Form 10-Q

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TR88rDZS2wYo7ti1K1f/o81pBJEBKsTpbmy7t5MKDJ0WrzCW4vCfB7pHXbOL+58q dSu05kB/YccTnoRjmTZVKA== 0000916641-03-000521.txt : 20030312 0000916641-03-000521.hdr.sgml : 20030312 20030312172624 ACCESSION NUMBER: 0000916641-03-000521 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20030126 FILED AS OF DATE: 20030312 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SMITHFIELD FOODS INC CENTRAL INDEX KEY: 0000091388 STANDARD INDUSTRIAL CLASSIFICATION: MEAT PACKING PLANTS [2011] IRS NUMBER: 520845861 STATE OF INCORPORATION: VA FISCAL YEAR END: 0427 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-15321 FILM NUMBER: 03601437 BUSINESS ADDRESS: STREET 1: 200 COMMERCE STREET STREET 2: 999 WATERSIDE DRIVE CITY: SMITHFIELD STATE: VA ZIP: 23430 BUSINESS PHONE: 7573653000 MAIL ADDRESS: STREET 1: 900 DOMINION TOWER STREET 2: 999 WATERSIDE DRIVE CITY: NORFOLK STATE: VA ZIP: 23510 FORMER COMPANY: FORMER CONFORMED NAME: LIBERTY REAL ESTATE TRUST DATE OF NAME CHANGE: 19661113 FORMER COMPANY: FORMER CONFORMED NAME: LIBERTY EQUITIES CORP DATE OF NAME CHANGE: 19710221 10-Q 1 d10q.htm FORM 10-Q Form 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended January 26, 2003

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 0-2258

SMITHFIELD FOODS, INC.

200 Commerce Street

Smithfield, Virginia 23430

(757) 365-3000

Virginia

52-0845861

(State of Incorporation)

(I.R.S. Employer

Identification Number)

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 ¨

Class		Shares outstanding at March 7, 2003
Common Stock, $.50 par value		109,443,331

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SMITHFIELD FOODS, INC.

CONTENTS

		PAGE

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

	Consolidated Condensed Statements of Income – 13 and 39 Weeks Ended January 26, 2003 and January 27, 2002	3

	Consolidated Condensed Balance Sheets – January 26, 2003 and April 28, 2002	4-5

	Consolidated Condensed Statements of Cash Flows – 39 Weeks Ended January 26, 2003 and January 27, 2002	6

	Notes to Consolidated Condensed Financial Statements	7-11

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		11-17

Item 4. Controls and Procedures		17

PART II—OTHER INFORMATION

Item 1. Legal Proceedings		17-18

Item 6. Exhibits and Reports on Form 8-K		18-19

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

SMITHFIELD FOODS, INC.

CONSOLIDATED CONDENSED STATEMENTS OF INCOME

(Unaudited)

	13 Weeks Ended				39 Weeks Ended
(In millions, except per share data)	January 26, 2003		January 27, 2002		January 26, 2003		January 27, 2002
Sales	$	1,996.8	$	2,086.3	$	5,955.6	$	5,393.0
Cost of sales		1,786.0		1,782.0		5,312.0		4,552.0

Gross profit		210.8		304.3		643.6		841.0

Selling, general and administrative expenses		137.3		151.6		417.1		394.6
Depreciation expense		41.2		36.9		121.2		102.6
Interest expense		24.8		28.6		73.2		71.4
Gain on sale of IBP, inc. common stock		—		—		—		(7.0	)

Income before income taxes		7.5		87.2		32.1		279.4
Income taxes		2.2		32.7		10.9		107.5

Net income	$	5.3	$	54.5	$	21.2	$	171.9

Net income per common share:
Basic	$	.05	$	.49	$	.19	$	1.60
Diluted	$	.05	$	.48	$	.19	$	1.57

Average common share outstanding:
Basic		109.4		111.4		109.6		107.2
Diluted		110.9		113.9		111.1		109.5

See Notes to Consolidated Condensed Financial Statements

3-22

SMITHFIELD FOODS, INC.

CONSOLIDATED CONDENSED BALANCE SHEETS

(In millions)	January 26, 2003			April 28, 2002
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	56.3		$	71.1
Accounts receivable, net		518.2			516.7
Inventories		987.4			860.5
Prepaid expenses and other current assets		71.9			72.1

Total current assets		1,633.8			1,520.4

Property, plant and equipment		2,417.3			2,207.0
Less accumulated depreciation		(785.8	)		(658.9	)

Net property, plant and equipment		1,631.5			1,548.1

Other assets:
Goodwill		502.9			448.3
Investments in partnerships		115.3			119.7
Other		291.2			241.5

Total other assets		909.4			809.5

	$	4,174.7		$	3,878.0

See Notes to Consolidated Condensed Financial Statements

4-22

SMITHFIELD FOODS, INC.

CONSOLIDATED CONDENSED BALANCE SHEETS

(In millions, except share data)	January 26, 2003			April 28, 2002
LIABILITIES AND SHAREHOLDERS’ EQUITY	(Unaudited)
Current liabilities:
Notes payable	$	15.9		$	24.0
Current portion of long-term debt and capital lease obligations		110.8			68.9
Accounts payable		388.9			355.8
Accrued expenses and other current liabilities		311.1			273.2

Total current liabilities		826.7			721.9

Long-term debt and capital lease obligations		1,561.3			1,387.1

Other noncurrent liabilities:
Deferred income taxes		277.4			276.6
Pension and postretirement benefits		68.3			74.2
Other		37.1			37.3

Total other noncurrent liabilities		382.8			388.1

Minority interests		22.8			18.1

Shareholders’ equity:
Preferred stock, $1.00 par value, 1,000,000 authorized shares		—			—
Common stock, $.50 par value, 200,000,000 authorized shares; 109,403,331 and 110,284,112 issued and outstanding		54.7			55.1
Additional paid-in capital		474.9			490.1
Retained earnings		856.9			835.7
Accumulated other comprehensive loss		(5.4	)		(18.1	)

Total shareholders’ equity		1,381.1			1,362.8

	$	4,174.7		$	3,878.0

See Notes to Consolidated Condensed Financial Statements

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SMITHFIELD FOODS, INC.

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

	39 Weeks Ended
(In millions)	January 26, 2003			January 27, 2002
Cash flows from operating activities:
Net income	$	21.2		$	171.9
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		126.3			108.7
Gain on sale of IBP, inc. common stock		—			(7.0	)
Changes in operating assets and liabilities, net of effect of acquisitions		(80.7	)		44.3

Net cash provided by operating activities		66.8			317.9

Cash flows from investing activities:
Capital expenditures		(134.5	)		(101.8	)
Business acquisitions, net of cash		(100.6	)		(162.0	)
Proceeds from sale of IBP, inc. common stock		—			58.7
Other		(1.2	)		5.2

Net cash used in investing activities		(236.3	)		(199.9	)

Cash flows from financing activities:
Net borrowings (repayments) on revolving credit facility		227.0			(242.0	)
Proceeds from the issuance of long-term debt		12.4			400.5
Principal payments on long-term debt and capital lease obligations		(59.1	)		(119.8	)
Repurchase and retirement of common stock		(24.6	)		(84.5	)
Other		(3.5	)		(33.2	)

Net cash provided by (used in) financing activities		152.2			(79.0	)

Net (decrease) increase in cash and cash equivalents		(17.3	)		39.0
Effect of foreign exchange rate changes on cash		2.5			0.4
Cash and cash equivalents at beginning of period		71.1			56.5

Cash and cash equivalents at end of period	$	56.3		$	95.9

Supplemental disclosures of cash flow information:
Common stock issued for acquisitions	$	—		$	202.7

Cash payments during period:
Interest (net of amount capitalized)	$	65.5		$	58.4

Income taxes	$	14.9		$	104.2

See Notes to Consolidated Condensed Financial Statements

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SMITHFIELD FOODS, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(1)

These statements should beread in conjunction with the Consolidated Financial Statements and related notes, which are included in the Company’s Annual Report, for the fiscal year ended April 28, 2002. The interim consolidated condensed financial information furnished herein is unaudited. The information reflects all adjustments (which include only normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the financial position and results of operations for the periods included in the report.

