or director
of the corporation under the provisions of these By-laws or under the provisions
of the Articles of Incorporation or under the provisions of the Mississippi
Business Corporation Act, a waiver thereof in writing, signed by the person or
persons entitled to such notice, whether before or after the date and time
stated in the notice, and filed with the minutes or corporate records, shall be
equivalent to the giving of such notice.

      Article XII. Transfer Agent.

      The Board of Directors shall be authorized, in its discretion, to contract
with and employ a securities transfer agent, either within or without the State
of Mississippi for the general purposes of issuing and cancelling stock and
other security certificates of the corporation, of transfer processing and of
other related security services. The services of any security transfer agent,
for which the Board may contract, may include, but not be limited to, all
security processing, stockholder record-keeping, election processing, dividend
payment, dividend reinvestment, tax information, notices and proxies, securities
regulation reporting, and corporate reorganization work related to securities.
Any transfer agent, if employed, shall be authorized and empowered to affix
official signatures and the seal of the corporation to stock and other security
certificates by facsimile and to sign on its behalf any and all stock and other
security certificates issued by the corporation.

                                       16


      Article XIII. Amendments.

      These By-laws may be altered, amended or repealed or new By-laws may be
adopted by the Board of Directors at any regular or special meeting of the Board
of Directors. Any alteration, amendment or repeal of, or any addition to, these
By-laws which affects classes of directors, the filling of vacancies on the
Board of Directors, the removal of directors, super majority voting
requirements, cumulative voting and classes of stock including preferences,
limitations and relative rights thereof shall require an affirmative vote of
two-thirds (2/3) or more of all the directors in office when the action is
taken; provided that such two-thirds (2/3) vote shall not be required for any
such alteration, amendment or repeal of, or any addition to, these By-laws at a
time when no person, corporation or entity, other than a member of the Sanderson
Family (as such term is defined in Article NINTH of the Articles of
Incorporation), beneficially owns (as such term is defined in Article NINTH of
the Articles of Incorporation) 20% or more of the outstanding shares of Common
Stock of the corporation or 20% or more of the total voting power of the
corporation entitled to vote on any such matter at a meeting of stockholders.

                                       17

EX-10.1

                                                                   EXHIBIT 10.1*

                          AMENDMENT TO PRIOR AGREEMENT

                                     BETWEEN

                              SANDERSON FARMS, INC.
                          (McCOMB PRODUCTION DIVISION)

                                       AND

            UNITED FOOD AND COMMERCIAL WORKERS, LOCAL 1529, AFL-CIO

                                 AFFILIATED WITH

                       UNITED FOOD AND COMMERCIAL WORKERS
                          INTERNATIONAL UNION, AFL-CIO

                        JULY 1, 2002 - DECEMBER 31, 2004



                          AMENDMENT TO PRIOR AGREEMENT

      This Amendment to Agreement is effective the fourth day of January, 2004,
by and between SANDERSON FARMS, INC. (PRODUCTION DIVISION) (hereinafter referred
to as "Company"), and United Food and Commercial Workers, Local Union 1529
(hereinafter referred to as the "Union"), and provides as follows:

                                       1.

      The purpose of this Amendment to Agreement is to change portions of the
existing Agreement between the Company and Union, as modified by Amendment dated
August 22, 2003, covering the bargaining unit of employees of the Company at its
Fernwood Mississippi Feed Mill. It shall be attached thereto and made a part of
that Agreement.

                                       2.

      Wages shall be paid as provided in Appendix A attached hereto and made a
part of this Amendment to Agreement.

      In all other respects, the existing Agreement between the parties, as
entered into and signed on the 16th day of July, 2002, and as amended on August
22, 2003, shall remain in full force and effect.

      IN WITNESS WHEREOF, the parties have hereunto signed their names this 26th
day of January, 2004.