(2)

Inventories consist of the following:

(In millions)	January 26, 2003		April 28, 2002
Hogs on farms	$	407.8	$	349.2
Fresh and processed meats		383.9		383.9
Cattle		71.6		25.2
Manufacturing supplies		52.5		51.9
Other		71.6		50.3

	$	987.4	$	860.5

(3)

Net income per basic share is computed based on the average common shares outstanding during the period. Net income per diluted share is computed based on the average common shares outstanding during the period adjusted for the effect of potential common stock equivalents, such as stock options. The computation for basic and diluted net income per share is as follows:

	13 Weeks Ended				39 Weeks Ended
(In millions, except per share data)	January 26, 2003		January 27, 2002		January 26, 2003		January 27, 2002
Net income	$	5.3	$	54.5	$	21.2	$	171.9

Average common shares outstanding:
Basic		109.4		111.4		109.6		107.2
Dilutive stock options		1.5		2.5		1.5		2.3

Diluted		110.9		113.9		111.1		109.5

Net income per common share:
Basic	$	.05	$	.49	$	.19	$	1.60

Diluted	$	.05	$	.48	$	.19	$	1.57

In the current fiscal year, the Company adopted the fair value method defined in Statement of Financial Accounting Standards (SFAS) No. 123, “Accounting for Stock-Based Compensation” (SFAS 123) to account for the Company’s stock option plans. The Company records compensation expense for stock options granted subsequent to April 28, 2002 based on the fair value as determined using the Black-Scholes option pricing model and weighted average assumptions. The Company estimates that the impact of recording compensation expense for stock options granted will be less than one cent per diluted share in the current fiscal year. Stock options granted prior to April 29, 2002 continue to be accounted for under Accounting Principles Board (APB) Opinion No. 25, “Accounting for Stock Issued to Employees” (APB 25). Under APB 25, no compensation expense is recorded. Had the Company used the fair value method to determine compensation

7-22

expense for its stock options granted prior to April 29, 2002, net income and net income per basic and diluted share would have been as follows:

	13 Weeks Ended				39 Weeks Ended
	January 26, 2003		January 27, 2002		January 26, 2003		January 27, 2002
(In millions, except per share data)	January 26, 2003		January 27, 2002		January 26, 2003		January 27, 2002
Net income, as reported	$	5.3	$	54.5	$	21.2	$	171.9
Pro forma net income		4.2		53.8		18.2		169.7
Net income per share, as reported:
Basic	$	.05	$	.49	$	.19	$	1.60
Diluted		.05		.48		.19		1.57
Pro forma net income per share:
Basic	$	.04	$	.48	$	.17	$	1.58
Diluted		.04		.47		.16		1.55

In December 2002, the Financial Accounting Standards Board (FASB) issued, SFAS No. 148, “Accounting for Stock-Based Compensation-Transition and Disclosure, an amendment to SFAS No. 123” (SFAS 148). SFAS 148 outlines certain methods for applying the fair value method as defined in SFAS 123. This statement also requires disclosures for options accounted for under APB 25 for all interim and annual financial statements. The Company’s prospective application of the fair value method of accounting for stock options is in compliance with the provisions of SFAS 148.

(4)

The components of comprehensive income, net of related taxes, consist of:

	13 Weeks Ended					39 Weeks Ended
	January 26, 2003		January 27, 2002			January 26, 2003			January 27, 2002
(In thousands)	January 26, 2003		January 27, 2002			January 26, 2003			January 27, 2002
Net income	$	5.3	$	54.5		$	21.2		$	171.9
Other comprehensive income:
Unrealized gain (loss) on cash flow hedges		1.3		(13.8	)		(0.4	)		(0.9	)
Foreign currency translation		12.4		(1.7	)		13.1			(5.3	)

Comprehensive income	$	19.0	$	39.0		$	33.9		$	165.7

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(5)

The following table presents information about the results of operations for each of the Company’s reportable segments for the 13 and 39 weeks ended January 26, 2003 and January 27, 2002, respectively.

	Meat Processing		Hog Production			General Corporate			Total
(In millions)	Meat Processing		Hog Production			General Corporate			Total
13 Weeks Ended:
January 26, 2003
Sales	$	1,954.8	$	258.5		$	—		$	2,213.3
Intersegment sales		—		(216.5	)		—			(216.5	)
Operating profit (loss)		108.1		(64.0	)		(11.8	)		32.3

January 27, 2002
Sales	$	2,014.8	$	279.6		$	—		$	2,294.4
Intersegment sales		—		(208.1	)		—			(208.1	)
Operating profit (loss)		100.3		30.7			(15.2	)		115.8

39 Weeks Ended:
January 26, 2003
Sales	$	5,794.8	$	755.7		$	—		$	6,550.5
Intersegment sales		—		(594.9	)		—			(594.9	)
Operating profit (loss)		230.4		(83.3	)		(41.8	)		105.3

January 27, 2002
Sales	$	5,138.4	$	989.0		$	—		$	6,127.4
Intersegment sales		—		(734.4	)		—			(734.4	)
Operating profit (loss)		138.6		249.4			(44.2	)		343.8

(6)

In November of fiscal 2003, the Company acquired Vall, Inc. (Vall) for $60.7 million in cash plus assumed liabilities. Vall, a hog production company with operations in Oklahoma and Texas, produces 350,000 market hogs annually. Had the acquisition of Vall occurred at the beginning of fiscal 2002, there would have been no material effect on sales for the 39 weeks ended January 26, 2003. Net income and net income per diluted share would have been $18.0 million and $.16 for the 39 weeks ended January 26, 2003. There would have been no material effect on sales, net income and net income per diluted share for the 13 and 39 weeks ended January 27, 2002.

In June of fiscal 2003, the Company acquired an 80% interest in Stefano Foods, Inc. (Stefano’s) for $35.8 million in cash plus assumed debt. The preliminary balance of the purchase price in excess of the fair value of the assets acquired and the liabilities assumed at the date of the acquisition was recorded as goodwill totaling $28.2 million.

In October of fiscal 2002, the Company acquired Packerland Holdings, Inc. (Packerland) and its affiliated companies for 6.3 million shares of the Company’s common stock plus assumed debt and other liabilities. The balance of the purchase prices in excess of the fair value of the assets acquired and the liabilities assumed at the date of acquisition was recorded as goodwill totaling $105.7 million.

In June of fiscal 2002, the Company acquired Moyer Packing Company (Moyer) for $90.5 million in cash plus assumed debt. The balance of the purchase price in excess of the fair value of the assets acquired and the liabilities assumed at the date of the acquisition was recorded as goodwill totaling $7.2 million.

9-22

Had the acquisitions of Packerland and Moyer occurred at the beginning of fiscal 2002, sales, net income and net income per diluted share would have been $6.3 billion, $177.5 million and $1.56 for the 39 weeks ended January 27, 2002.

In September of fiscal 2002, the Company acquired the remaining common shares of Schneider Corporation (Schneider) for 2.8 million shares of the Company’s common stock. Prior to this transaction, the Company owned approximately 63% of the outstanding shares of Schneider. The balance of the purchase price in excess of the fair value of the assets acquired and the liabilities assumed at the date of acquisition was recorded as goodwill totaling $13.7 million.

In July of fiscal 2002, the Company acquired substantially all of the assets and business of Gorges/Quik-to-Fix Foods, Inc. (Quik-to-Fix) for $31.0 million in cash.

These acquisitions were accounted for using the purchase method of accounting and, accordingly, the accompanying financial statements include the financial position and results of operations from the dates of acquisition. Had the acquisitions of Stefano’s, Quik-to-Fix and the purchase of the remaining shares of Schneider occurred at the beginning of the fiscal years in which they were acquired, there would not have been a material effect on sales, net income or net income per diluted share for the 13 and 39 weeks ended January 26, 2003 or January 27, 2002.

(7)

In fiscal 2002, the Company adopted SFAS No. 133 “Accounting for Derivative Instruments and Hedging Activities” as amended requiring that all derivative instruments be recorded on the balance sheet at fair value.

As of January 26, 2003, the balance of deferred net losses on derivative instruments included in Accumulated Other Comprehensive Loss was $0.2 million, net of tax. The Company expects that substantially all of these losses will be reclassified into earnings over the next twelve months as the underlying hedged transactions are realized. As of January 26, 2003, the maximum maturity date for any commodity contract outstanding was 13 months. As of January 26, 2003, the Company had derivative related balances totaling $2.1 million recorded in other current assets and $2.0 million recorded in other current liabilities.

The net impact of ineffectiveness related to the Company’s hedges was not material for the 13 and 39 weeks ended January 26, 2003. No hedges were discontinued for the 13 and 39 weeks ended January 26, 2003 as a result of it becoming probable that the forecasted transaction would not occur.

(8)

In November of 2002, the FASB issued FASB Interpretation (FIN) No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others” (FIN 45). FIN 45 establishes accounting and disclosure requirements for companies that enter into guarantees. Under FIN 45, the Company is required to recognize a liability, for guarantees entered into subsequent to December 31, 2002, at the fair value of the guarantee at its inception. The fair value of the guarantee is measured as the Company’s obligation it has undertaken in issuing the guarantee, including the ongoing obligation to stand ready to perform over the term of the guarantee in the event that the specified triggering events or conditions occur. The Company has not entered into any guarantees subsequent to December 31, 2002. FIN 45 also requires disclosure of guarantees in all quarterly and annual financial statements beginning with periods ending after December 15, 2002.

The Company has an agreement to provide a $30.0 million line of credit to Pennexx Foods, Inc. (Pennexx), a case-ready meat provider, 50% owned by the Company. As of January 26, 2003, Pennexx has outstanding borrowings of $10.9 million on this line. The Company is also a guarantor on $12.1 million of Pennexx equipment leases. The Company is guarantor on a $20.0 million line of credit for Agroindustrial del Noreste, a 50% owned venture in Mexico. As of January 26, 2003, $3.0 million was outstanding on this line of credit.

10-22

(9)

In August 2001, the FASB issued SFAS No. 143, “Accounting for Asset Retirement Obligations” (SFAS 143). SFAS 143 applies to legal obligations associated with the retirement of tangible long-lived assets that result from the acquisition, construction, development or the normal operation of long-lived assets, except for certain obligations of lessees. SFAS 143 requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred and can be reasonably estimated. The Company is not required to adopt SFAS 143 until fiscal 2004. The Company has not completed the analysis required to estimate the impact, if any, of the standard.

In January 2003, the FASB issued FIN No. 46, “Consolidation of Variable Interest Entities” (FIN 46). FIN 46 expands consolidated financial statements to include variable interest entities (VIEs). VIEs are entities in which the Company does not have majority voting control, but in which the company is considered the primary beneficiary of that entity. FIN 46 is immediately effective for VIEs created after January 31, 2003 and is effective for the Company in the second quarter of fiscal 2004 for VIEs created prior to February 1, 2003. The Company is evaluating unconsolidated entities in which it has significant contractual, ownership, or other pecuniary interests to determine if they are VIEs. Based on this evaluation, the Company does not believe that FIN 46 will have a material impact on the Company’s Consolidated Financial Statements.

(10)

Certain prior period amounts have been reclassified to conform to current period presentations.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

General

Smithfield Foods, Inc. (the Company) is comprised of a Meat Processing Group (MPG) and a Hog Production Group (HPG). The MPG consists primarily of seven wholly or majority owned domestic fresh pork and processed meats subsidiaries, two domestic beef processing subsidiaries and three international meat processing subsidiaries. The HPG consists primarily of the hog production operations located in the United States (U.S.). The MPG and HPG have certain joint ventures and other investments primarily outside the U.S.

Results of Operations

The following acquisitions affect the comparability of the results of operations for the 13 and 39 weeks ended January 26, 2003 and January 27, 2002:

In November of fiscal 2003, the Company acquired Vall, Inc. (Vall) for $60.7 million in cash plus assumed liabilities. Prior to the acquisition, Vall produced 350,000 market hogs annually.

In June of fiscal 2003, the Company acquired an 80% interest in Stefano Foods, Inc. (Stefano’s) for $35.8 million in cash plus assumed debt. Prior to the acquisition, Stefano’s had annual sales of approximately $22 million.

In October of fiscal 2002, the Company acquired Packerland Holdings, Inc. (Packerland) and its affiliated companies for 6.3 million shares of the Company’s common stock plus assumed debt and other liabilities. In June of fiscal 2002, the Company acquired Moyer Packing Company (Moyer) for $90.5 million in cash plus assumed debt. Packerland and Moyer represent the Company’s beef processing operations. Prior to acquisition, Packerland and Moyer had combined annual sales of approximately $2 billion.

11-22

In July of fiscal 2002, the Company acquired substantially all of the assets and business of Gorges/Quik-to-Fix Foods, Inc. (Quik-to-Fix) for $31.0 million in cash. Prior to the acquisition, Quik-to-Fix had annual sales of approximately $140 million.

These acquisitions were accounted for using the purchase method of accounting and, accordingly, the accompanying financial statements include the results of operations from the dates of acquisition.

13 weeks ended January 26, 2003 compared to 13 weeks ended January 27, 2002

Consolidated

Sales decreased by $89.5 million, or 4%, reflecting a 5% decrease in the average unit selling price of pork products in the MPG partially offset by $16.0 million of incremental sales of acquired businesses. The selling price decrease is the result of lower live hog prices and pressure on fresh pork selling prices due to an excess protein supply in the U.S. market. See the following section for comments on sales changes by business segment.

Gross profit decreased $93.5 million, or 31%, primarily the result of sharply lower margins in the HPG on a 13% decrease in live hog market prices, slightly increased raising costs and a weak operating environment for fresh pork. These declines were partially offset by higher processed meats margins in the MPG.

Selling, general and administrative expenses decreased $14.3 million, or 9%. This decrease was primarily due to a reclassification in the current quarter of $7.9 million from the first two quarters of the current fiscal year which increased cost of sales and decreased selling, general and administrative expenses. Excluding this reclassification, selling, general and administrative expenses decreased $6.4 million, or 4%. This decrease reflected lower advertising and promotion costs and decreases in other variable operating expenses.

Depreciation expense increased $4.3 million, or 12%. This increase is primarily due to completed capital projects to increase the Company’s processed meats capacities.

Interest expense decreased $3.8 million, or 13%. The decrease is due to lower average interest rates on the revolving credit facility and the Company’s variable rate debt partially offset by increased borrowing levels.

The effective income tax rate decreased to 29% as compared with 38% primarily the result of a decrease in overall earnings at lower marginal tax rates and the elimination of non-tax effected losses in foreign jurisdictions.

Reflecting the foregoing factors, net income decreased to $5.3 million, or $.05 per diluted share as compared to $54.5 million, or $.48 per diluted share for the same period last year.

12-22

Segment Results

The following table presents the Company’s segment results for the 13 weeks ended January 26, 2003 and January 27, 2002.

	Sales						Operating Profit (Loss)
(in millions)	January 26, 2003			January 27, 2002			January 26, 2003			January 27, 2002
HPG	$	258.5		$	279.6		$	(64.0	)	$	30.7

MPG:
Pork		1,099.5			1,189.8			78.5			84.0
Beef		536.6			530.2			18.0			10.1
International		336.7			305.9			11.6			6.2
Intrasegment		(18.0	)		(11.1	)		—			—

Total MPG		1,954.8			2,014.8			108.1			100.3

Intersegment		(216.5	)		(208.1	)		—			—
Corporate		—			—			(11.8	)		(15.2	)

Consolidated	$	1,996.8		$	2,086.3		$	32.3		$	115.8

Hog Production Group

HPG sales decreased 8%, due to a 13% decrease in live hog market prices, partially offset by a 7% increase in the number of head sold. HPG had sales of $216.5 million and $208.1 million for the 13 weeks ended January 26, 2003 and January 27, 2002, respectively, at current prices, to the MPG which were eliminated in the Company’s Consolidated Condensed Statements of Income.

Operating profit decreased $94.7 million primarily due to the decrease in live hog prices and higher raising costs from increased feed costs in the current year. HPG operations reflected cost reductions from production efficiencies resulting from the consolidation of the Company’s production operations.

Meat Processing Group

Sales in the MPG segment decreased $60.0 million, or 3%, primarily due to a 5% decrease in average unit selling prices in the pork operations. In addition to lower live hog pricing, fresh pork sales prices were negatively affected by an increased supply of protein in the U.S. market. The increased supply of protein also effected fresh pork sales volumes, which decreased 3%. Processed meats sales volumes in the base business increased 4%. Total beef sales volume and pricing remained flat.

MPG operating profit increased by $7.8 million on higher margins and volumes in processed meats and higher margins in the beef operations. These increases were partially offset by lower margins for fresh pork as a result of unfavorable market conditions. Increased processed meats margins reflected improved product mix and lower raw material costs. Increased beef margins include higher pricing for hides and rendered byproducts. Fresh pork margin decreases were partially offset by the Company’s continued emphasis on value-added fresh pork categories.

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39 weeks ended January 26, 2003 compared to 39 weeks ended January 27, 2002

Consolidated

Sales increased by $562.6 million, or 10%, reflecting $910.6 million of incremental sales of acquired businesses partially offset by a 10% decrease in the average unit selling price of pork products in the MPG. The selling price decrease is the result of lower live hog prices and pressure on fresh meat selling prices due to an excess protein supply in the U.S. market. See the following section for comments on sales changes by business segment.

Gross profit decreased $197.4 million, or 23%, primarily the result of sharply lower margins in the HPG on a 26% decrease in live hog market prices, slightly higher raising costs and a weak operating environment for fresh pork. These declines were partially offset by the inclusion of $73.9 million of gross profit of acquired businesses and higher processed meats margins in the MPG. Gross margin percentage decreased to 11% from 16% primarily due to substantially lower margins in the HPG and the acquisition of the beef operations. The beef operations are primarily non-branded, fresh meat businesses with accompanying lower margins.