SANDERSON FARMS, INC.                              UNITED FOOD AND COMMERCIAL
(McCOMB PRODUCTION DIVISION)                       WORKERS, LOCAL 1529, AFL-CIO

/s/Doug Creel                                      /s/Kevin L. Smith
- ----------------------------                       -----------------------------
/s/Grady Cutrer                                    /s/Rick Slayton
- ----------------------------                       -----------------------------
                                                   /s/Brian K. White
                                                   -----------------------------
                                                   /s/Herbert May
                                                   -----------------------------

                                        2


                                  APPENDIX "A"

                                  WAGE SCHEDULE

                            EFFECTIVE JANUARY 4, 2004

                                    FEED MILL

                         
Master Maintenance          $ 12.70
Unloader - Mill             $ 10.00
Control Room Technician     $ 10.00
Utility - Mill              $  9.10



      Newly hired employees shall receive a training rate of $6.55 per hour,
which shall increase as follows: after 60 days, $7.65; after 6 months, $8.25;
and, after one year, the amount shown above. Newly hired employees in premium
classifications shall receive the rate of that classification when the employee
demonstrates the ability to perform satisfactorily all the duties of the job.

                                FEED MILL DRIVERS

Payment by Load and Mileage



                                         By Mile
Load                                 Round trip miles
                                                              
Per Trip                $ 13.50         - to   30                      0.2603
Per Trip - Split        $ 15.50         31 to  60                      0.2476
                                        61 to  90                      0.2360
                                        91 to 120                      0.2256
                                       121 to 150                      0.2207
                                       151 to 180                      0.2160
                                       181 and above                   0.2115


                                                           
Reclaim Driver                                                $ 11.05
Holiday, Vacation, Funeral Leave                              $ 11.55
Downtime (when downtime event exceeds one hour)               $ 10.10
Training rate (until driver reaches incentive or end
   of probation, whichever is sooner)                         $ 10.10
Seniority Pay: Load/Mile Pay - Additional (after 5 years)     $ .02 per mile
Seniority Pay: Hourly Pay - Additional (after 5 years)        $ .50 per hour



                                        3

EX-10.2

EXHIBIT 10.2*

                              SANDERSON FARMS, INC.

                       NINTH AMENDMENT TO CREDIT AGREEMENT

Harris Trust and Savings Bank
Chicago, Illinois

SunTrust Bank
Atlanta, Georgia

Trustmark National Bank
Jackson, Mississippi

AmSouth Bank
Jackson,
Mississippi

Ladies and Gentlemen:

      Reference is hereby made to that certain Credit Agreement dated as of July
31, 1996, as amended (the "Credit Agreement") among the undersigned. Sanderson
Farms, Inc., a Mississippi corporation (the "Company"), you (the "Banks") and
Harris Trust and Savings Bank, as agent for the Banks (the "Agent"). All defined
terms used herein shall have the same meaning as in the Credit Agreement unless
otherwise defined herein.

      The Credit Agreement provides for a Revolving Credit to be made available
to the Company through July 31, 2006. The Company now applies to the Banks to
amend the Credit Agreement to extend the Termination Date thereof from July 31,
2006, to July 31, 2009, to  change the definitions of the terms "Applicable
Domestic Rate Margin" and "Applicable Eurodollar Margin" and to amend certain
other provisions of the Credit Agreement, all in the manner and on the terms and
conditions set forth herein.

1.    AMENDMENTS.

      Upon satisfaction of all of the conditions precedent set forth in Section
2 hereof, the Credit Agreement shall be amended as follows:

      1.1.  The date "July 31, 2006" appearing in the last sentence of Section
1.1(a) of the Credit Agreement shall be replaced with the date "July 31, 2009",
and the Revolving Credit Termination Date under the Credit Agreement shall be
July 31, 2009.

      1.2.  The eighth sentence of Section 1.6 of the Credit Agreement shall be
amended to read as follows:

      "In consideration of the issuance of L/Cs the Company agrees to pay Harris
      a commission fee in the amount of the rate per annum (computed on the
      basis of a 360 day year and actual days elapsed) equal to the Applicable
      Eurodollar Margin of the face



      amount of each standby L/C (other than the Bond Letter of Credit) issued
      hereunder payable quarterly in arrears on the last day of each calendar
      quarter, commencing June 30, 2004, and on the Termination Date, and
      one-quarter of one percent (0.25%) per annum (computed as aforesaid) of
      the face amount of each trade letter of credit issued hereunder, payable
      upon negotiation thereof".

      1.3.  The definitions of the terms "Applicable Domestic Rate Margin" and
"Applicable Eurodollar Margin" appearing in Section 4 of the Credit Agreement
shall be amended to read as follows:

            " "Applicable Domestic Rate Margin" with respect to Domestic Rate
      Loans "Applicable Eurodollar Margin" with respect to Eurodollar Loans and
      "Applicable Commitment Fee Margin" with respect to the commitment fee
      payable under Section 2.1 hereof, shall each mean the rate specified for
      such obligation below in Levels I, II, III and IV for the range of Funded
      Debt Ratio specified for each Level:



                 FUNDED DEBT               APPLICABLE        APPLICABLE            APPLICABLE
                    RATIO                  EURODOLLAR       DOMESTIC RATE        COMMITMENT FEE
                                             MARGIN            MARGIN                MARGIN
              -------------------          ----------       -------------        --------------
                                                                     
LEVEL I               <35%                   1.00%             0.00%                 0.20%

LEVEL II      > or = 35% and <45%            1.25%             0.00%                 0.20%

LEVEL III     > or = 45% and <55%            1.50%             0.00%                 0.25%

LEVEL IV          > or = 55%                 2.00%             0.00%                 0.30%


      Not later than ten (10) Business Days after receipt by the Banks of the
      Compliance Certificate called for by Section 7.4(c) hereof for the
      applicable fiscal quarter, the Agent shall determine the Funded Debt Ratio
      for the applicable period and shall promptly notify the Company of such
      determination and of any change in the Applicable Eurodollar Margin and
      Applicable Commitment Fee Margin (collectively, "Applicable Margins")
      resulting therefrom. Any such change in the Applicable Margins shall be
      effective as of the date the Agent so notifies the Company with respect to
      all Eurodollar Loans and Eurodollar Portions outstanding, and commitment
      fees payable, on such date, and such new Applicable Margins shall continue
      in effect until the effective date of the next quarterly redetermination
      in accordance with this Section. Each determination of the Funded Debt
      Ratio and Applicable Margins by the Agent in accordance with this Section
      shall be conclusive and binding on the Company absent manifest error. From
      May 18, 2004, until the Applicable Margins are first adjusted pursuant
      hereto, the Applicable Margins shall be those set forth in Level I above."

                                       -2-


      1.4.  Section 4.1 of the Credit Agreement shall be amended by adding the
following definition thereto in the appropriate alphabetical order:

            "Change of Control" means any of (a) the acquisition by any "person"
      or "group" (as such terms are used in sections 13(d) and 14(d) of the
      Securities Exchange Act of 1934, as amended) at any time of beneficial
      ownership of a majority of the voting power in the elections of directors,
      other than acquisitions of such interests by the estate of Joe Franklin
      Sanderson, deceased, the direct lineal descendents of Joe Franklin
      Sanderson, deceased, the direct lineal descendants of Dewey Sanderson,
      deceased, their spouses, any trusts for the benefit of any of the
      foregoing, and any employee stock option plan established by the Company,
      (b) the failure of individuals who are members of the board of directors
      (or similar governing body) of the Company on May 18, 2004 (together with
      any new or replacement directors whose initial nomination for election was
      approved by a majority of the directors who were either directors on such
      date or previously so approved) to constitute a majority of the board of
      directors (or similar governing body) of the Company, or (c) any "Change
      of Control" (or words of like import), as defined in any agreement or
      indenture relating to any issue of Indebtedness for Borrowed Money or any
      equity securities of the Company shall occur.

      1.5.  Section 7.9 of the Credit Agreement shall be amended to read as
follows:

            "Section 7.9. Consolidated Tangible Net Worth. The Company will
      maintain at all times Consolidated Tangible Net Worth during each fiscal
      year of the Company in an amount not less than:

            (a)   during each of the last two fiscal quarters of the fiscal year
      ending October 31, 2004, $180,000,000 plus any Net Proceeds of Stock
      issued during either quarter or quarters of such fiscal year plus 60% of
      an amount (but not less than zero) equal to (i) the Company's Consolidated
      Net Income through the preceding quarter-end in such fiscal year, minus
      (ii) the lesser of (x) $2,500,000 for each completed fiscal quarter in
      such fiscal year and (y) the aggregate amount of all dividends actually
      paid during such fiscal year through the last day of such fiscal quarter
      rounded to the next highest $100,000; and