Selling, general and administrative expenses increased $22.5 million, or 6%. This increase was primarily due to the inclusion of $30.3 million in expenses of acquired businesses and increased advertising and promotion of branded fresh pork and processed meats, partially offset by a $4.7 million insurance settlement. Prior year results reflect a $5.0 million loss incurred as a result of a fire at a Circle Four farm in Utah.

Depreciation expense increased $18.6 million, or 18%. The increase is primarily due to the inclusion of $8.1 million of depreciation expense of acquired businesses and increased depreciation in the existing business reflecting capital expenditures to increase processed meats capacities.

Interest expense increased $1.8 million, or 3%. The increase is due to the inclusion of $5.7 million of interest expense of acquired businesses and additional borrowings associated with the acquisitions and the Company’s share repurchase program, partially offset by a decrease in the average interest rates on the revolving credit facility and the Company’s variable rate debt.

The effective income tax rate decreased to 34% as compared to 38% primarily the result of a decrease in overall earnings at lower marginal tax rates and the elimination of non-tax effected losses in foreign jurisdictions. The Company had a valuation allowance of $28.8 million related to income tax assets as of January 26, 2003 primarily related to losses in foreign jurisdictions for which no tax benefit is recognized.

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Net income and net income per diluted share for the 39 weeks ended January 26, 2003 and January 27, 2002, adjusted for nonrecurring items, are presented below.

	January 26, 2003						January 27, 2002
(In millions, except per share data)	Net Income			Per Diluted Share			Net Income			Per Diluted Share
Net income, as reported:	$	21.2		$	.19		$	171.9		$	1.57
Nonrecurring items (net of tax):
Insurance settlement		3.1			.03			—			—
Litigation settlement and other charges		(2.3	)		(.02	)		—			—
Gain on sale of IBP, inc. common stock		—			—			4.2			.04
Fire loss at a hog farm		—			—			(3.0	)		(.03	)

Total nonrecurring items		0.8			.01			1.2			.01

Net income, excluding nonrecurring items	$	20.4		$	.18		$	170.7		$	1.56

Segment Results

The following table presents the Company’s segment results for the 39 weeks ended January 26, 2003 and January 27, 2002.

	Sales						Operating Profit (Loss)
(in millions)	January 26, 2003			January 27, 2002			January 26, 2003			January 27, 2002
HPG	$	755.7		$	989.0		$	(83.3	)	$	249.4

MPG:
Pork		3,226.7			3,478.7			135.5			112.3
Beef		1,621.6			735.4			59.9			9.7
International		985.8			949.9			35.0			16.6
Intrasegment		(39.3	)		(25.6	)		—			—

Total MPG		5,794.8			5,138.4			230.4			138.6

Intersegment		(594.9	)		(734.4	)		—			—
Corporate		—			—			(41.8	)		(44.2	)

Consolidated	$	5,955.6		$	5,393.0		$	105.3		$	343.8

Hog Production Group

HPG sales decreased 24%, primarily due to a substantial decrease in live hog market prices. HPG had sales of $594.9 million and $734.4 million for the 39 weeks ended January 26, 2003 and January 27, 2002, respectively, at current prices, to the MPG which were eliminated in the Company’s Consolidated Condensed Statements of Income.

Operating profit decreased $332.7 million primarily due to the decrease in live hog market prices and slightly higher raising costs from increased feed costs in the current year. HPG operations reflected cost reductions from production efficiencies resulting from the consolidation of the Company’s production operations.

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Meat Processing Group

Sales in the MPG increased $656.4 million, or 13%, primarily due to the inclusion of the sales of the beef operations. This increase was partially offset by a 10% decrease in unit selling prices in the pork operations. In addition to lower live hog pricing, fresh pork sales prices were negatively affected by an increased supply of protein in the U.S. market, related to unfavorable export market conditions. Sales volume in the base business increased 6% for processed meats and 2% for fresh pork.

MPG operating profit increased by $91.8 million on sharply higher margins and higher volumes in processed meats and the inclusion of the beef operations. These increases were partially offset by lower margins for fresh pork as a result of unfavorable market conditions. Increased processed meats margins reflected improved product mix and lower raw material costs. Fresh pork margins decreases were partially offset by the Company’s continued emphasis on value-added fresh pork categories.

Liquidity and Capital Resources

Cash provided by operations totaled $66.8 million for the 39 weeks ended January 26, 2003 compared to $317.9 million in the same period last year. This decrease is due primarily to lower earnings and increased working capital commitments as compared to the prior year.

Cash used in investing activities increased to $236.3 million for the 39 weeks ended January 26, 2003 compared to $199.9 million for the comparable prior period. The increase is primarily due to the increase in capital expenditures. Capital expenditures in the current period totaled $134.5 million primarily related to fresh and processed meats plant improvements and foreign farm expansion projects. As of January 26, 2003, the Company had definitive commitments of $127.0 million for capital expenditures primarily for processed meats plant improvements, foreign farm expansion and production efficiency projects.

Financing activities provided cash of $152.2 million in the current 39-week period compared to cash used of $79.0 million in the prior year. The Company increased its borrowings on its revolving credit facility $227.0 million to fund investment activity and to finance expansion projects at the Company’s joint ventures in Mexico and at Pennexx Foods, Inc. (Pennexx). In addition, the Company made principal repayments on long-term debt and repurchased 0.9 million shares of the Company’s common stock. As of March 7, 2003, 16.8 million shares of the Company’s common stock have been repurchased under an 18.0 million-share repurchase program. In the prior period, the Company issued $300.0 million of eight-year 8.0% senior unsecured notes. The net proceeds from the sale of the notes went to repay indebtedness under the Company’s revolving credit facility. Also in the prior period, the Company’s Polish subsidiary, Animex Sp. z o.o., and Schneider entered into new long-term debt arrangements. These proceeds were used to repay existing indebtedness.

Due to the unfavorable market conditions and the sharply lower operating results over the last four quarters, the Company requested and received temporary relief from certain leverage covenants in its Multi-Year Credit Facility and certain of its senior secured note loan agreements. The temporary relief begins with the Company’s third quarter of this year and extends through the second quarter of fiscal 2004 and assumes that the Company’s earnings return to more normal levels over that period. Should market conditions remain depressed, and the Company’s operating results not recover as anticipated, the Company may have to request additional temporary relief from certain loan covenants. Management believes that the amended loan covenants will not limit its access to the credit markets and that through internally generated funds and access to global credit markets, funds are available to adequately meet the Company’s current and future operating and capital needs.

The Company has an agreement to provide a $30.0 million line of credit to Pennexx, a case-ready meat provider, 50% owned by the Company. As of January 26, 2003, Pennexx has outstanding borrowings of $10.9 million on this line. The Company is also a guarantor on $12.1

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million of Pennexx equipment leases. The Company is guarantor on a $20.0 million line of credit for Agroindustrial del Noreste, a 50% owned venture in Mexico. As of January 26, 2003, $3.0 million was outstanding on this line of credit.

Outlook

Through most of calendar 2002 and the beginning of calendar 2003, the meat processing and hog production industries have suffered difficult industry conditions. While most key indicators of future industry performance remain positive, the timing and the strength of the recovery remain unclear. Management continues to believe, and futures markets would support, a return to more normal conditions will occur in the near term. While the Company’s fourth quarter earnings will not reach last year’s levels, management expects that conditions will improve and earnings will begin trending up from the Company’s second and third quarter levels.

Forward-Looking Statements

This report contains “forward-looking” statements within the meaning of the federal securities laws. The forward-looking statements include statements concerning our outlook for the future, as well as other statements of beliefs, future plans and strategies or anticipated events, and similar expressions concerning matters that are not historical facts. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in, or implied by, the statements. These risks and uncertainties include the availability and prices of live hogs and cattle, raw materials and supplies, food safety, livestock disease, live hog production costs, product pricing, the competitive environment and related market conditions, hedging risk, operating efficiencies, changes in interest rate and foreign currency exchange rates, access to capital, compliance with covenants in loan agreements, the cost of compliance with environmental and health standards, adverse results from on-going litigation, actions of domestic and foreign governments and the ability to make effective acquisitions and successfully integrate newly acquired businesses into existing operations.

Item 4. Controls and Procedures

The Company’s principal executive officer and principal financial officer have evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-14(c) of the Securities Exchange Act of 1934, as amended) as of a date within 90 days of the filing date of this Quarterly Report on Form 10-Q. Based upon their evaluation, the principal executive officer and principal financial officer concluded that the Company’s disclosure controls and procedures are effective. There were no significant changes in the Company’s internal controls or in other factors that could significantly affect these controls, since the date these controls were evaluated.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings

As previously disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended April 28, 2002, in June 2000, Neuse River Foundation, Richard J. Dove, d/b/a The Neuse Riverkeeper, D. Boulton Baldridge, d/b/a The Cape Fear Riverkeeper, New River Foundation, Inc., Tom Mattison, d/b/a The New Riverkeeper and The Water Keeper Alliance filed a lawsuit in the General Court of Justice, Superior Court Division, of the State of North Carolina against Smithfield Foods, Inc., Carroll’s Foods, Inc., Brown’s of Carolina, Inc., Murphy Farms, Inc., Wendell H. Murphy, Sr., Wendell H. Murphy, Jr., and Joseph W. Luter, III. The lawsuit alleged, among other things, claims based on negligence, trespass, strict liability and unfair trade practices related to the operation of swine waste disposal lagoons and sprayfields in North Carolina. The lawsuit sought numerous and costly remedies, including injunctive relief to end all use of hog waste disposal lagoons in North Carolina, unspecified but costly remediation efforts and other damages. On March 27, 2001, the Superior Court granted the Company’s motion and dismissed the lawsuit. The plaintiffs noted their appeal on April 11, 2001. The North Carolina Court of Appeals upheld the ruling of the Superior Court dismissing the lawsuit. The plaintiffs sought discretionary review of this ruling from the North Carolina Supreme Court. On February 27, 2003, the North Carolina Supreme Court denied the plaintiffs request for discretionary review.

As previously disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended April 28, 2002, in February 2001, Thomas E. Jones and twelve other individuals filed a lawsuit in the North Carolina General Court of Justice, Superior Court Division, Wake County, against Smithfield Foods, Inc., three of its subsidiaries, Wendell H. Murphy, Sr., Wendell H. Murphy, Jr., and Joseph W. Luter, III, referred to as the “Jones Suit.” The Jones Suit alleged, among other things, claims based on negligence, trespass, strict liability and unfair trade practices related to the operation of swine waste disposal lagoons and sprayfields in North Carolina. The lawsuit sought numerous and costly remedies, including injunctive relief to end all use of hog waste disposal lagoons in North Carolina, unspecified but costly remediation efforts and other damages. On March 27, 2001, the Superior Court granted the Company’s motion and dismissed the lawsuit. The plaintiff’s noted their appeal on April 11, 2001. The North Carolina Court of Appeals upheld the ruling of the Superior Court dismissing the lawsuit. The plaintiffs sought discretionary review of this ruling from the North Carolina Supreme Court. On February 27, 2003, the North Carolina Supreme Court denied the plaintiffs request for discretionary review.

As previously disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended April 28, 2002, in March 2001, Eugene C. Anderson and other individuals filed what purports to be a class action in the United States District Court for the Middle District of Florida, Tampa Division, against the Company and Joseph W. Luter, III, referred to as the “Anderson Suit.” The

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Anderson Suit purports to allege violations of various laws, including the Racketeer Influenced and Corrupt Organizations Act, based on the Company’s alleged failure to comply with certain environmental laws. The complaint seeks treble damages that are unspecified. The plaintiffs filed an amended complaint on May 1, 2001. On February 13, 2002, the District Court granted the Company’s and Mr. Luter’s motion to dismiss, giving the plaintiffs 20 days within which to file an amended complaint. On March 15, 2002, the plaintiffs filed their second amended complaint. On June 24, 2002, the District Court granted the Company’s and Mr. Luter’s motion to dismiss the plaintiffs’ second amended complaint with prejudice and issued an order imposing monetary sanctions against the plaintiffs’ attorneys. The plaintiffs noted their appeal on July 24, 2002. On February 25, 2003, the 11^th Circuit Court of Appeals granted the Company’s and Mr. Luter’s motion to dismiss the appeal as to certain plaintiffs. The parties await oral argument. The Company continues to believe that the Anderson Suit is baseless and without merit and the Company will defend the suit vigorously.

Item 6. Exhibits and Reports on Form 8-K

A. Exhibits

Exhibit 3.1

—

Articles of Amendment effective August 29, 2001 to the Amended and Restated Articles of Incorporation, including the Amended and Restated Articles of Incorporation of the Company, as amended to date (incorporated by reference to Exhibit 3.1 to the Company’s Amendment No. 1 to Form 10-Q Quarterly Report filed with the SEC on September 12, 2001).

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Exhibit 3.2	—	Amendment to the Bylaws adopted May 30, 2001, including the Bylaws of the Company, as amended to date (incorporated by reference to Exhibit 2 to the Company’s Registration Statement on Form 8-A filed with the SEC on May 30, 2001).

Exhibit 4.1	—	Amendment Agreement No. 2 dated as of December 31, 2002, among the Company and each of the Holders listed on Annex No. 1 thereto, relating to the Amended and Restated Note Purchase Agreement dated as of October 31, 1999 relating to $196,882,354 in senior secured notes, series B through H (filed herewith).

Exhibit 4.2	—	Amendment Agreement No. 2 dated as of December 31, 2002, among the Company and each of the Holders listed on Annex No. 1 thereto, relating to the Amended and Restated Note Purchase Agreement dated as of October 27, 1999 relating to $225,000,000 in senior secured notes, series I through L (filed herewith).

Exhibit 4.3	—	Amendment Agreement No. 2 dated as of December 31, 2002, among the Company and each of the Holders listed on Annex No. 1 thereto, relating to the Amended and Restated Note Purchase Agreement dated as of June 2, 2000 relating to $100,000,000 in senior secured notes, series M through N (filed herewith).

Exhibit 4.4	—	Amendment Agreement No. 1 dated as of December 31, 2002, among the Company and each of the Holders listed on Annex No. 1 thereto, relating to the Amended and Restated Note Purchase Agreement dated as of June 2, 2000 relating to $55,000,000 in senior secured notes, series O through P (filed herewith).

Exhibit 99.1	—	Certification of Joseph W. Luter, III, Chairman of the Board and Chief Executive Officer, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).

Exhibit 99.2	—	Certification of Daniel G. Stevens, Vice President and Chief Financial Officer, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith)

B. Reports on Form 8-K

None.

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SIGNATURES

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

SMITHFIELD FOODS, INC.

/s/ DANIEL G. STEVENS

Daniel G. Stevens

Vice President and Chief Financial Officer

/s/ JEFFREY A. DEEL

Jeffrey A. Deel

Corporate Controller

Date: March 12, 2003

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CERTIFICATIONS

I, Joseph W. Luter, III, certify that:

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

2. Based on my knowledge, this quarterly 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 quarterly report; and

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly 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 quarterly report;

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

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

evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

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

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

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

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

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

Date: March 12, 2003

/s/ JOSEPH W. LUTER, III

Joseph W. Luter, III

Chairman of the Board and

Chief Executive Officer

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I, Daniel G. Stevens, certify that:

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

evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

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

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

Date: March 12, 2003

/s/ DANIEL G. STEVENS

Daniel G. Stevens

Vice President and Chief Financial Officer

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EX-4.1 3 dex41.htm EXHIBIT 4.1 Exhibit 4.1

EXHIBIT 4.1

SMITHFIELD FOODS, INC.

AMENDMENT AGREEMENT NO. 2

As of December 31, 2002

To each of the Current Holders

listed in Annex 1 attached hereto

Ladies and Gentlemen:

Smithfield Foods, Inc., a Virginia corporation (together with its respective successors and assigns, the “Issuer”) agrees with you as follows:

1. PRELIMINARY STATEMENTS.

The Issuer issued and sold:

(a) Nine Million Eight Hundred and Fifty-Two Thousand Nine Hundred Forty-Two Dollars ($9,852,942) in aggregate principal amount of 8.41% Series B Senior Secured Notes due August 1, 2006 (as they may be amended, restated or otherwise modified from time to time, the “Series B Notes”);

(b) Forty Million Dollars ($40,000,000) in aggregate principal amount of its 8.34% Series C Senior Secured Notes due August 1, 2003 (as they may be amended, restated or otherwise modified from time to time, the “Series C Notes”);

(c) Nine Million Dollars ($9,000,000) in aggregate principal amount of its 9.80% Series D Senior Secured Notes due August 1, 2003 (as they may be amended, restated or otherwise modified from time to time, the “Series D Notes”);

(d) Nine Million Two Hundred Fifty Thousand Dollars ($9,250,000) in aggregate principal amount of its 10.75% Series E Senior Secured Notes due August 1, 2005 (as they may be amended, restated or otherwise modified from time to time, the “Series E Notes”);

(e) One Hundred Million Dollars ($100,000,000) in aggregate principal amount of its 8.52% Series F Senior Secured Notes due August 1, 2006 (as they may be amended, restated or otherwise modified from time to time, the “Series F Notes”);

(f) Fourteen Million Dollars ($14,000,000) in aggregate principal amount of its 9.85% Series G Senior Secured Notes due November 1, 2006 (as they may be amended, restated or otherwise modified from time to time, the “Series G Notes”); and

(g) Fourteen Million Seven Hundred Seventy-Nine Thousand Four Hundred and Twelve Dollars ($14,779,412) in aggregate principal amount of its 8.41% Series H Senior Secured Notes due August 1, 2004 (as they may be amended, restated or otherwise modified from time to time, the “Series H Notes” and, together with the Series B Notes, the Series C Notes, the Series D Notes, the Series E Notes, the Series F Notes, the Series G Notes, collectively, the “Notes”);

pursuant to those separate Amended and Restated Note Purchase Agreements each dated as of October 31, 1999 among the Issuer and the noteholders named in Annex 1 thereto (as amended by that certain Amendment Agreement No. 1, dated as of December 7, 2001, among the Issuer and the other parties listed on the signature pages thereto, the “Existing Purchase Agreements”). The register kept by the Issuer for the registration and transfer of the Notes indicates that each of the Persons named in Annex 1 hereto (collectively, the “Current Holders”) is currently a holder of the original aggregate principal amount of the Notes indicated in such Annex.