            (b)   during each fiscal quarter of each fiscal year of the Company
      thereafter, an amount equal to the sum of the minimum amount required to
      be maintained on the last day of the preceding fiscal year of the Company
      plus the Net Proceeds of Stock issued in the last quarter of the preceding
      fiscal year and any preceding quarter or quarters of the then current
      fiscal year plus 60% of an amount (but not less than zero) equal to (i)
      the Company's Consolidated Net Income, if any, through the immediately
      preceding fiscal quarter end of such fiscal year minus (ii) the lesser of
      (x) $2,500,000 for each completed fiscal quarter in such fiscal year and
      (y) the aggregate amount of all dividends actually paid during such fiscal
      year through the last day of such fiscal quarter rounded to the next
      highest $100,000."

                                       -3-


      1.6.  Section 7.12 of the Credit Agreement shall be amended to read as
follows:

            "Section 7.12. Capital Expenditures. The Company will not, and will
not permit any Subsidiary to, be obligated to spend during any fiscal year for
capital expenditures (as defined and classified in accordance with generally
accepted accounting principles consistently applied, including without
limitation any such capital expenditures in respect of Capitalized Leases but
excluding any acquisition permitted by Section 7.14(d) which might constitute
such a capital expenditure) an aggregate amount for the Company and its
Subsidiaries in excess of the amount indicated below for each fiscal year of the
Company plus an amount (the "Carryover Amount") permitted to be spent in the
preceding fiscal year but not actually spent therein (the "Maximum Carryover
Amount to the Next Fiscal Year"):



                            MAXIMUM                        MAXIMUM CARRYOVER AMOUNT
FISCAL YEAR ENDING      LIMITATION AMOUNT                  TO THE NEXT FISCAL YEAR
- ------------------      -----------------                  -----------------------
                                                     
October 31, 2004          $  40,000,000                          Unlimited
October 31, 2005          $ 120,000,000                          Unlimited
October 31, 2006          $  30,000,000                         $7,500,000
October 31, 2007          Prior Year's                          $7,500,000
                          Depreciation
October 31, 2008          Prior Year's                          $7,500,000
                          Depreciation
October 31, 2009          Prior Year's                          $7,500,000
                          Depreciation
Thereafter                Prior Year's                          $7,500,000
                          Depreciation


      1.7.  The Credit Agreement shall be amended by adding the following
provision thereto as Section 7.22 thereof:

            "Section 7.22. No Guaranty of Estate Indebtedness. The Company shall
      not, and shall not permit any Subsidiary to, directly or indirectly
      guaranty the payment or collection of any Indebtedness for Borrowed Money
      of the Estate of Joe Franklin Sanderson, deceased, or of the executors,
      co-executors, or any of them, of such estate."

      1.8.  Section 8.1(c) of the Credit Agreement shall be amended by adding
the phrase "and 7.22" immediately after the phrase "and 7.19" appearing therein.

      1.9.  Section 8.1 of the Credit Agreement shall be amended by replacing
the period at the end of subsection (1) thereof with "; or" and by adding the
following provision thereto as subsection(m):

            "(m) a Change of Control shall occur."

                                       -4-


2.    CONDITIONS PRECEDENT.

      The effectiveness of this Amendment is subject to the satisfaction of all
of the following conditions precedent:

      2.1.  The Company and each of the Banks shall have executed this
Amendment.

      2.2.  Each Guarantor Subsidiary shall have executed the Guarantors'
Acknowledgment attached hereto.

      2.3.  The Agent shall have received the favorable written opinion of
counsel for the Company in the form of Exhibit A attached hereto.

      2.4.  The Agent shall have received a Certificate of the Treasurer of the
Company and each of the Guarantor Subsidiaries with respect to (a) resolutions
of their respective Board of Directors authorizing the transactions contemplated
hereby, and (b) incumbency and signature of the President, Treasurer and
Secretary of the Company and each Guarantor Subsidiary.

      2.5.  The Agent shall have received for the ratable account of the Banks a
non-refundable front-end fee in an amount of $200,000.

3.    REPRESENTATIONS AND WARRANTIES.

      3.1.  Each of the representations and warranties set forth in Section 5 of
the Credit Agreement are true and correct.

      3.2.  The Company is in full compliance with all of the terms and
conditions of the Credit Agreement and no Event of Default or Potential Default
has occurred and is continuing thereunder or shall result after giving effect to
this Amendment.