2. DEFINED TERMS.

Capitalized terms used herein and not otherwise defined herein have the meanings ascribed to them in the Existing Purchase Agreements.

3. AMENDMENTS TO EXISTING PURCHASE AGREEMENTS AND NOTES.

3.1. Amendments to Existing Purchase Agreements.

Subject to Section 5, the Current Holders and the Issuer hereby agree to each of the amendments to the Existing Purchase Agreements as provided for by this Amendment Agreement No. 2 (this “Amendment Agreement”) in the manner specified in Exhibit 3.1 hereto. Such amendments are referred to herein, collectively, as the “Existing Purchase Agreement Amendments”.

3.2. Amendments to Notes.

Subject to Section 5, the Current Holders and the Issuer hereby agree that (a) each of the Series B Notes, Series C Notes, Series D Notes, Series E Notes, Series F Notes, Series G Notes and Series H Notes shall be deemed to be automatically amended without any further action required on the part of any other Person, to conform to and have the terms provided in Exhibit 3.2(B), Exhibit 3.2(C), Exhibit 3.2(D), Exhibit 3.2(E), Exhibit 3.2(F), Exhibit 3.2(G) and Exhibit 3.2(H), respectively, hereto (except that the principal amount and payee of each Note shall remain unchanged) and (b) any Series B Notes, Series C Notes, Series D Notes, Series E Notes, Series F Notes, Series G Notes and Series H Notes issued after the Effective Date shall be in the form of Exhibit 3.2(B), Exhibit 3.2(C), Exhibit 3.2(D), Exhibit 3.2(E), Exhibit 3.2(F), Exhibit 3.2(G) and Exhibit 3.2(H), respectively, hereto. Such amendment and issuance are referred to herein, collectively, as the “Existing Note Amendments,” and, together with the Existing Purchase Agreement Amendments, collectively as the “Amendments”.

4. REPRESENTATIONS AND WARRANTIES OF THE ISSUER.

To induce you to enter into this Amendment Agreement and to consent to the Amendments, the Issuer represents and warrants as follows:

4.1. Material Adverse Effect.

Since the date of the last audited consolidated financial statements of the Issuer delivered to each of the Current Holders, no event has occurred or condition exists which has had, or could reasonably be expected to have, a Material Adverse Effect.

4.2. Organization, Power and Authority, etc.

The Issuer is duly organized and validly existing under the laws of its jurisdiction of organization and has all requisite corporate power and authority to enter into and perform its obligations under this Amendment Agreement.

4.3. Legal Validity.

The execution and delivery of this Amendment Agreement by the Issuer and compliance by the Issuer with its obligations hereunder: (a) are within the corporate powers of the Issuer; and (b) are legal and do not conflict with, result in any breach of, constitute a default under, or result in the creation of any Lien upon any Property of the Issuer under the provisions of: (i) any charter instrument or bylaw to which the Issuer is a party or by which the Issuer or any of its Property may be bound; (ii) any order, judgment, decree or ruling of any court, arbitrator or governmental authority applicable to the Issuer or its Property; or (iii) any agreement or instrument to which the Issuer is a party or by which the Issuer or any of its Property may be bound or any statute or other rule or regulation of any governmental authority applicable to the Issuer or its Property, except where such conflict, breach or default could not reasonably be expected to have a Material Adverse Effect.

This Amendment Agreement has been duly authorized by all necessary action on the part of the Issuer, has been executed and delivered by a duly authorized officer of the Issuer, and constitutes a legal, valid and binding obligation of the Issuer, enforceable in accordance with its terms, except that enforceability may be limited by applicable bankruptcy, reorganization, arrangement, insolvency, moratorium, or other similar laws affecting the enforceability of creditors’ rights generally and subject to the availability of equitable remedies.

4.4. No Defaults.

Immediately prior to and after giving effect to the Amendments set forth in this Amendment Agreement, no Default or Event of Default will exist.

5. EFFECTIVENESS OF AMENDMENTS.

The Amendments shall become effective as of the first date written above (the “Effective Date”), if at all, at such time as all of the Current Holders shall have indicated their written consent to such amendments by executing and delivering the applicable counterparts of this Amendment Agreement. It is understood that any Current Holder may withhold its consent for any reason, and that, without limitation of the foregoing, each Current Holder hereby makes the granting of its consent contingent upon satisfaction of the following conditions:

5.1. Amendment to Credit Facility.

Each Current Holder shall have received true and correct copies of the fully executed amendment (the “Credit Facility Amendment”) to the Credit Facility substantially in the form of Exhibit 5.1 hereto;

5.2. Amendment of Other Note Agreements.

Each Current Holder shall have received true and correct copies of the fully executed amendments (collectively, the “Other Purchase Agreement Amendments”) to those certain separate Note Purchase Agreements, dated as of March 1, 2002, between the Issuer and each of the purchasers listed on Annex 1 thereto, those certain separate Note Purchase Agreements, dated as of June 2, 2000 between the Issuer and each of the purchasers listed on Annex 1 thereto, and those certain separate Note Purchase Agreements, dated as of October 27, 1999, between the Issuer and each of the purchasers listed on Annex 1 thereto. Each such amendment shall be substantially in the form of this Amendment Agreement;

5.3. Opinion of Counsel.

The Current Holders shall have received from special counsel to the Issuer, a closing opinion, dated as of the Effective Date, and in form and substance satisfactory to the Current Holders. This Section 5.3 shall constitute direction by the Issuer to such counsel to deliver such closing opinion to the Current Holders;

5.4. Amendment Fee.

The fee to be paid to the Current Holders pursuant to Section 7 of this Amendment Agreement shall have been paid in full;

5.5. Expenses.

The payment of the expenses to be paid on behalf of the Current Holders pursuant to Section 8 of this Amendment Agreement (to the extent a statement therefore has been presented to the Issuer on or prior to the Effective Date) shall have been paid in full; and

6. CONSENT.

The Current Holders hereby consent to the execution and delivery of the Credit Facility Amendment and the Other Purchase Agreement Amendments to the extent that such consent is required under the terms of the Financing Documents.

7. AMENDMENT FEE.

In consideration of the execution and delivery by the Current Holders of this Amendment Agreement and the consent by the Current Holders to the Amendments, on or prior to the Effective Date, the Issuer shall have paid to each of the Current Holders a fee in an amount equal to 0.10% of the aggregate outstanding principal amount of the Notes held by such Current Holder and in the manner and to the accounts specified in the Existing Purchase Agreements.

8. EXPENSES.

Whether or not the Amendments become effective, the Issuer will promptly (and in any event within thirty (30) days of receiving any statement or invoice therefor) pay all fees, expenses and costs relating to this Amendment Agreement, including, but not limited to, the reasonable fees of your special counsel, Bingham McCutchen LLP, incurred in connection with the preparation, negotiation and delivery of this Amendment Agreement and any other documents related thereto. Nothing in this Section 8 shall limit the Issuer’s obligations pursuant to Section 1.4 of the Existing Purchase Agreements.

9. MISCELLANEOUS.

9.1. Part of Existing Purchase Agreements; Future References, etc.

This Amendment Agreement shall be construed in connection with and as a part of the Existing Purchase Agreements and, except as expressly amended by this Amendment Agreement, all terms, conditions and covenants contained in the Existing Purchase Agreements are hereby ratified and shall be and remain in full force and effect. Any and all notices, requests, certificates and other instruments executed and delivered after the execution and delivery of this Amendment Agreement may refer to the Existing Purchase Agreements without making specific reference to this Amendment Agreement, but nevertheless all such references shall include this Amendment Agreement unless the context otherwise requires.

9.2. Counterparts.

This Amendment Agreement may be executed in any number of counterparts, each of which shall be an original but all of which together shall constitute one instrument. Each counterpart may consist of a number of copies hereof, each signed by less than all, but together signed by all, of the parties hereto. Delivery of a facsimile of an executed signature page hereto shall be effective as delivery of an original.