4.    MISCELLANEOUS.

      4.1.  Reference to this specific Amendment need not be made in any note,
document, letter, certificate, the Credit Agreement itself, the Revolving Notes,
or any communication issued or made pursuant to or with respect to the Credit
Agreement or the Revolving Notes, any reference to the Credit Agreement being
sufficient to refer to the Credit Agreement as amended hereby.

      4.2.  This Amendment may be executed in any number of counterparts, and by
the different parties on different counterparts, all of which taken together
shall constitute one and the same agreement. Any of the parties hereto may
execute this Amendment by signing any such counterpart and each of such
counterparts shall for all purposes be deemed to be an original. This Amendment
shall be governed by the internal laws of the State of Illinois.

                           [SIGNATURE PAGES TO FOLLOW]

                                       -5-


      Upon acceptance hereof by the Agent and the Banks in the manner
hereinafter set forth this Amendment shall be a contract between us for the
purposes herein above set forth.

      Dated as of May 18, 2004.

                                            SANDERSON FARMS, INC.

                                            By /s/ Mike Cockrell
                                              ----------------------
                                              Its CFO

      Accepted and agreed to as of the day and year last above written.

                                             HARRIS TRUST AND SAVINGS BANK
                                               individually and as Agent

                                            By /s/ David Bechstein
                                              ----------------------
                                              Its Vice President

                                            SUNTRUST BANK

                                            By /s/ Michael Ladrey
                                              ----------------------
                                              Its Managing Director

                                            By______________________
                                              Its___________________

                                            TRUSTMARK NATIONAL BANK

                                            By /s/ William Edwards
                                              ----------------------
                                              Its First Vice President

                                            AMSOUTH BANK

                                            By /s/ Stanley A. Herrin
                                              ----------------------
                                              Its Vice President

                                 Signature Page
                             Sanderson Farms, Inc.
                       Ninth Amendment to Credit Agreement



                                  HARRIS TRUST

                            GUARANTORS ACKNOWLEDGMENT

      The undersigned, each of which has executed and delivered to the Banks a
Guaranty Agreement dated as of July 31, 1996 (the "Guaranty Agreement"), hereby
acknowledges the amendment of the Credit Agreement as set forth above and agrees
that all of the Company's indebtedness, obligations and liabilities to the Banks
and the Agent under the Credit Agreement and the Notes as amended by the
foregoing Amendment shall continue to be entitled to the benefits of said
Guaranty Agreement. The undersigned further agree that the Acknowledgment or
consent of the undersigned to any further amendments of the Credit Agreement
shall not be required as a result of this Acknowledgment having been obtained,
except to the extent, if any, required by the Guaranty Agreement.

Dated as of May 18, 2004.

                                         SANDERSON FARMS, INC. (FOODS DIVISION)

                                         By /s/ Mike Cockrell
                                           ----------------------
                                           Its CFO

                                         SANDERSON FARMS, INC. (PRODUCTION
                                           DIVISION)

                                         By /s/ Mike Cockrell
                                           ----------------------
                                           Its CFO


                                         SANDERSON FARMS, INC. (PROCESSING
                                           DIVISION)

                                           By /s/ Mike Cockrell
                                             ----------------------
                                             Its CFO



                                   EXHIBIT A

                           FORM OF OPINION OF COUNSEL

EX-15

EXHIBIT 15

             ACCOUNTANTS' LETTER RE: UNAUDITED FINANCIAL INFORMATION

The Board of Directors and Stockholders
Sanderson Farms, Inc.

We are aware of the incorporation by reference in Registration Statements (Form
S-8 Nos. 33-67474 and 333-92412) pertaining to the Sanderson Farms, Inc. and
Affiliates Stock Option Plan of our report dated May 21, 2004 relating to the
unaudited condensed consolidated interim financial statements of Sanderson
Farms, Inc. that are included in its Form 10-Q for the quarter ended April 30,
2004.