9.3. Governing Law.

THIS AMENDMENT AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE COMMONWEALTH OF VIRGINIA EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH COMMONWEALTH THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH COMMONWEALTH.

[Remainder of page intentionally left blank. Next page is signature page.]

If you are in agreement with the foregoing, please so indicate by signing the acceptance below on the accompanying counterpart of this agreement and returning it to the Issuer, whereupon it will become a binding agreement among you and the Issuer.

SMITHFIELD FOODS, INC.

By:		/s/ Daniel G. Stevens
Name:		Daniel G. Stevens
Title:		Vice President and Chief Financial Officer

[Signature Page to Amendment Agreement No. 2 (B-H)]

The foregoing Amendment Agreement is hereby accepted as of the date first above written.

JOHN HANCOCK LIFE INSURANCE COMPANY


By:		/s/ David E. Johnson
Name:		David E. Johnson
Title:		Managing Director

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY


By:		/s/ David E. Johnson
Name:		David E. Johnson
Title:		Authorized Signatory

MELLON BANK, N.A., solely in its capacity as

Trustee for the BELL ATLANTIC MASTER

TRUST, (as directed by John Hancock Financial

Services, Inc.), and not in its individual capacity


By:		/s/ Bernadette Rist
Name:		Bernadette Rist
Title:		Authorized Signatory

MELLON BANK, N. A., solely in its capacity as

Trustee for the LONG-TERM INVESTMENT

TRUST, (as directed by John Hancock Financial

Services, Inc.), and not in its individual capacity


By:		/s/ Bernadette Rist
Name:		Bernadette Rist
Title:		Authorized Signatory

THE NORTHERN TRUST COMPANY,

AS TRUSTEE OF THE LUCENT TECHNOLOGIES INC. MASTER PENSION TRUST

By: John Hancock Life Insurance Company, as Investment Manager


By:		/s/ David E. Johnson
Name:		David E. Johnson
Title:		Managing Director

[Signature Page to Amendment Agreement No. 2 (B-H)]

THE MARITIME LIFE ASSURANCE COMPANY


By:		/s/ Peter A. Stuart
Name:		Peter A. Stuart
Title:		Senior Vice President and Chief Investment Officer


By:		/s/ Alfred Samson
Name:		Alfred Samson
Title:		Vice President, Public Securities

THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY


By:		/s/ Jeffrey J. Lueken
Name:		Jeffrey J. Lueken
Title:		Its Authorized Representative

AMERICAN GENERAL LIFE AND ACCIDENT INSURANCE COMPANY

(successor by merger to The Independent Life and Accident Insurance Company)

THE VARIABLE ANNUITY LIFE INSURANCE COMPANY

By: American General Investment Management, L.P.

By: American General Investment Management Corporation, it general partner


By:		/s/ Lochlan O. McNew
Name:		Lochlan O. McNew Name
Title:		Vice President

ACADEMY LIFE INSURANCE COMPANY


By:		/s/ Bill Henrickson
Name:		Bill Henrickson
Title:		Vice President

MONUMENTAL LIFE INSURANCE COMPANY,

successor by merger to PEOPLES SECURITY LIFE INSURANCE COMPANY


By:		/s/ Bill Henrickson
Name:		Bill Henrickson
Title:		Vice President

[Signature Page to Amendment Agreement No. 2 (B-H)]

UNITED OF OMAHA LIFE INSURANCE COMPANY


By:		/s/ Kent Knudsen
Name:		Kent Knudsen
Title:		Senior Vice President

COMPANION LIFE INSURANCE COMPANY


By:		/s/ Kent Knudsen
Name:		Kent Knudsen
Title:		Authorized Signer

MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY

By: David L. Babson & Company, Inc., as Investment Adviser


By:		/s/ Kathleen Lynch
Name:		Kathleen Lynch
Title:		Managing Director

MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY

(as successor in interest to Unicare Life & Health Insurance Company)

By: David L. Babson & Company, Inc., as Investment Adviser


By:		/s/ Kathleen Lynch
Name:		Kathleen Lynch
Title:		Managing Director

C.M. LIFE INSURANCE COMPANY

By: David L. Babson & Company, Inc., as Investment Sub-Adviser


By:		/s/ Kathleen Lynch
Name:		Kathleen Lynch
Title:		Managing Director

[Signature Page to Amendment Agreement No. 2 (B-H)]

The undersigned consent to the Amendments effected by the foregoing Amendment Agreement.

CODDLE ROASTED MEATS, INC.

GWALTNEY OF SMITHFIELD, LTD.

HANCOCK’S OLD FASHIONED COUNTRY HAM, INC.

IOWA QUALITY MEATS, LTD.

JOHN MORRELL & CO.

LYKES MEAT GROUP, INC.

MOYER PACKING COMPANY

NORTH SIDE FOODS CORP.

PACKERLAND HOLDINGS, INC.

PACKERLAND PROCESSING COMPANY, INC.

PACKERLAND-PLAINWELL, INC. (f/k/a Murco Foods, Inc.)

PATRICK CUDAHY INCORPORATED

PREMIUM PORK, INC.

QUIK-TO-FIX FOODS, INC.

SFFC, INC.

SMITHFIELD PURCHASE CORPORATION (successor by merger to Carroll’s Realty, Inc.)

STADLER’S COUNTRY HAMS, INC.

SUN LAND BEEF COMPANY

SUNNYLAND, INC.

THE SMITHFIELD COMPANIES, INC.

THE SMITHFIELD PACKING COMPANY INCORPORATED

MURPHY-BROWN LLC

By: John Morrell & Co., as sole member

MURPHY FARMS LLC

QUARTER M FARMS LLC

CARROLL’S FOODS OF VIRGINIA LLC

CARROLL’S FOODS LLC

CIRCLE FOUR LLC

CENTRAL PLAINS FARMS LLC

BROWN’S OF CAROLINA LLC

By: Murphy-Brown LLC, as sole member

By: John Morrell & Co., as sole member

BROWN’S FARMS, LLC

By: Brown’s of Carolina LLC, as sole member

By: Murphy-Brown LLC, as sole member

By: John Morrell & Co., as sole member

CARROLL’S REALTY PARTNERSHIP

By: Smithfield Purchase Corporation, as general partner

SMITHFIELD PACKING REAL ESTATE, LLC

By: The Smithfield Packing Company Incorporated, as sole member

GREAT LAKES CATTLE CREDIT COMPANY, LLC

By: Packerland Holdings, Inc., as sole member

[Signature Page to Amendment Agreement No. 2 (B-H)]

SMITHFIELD-CARROLL’S FARMS

By: Smithfield Purchase Corporation, as general partner

BROWN’S REALTY PARTNERSHIP

By: Brown’s Farms, LLC, its partner

By: Brown’s of Carolina LLC, its sole member and manager

By: Murphy-Brown LLC, its sole member and manager

By: John Morrell & Co., as sole member

and

By: Smithfield Purchase Corporation, its partner

SMITHFIELD PACKING REALTY PARTNERSHIP

By: Smithfield Packing Real Estate, LLC, its partner

By: The Smithfield Packing Company, Incorporated, its sole member and manager

and

By: Smithfield Purchase Corporation, its partner


By:		/s/ Daniel G. Stevens
Name:		Daniel G. Stevens
Title:		Vice President and Chief Financial Officer

[Signature Page to Amendment Agreement No. 2 (B-H)]

ANNEX 1

CURRENT HOLDERS AND PRINCIPAL AMOUNTS

Name of Current Holder	Aggregate Principal Amount of Serie B Notes Held		Aggregate Principal Amount of Series C Notes Held		Aggregate Principal Amount of Series D Notes Held		Aggregate Principal Amount of Series E Notes Held		Aggregate Principal Amount of Series F Notes Held		Aggregate Principal Amount of Series G Notes Held		Aggregate Principal Amount of Series H Notes Held
John Hancock Life Insurance Company	$	9,852,942	$	-0-	$	9,000,000	$	9,250,000	$	24,000,000	$	14,000,000	$	-0-
John Hancock Variable Life Insurance Company	$	-0-	$	-0-	$	-0-	$	-0-	$	5,000,000	$	-0-	$	-0-
Mellon Bank, N.A., Trustee under Master Trust Agreement of Bell Atlantic Master Trust	$	-0-	$	-0-	$	-0-	$	-0-	$	3,000,000	$	-0-	$	-0-
Mellon Bank, N.A. Trustee under Master Trust Agreement of Long-Term Investment Trust	$	-0-	$	-0-	$	-0-	$	-0-	$	960,000	$	-0-	$	-0-
The Northern Trust Company, as Trustee of the Lucent Technologies Inc. Master Pension Trust	$	-0-	$	-0-	$	-0-	$	-0-	$	2,040,000	$	-0-	$	-0-
The Maritime Life Assurance Company	$	-0-	$	-0-	$	-0-	$	-0-	$	5,000,000	$	-0-	$	-0-
The Northwestern Mutual Life Insurance Company	$	-0-	$	5,000,000	$	-0-	$	-0-	$	30,000,000	$	-0-	$	-0-
The Variable Annuity Life Insurance Company	$	-0-	$	7,500,000	$	-0-	$	-0-	$	12,000,000	$	-0-	$	-0-
American General Life and Accident Insurance Company (Successor by merger to Independent Life and Accident Insurance Company	$	-0-	$	-0-	$	-0-	$	-0-	$	3,000,000	$	-0-	$	-0-
Academy Life Insurance Company	$	-0-	$	5,000,000	$	-0-	$	-0-	$	-0-	$	-0-	$	-0-