                                                      /s/Ernst and Young LLP

New Orleans, Louisiana
May 21, 2004

EX-31.1

EXHIBIT 31.1

                                  CERTIFICATION

I, Joe F. Sanderson, Jr., certify that:

1.    I have reviewed this quarterly report on Form 10-Q of Sanderson Farms,
      Inc.;

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

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

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

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

      (b)   Evaluated the effectiveness of the registrant's disclosure controls
              and procedures and presented in this report our conclusions about
              the effectiveness of the disclosure controls and procedures, as of
              the end of the period covered by this report based on such
              evaluation; and

      (c)   Disclosed in this report any change in the registrant's internal
              control over financial reporting that occurred during the
              registrant's most recent fiscal quarter (the registrant's fourth
              fiscal quarter in the case of an annual report) that has
              materially affected, or is reasonably likely to materially affect,
              the registrant's internal control over financial reporting; and

5.    The registrant's other certifying officer(s) and I have disclosed, based
      on our most recent evaluation of internal control over financial
      reporting, to the registrant's auditors and the audit committee of the
      registrant's board of directors (or persons performing the equivalent
      functions):



      (a)   All significant deficiencies and material weaknesses in the design
              or operation of internal control over financial reporting which
              are reasonably likely to adversely affect the registrant's ability
              to record, process, summarize and report financial information;
              and

      (b)   Any fraud, whether or not material, that involves management or
              other employees who have a significant role in the registrant's
              internal control over financial reporting.

May 25, 2004

                                                   /s/Joe F. Sanderson, Jr.
                                                   -----------------------------
                                                   President, Chief Executive
                                                   Officer and Chairman of the
                                                   Board (Principal Executive
                                                   Officer)

EX-31.2

EXHIBIT 31.2

                                  CERTIFICATION

I, D. Michael Cockrell, certify that:

1.    I have reviewed this quarterly report on Form 10-Q of Sanderson Farms,
      Inc.;

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

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

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

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

      (b)   Evaluated the effectiveness of the registrant's disclosure controls
              and procedures and presented in this report our conclusions about
              the effectiveness of the disclosure controls and procedures, as of
              the end of the period covered by this report based on such
              evaluation; and

      (c)   Disclosed in this report any change in the registrant's internal
              control over financial reporting that occurred during the
              registrant's most recent fiscal quarter (the registrant's fourth
              fiscal quarter in the case of an annual report) that has
              materially affected, or is reasonably likely to materially affect,
              the registrant's internal control over financial reporting; and

5.    The registrant's other certifying officer(s) and I have disclosed, based
      on our most recent evaluation of internal control over financial
      reporting, to the registrant's auditors and the audit committee of the
      registrant's board of directors (or persons performing the equivalent
      functions):



      (a)   All significant deficiencies and material weaknesses in the design
              or operation of internal control over financial reporting which
              are reasonably likely to adversely affect the registrant's ability
              to record, process, summarize and report financial information;
              and

      (b)   Any fraud, whether or not material, that involves management or
              other employees who have a significant role in the registrant's
              internal control over financial reporting.

May 25, 2004

                                                   /s/D. Michael Cockrell
                                                   -----------------------------
                                                   D. Michael Cockrell
                                                   Treasurer and Chief
                                                   Financial Officer

EX-32.1

                                                                    EXHIBIT 32.1

                            CERTIFICATION PURSUANT TO
                                 18 U.S.C. 1350

In connection with the Quarterly Report of Sanderson Farms, Inc. (the "Company")
on Form 10-Q for the quarter ended April 30, 2004 (the "Report"), I, Joe F.
Sanderson, Jr., President and Chief Executive Officer of the Company, certify
that:

      (1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and

      (2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.

/s/Joe F. Sanderson, Jr.
- ------------------------
Joe F. Sanderson, Jr.
President and Chief Executive Officer
May 25, 2004

EX-32.2

                                                                    EXHIBIT 32.2

                            CERTIFICATION PURSUANT TO
                                 18 U.S.C. 1350

In connection with the Quarterly Report of Sanderson Farms, Inc. (the "Company")
on Form 10- Q for the quarter ended April 30, 2004 (the "Report"), I, D. Michael
Cockrell, Treasurer and Chief Financial Officer of the Company, certify that:

      (1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and

      (2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.

/s/D. Michael Cockrell
- -------------------------------------
D. Michael Cockrell
Treasurer and Chief Financial Officer
May 25, 2004