Annex 1-1

Name of Current Holder	Aggregate Principal Amount of Serie B Notes Held		Aggregate Principal Amount of Series C Notes Held		Aggregate Principal Amount of Series D Notes Held		Aggregate Principal Amount of Series E Notes Held		Aggregate Principal Amount of Series F Notes Held		Aggregate Principal Amount of Series G Notes Held		Aggregate Principal Amount of Series H Notes Held
Monumental Life Insurance Company, Successor by Merger to Peoples Security Life Insurance Company	$	-0-	$	-0-	$	-0-	$	-0-	$	12,500,000	$	-0-	$	-0-
United of Omaha Life Insurance Company	$	-0-	$	13,000,000	$	-0-	$	-0-	$	-0-	$	-0-	$	-0-
Companion Life Insurance Company	$	-0-	$	2,000,000	$	-0-	$	-0-	$	-0-	$	-0-	$	-0-
Massachusetts Mutual Life Insurance Company	$	-0-	$	4,500,000	$	-0-	$	-0-	$	2,500,000	$	-0-	$	14,779,412
Massachusetts Mutual Life Insurance Company (as Successor I interest to Unicare Life & Health Insurance Company)	$	-0-	$	2,000,000	$	-0-	$	-0-	$	-0-	$	-0-	$	-0-
C.M. Life Insurance Company	$	-0-	$	1,000,000	$	-0-	$	-0-	$	-0-	$	-0-	$	-0-

Annex 1-2

EXHIBIT 3.1

AMENDMENTS TO EXISTING PURCHASE AGREEMENTS

1. The Existing Purchase Agreements are hereby amended by adding a new Section 4.9 to read as follows:

4.9. Incremental Margin Period.

Notwithstanding anything to the contrary set forth in this Agreement or in any of the other Financing Documents, at all times during the Incremental Margin Period the interest rate then in effect for the Notes shall be increased by an amount equal to the Incremental Margin then in effect.

2. Section 6.7 of the Existing Purchase Agreements is hereby amended and restated in its entirety to read as follows:

6.7. Maintenance of Funded Debt.

(a) Consolidated Funded Debt. The Company shall not permit Consolidated Funded Debt, determined as of the end of each fiscal quarter of the Company, to exceed the Applicable Funded Debt Percentage of Consolidated EBITDA for the period of four (4) consecutive fiscal quarters of the Company ended at such time.

(b) Consolidated Senior Funded Debt. The Company shall not permit Consolidated Senior Funded Debt, determined as of the end of each fiscal quarter of the Company, to exceed the Applicable Senior Funded Debt Percentage of Consolidated EBITDA for the period of four (4) consecutive fiscal quarters of the Company ended at such time.

3. Section 9.1 of the Existing Purchase Agreements is hereby amended by adding the following new definitions in the appropriate alphabetical order to read as follows:

3FQ03 – means the fiscal quarter of the Company ending on January 26, 2003.

4FQ03 – means the fiscal quarter of the Company ending on April 27, 2003.

1FQ04 – means the fiscal quarter of the Company ending on July 27, 2003.

2FQ04 – means the fiscal quarter of the Company ending on October 26, 2003.

3FQ04 – means the fiscal quarter of the Company ending on January 25, 2004.

Applicable Funded Debt Percentage – means, at any fiscal quarter end, the percentage applicable to such fiscal quarter end in the table set forth below:

Exhibit 3.1-1

Fiscal Quarter End		Percentage
All fiscal quarter ends prior to the end of 3FQ03		400%
3FQ03		450% plus New Debt Step Up
4FQ03		450% plus New Debt Step Up
1FQ04		450% plus New Debt Step Up
2FQ04		400% plus New Debt Step Up
All fiscal quarter ends after the end of 2FQ04		400%

Applicable Senior Funded Debt Percentage – means, at any fiscal quarter end, the percentage applicable to such fiscal quarter end in the table set forth below:

Fiscal Quarter End		Percentage
All fiscal quarter ends prior to the end of 3FQ03		320%
3FQ03		400% plus New Debt Step Up
4FQ03		400% plus New Debt Step Up
1FQ04		400% plus New Debt Step Up
2FQ04		375% plus New Debt Step Up
All fiscal quarter ends after the end of 2FQ04		320%

Incremental Margin – means, at all times during each fiscal quarter during the Incremental Margin Period, (a) zero (0) if Consolidated Funded Debt at the end of the immediately preceding fiscal quarter is not more than 400% of Consolidated EBITDA for the period of four (4) consecutive fiscal quarters of the Company then most recently ended, (b) one half of one percent (0.50%) if Consolidated Funded Debt at the end of the immediately preceding fiscal quarter is more than 400% but less than 450% of Consolidated EBITDA for the period of four (4) consecutive fiscal quarters of the Company then most recently ended and (c) three quarters of one percent (0.75%) if Consolidated Funded Debt at the end of the immediately preceding fiscal quarter is not less than 450% of Consolidated EBITDA for the period of four (4) consecutive fiscal quarters of the Company then most recently ended.

Incremental Margin Period – means the period from the start of 4FQ03 to and including the end of 3FQ04.

New Debt Step Up – means (a) zero percent (0%) if the Company shall have incurred, in aggregate, less than $200,000,000 of Unsecured Debt after December 31, 2002, (b) twenty-five percent (25%) if the Company shall have incurred, in aggregate, not less than $200,000,000 nor more than $300,000,000 of Unsecured Debt after December 31, 2002 and (c) fifty percent (50%) if the Company shall have incurred, in aggregate, more than $300,000,000 of Unsecured Debt after December 31, 2002.

Exhibit 3.1-2

Unsecured Debt – means any Debt of the Company or any of its Subsidiaries of the type described in paragraph (a) of the definition of Debt which (a) shall have been issued in a private placement or public offering, (b) has an initial term of more than one (1) year and (c) is not secured by any Lien on any Property of the Company or its Subsidiaries.

Exhibit 3.1-3

EXHIBIT 3.2(B)

[FORM OF SERIES B SENIOR SECURED NOTE]

SMITHFIELD FOODS, INC.

8.41% SERIES B SENIOR SECURED NOTE DUE AUGUST 1, 2006

No. RB-[ ]		[Date]

$[ ]		PPN: 832248 A@ 7

SMITHFIELD FOODS, INC., a Virginia corporation (the “Company”), for value received, hereby promises to pay to [ ] or registered assigns the principal sum of [ ] DOLLARS ($[ ])on August 1, 2006 and to pay interest (computed on the basis of a 360-day year of twelve 30-day months) on the unpaid principal balance thereof from the date of this Note at the rate of eight and forty-one one-hundredths percent (8.41%) per annum plus, at all times during the Incremental Margin Period, the Incremental Margin then in effect, quarterly on the first (1st) day of each February, May, August and November in each year, commencing on the later of August 1, 1996 or the payment date next succeeding the date hereof, until the principal amount hereof shall become due and payable; and to pay on demand interest on any overdue principal (including any overdue prepayment of principal) and Make-Whole Amount, if any, and (to the extent permitted by applicable law) on any overdue installment of interest, at a rate equal to the lesser of (a) the highest rate allowed by applicable law or (b) ten and forty-one one-hundredths percent (10.41%) per annum plus, at all times during the Incremental Margin Period, the Incremental Margin then in effect.

Payments of principal, Make-Whole Amount, if any, and interest shall be made in such coin or currency of the United States of America as at the time of payment is legal tender for the payment of public and private debts to the registered holder hereof at the address shown in the register maintained by the Company for such purpose, in the manner provided in the Note Purchase Agreement.

This Note is one of an issue of Series B Senior Secured Notes of the Company issued in an aggregate principal amount limited to Nine Million Eight Hundred Fifty-Two Thousand Nine Hundred Forty-Two Dollars ($9,852,942) pursuant to the Company’s separate Note Purchase Agreements, (collectively as may be amended from time to time, the “Note Purchase Agreement”), each dated as of July 15, 1996, with the purchasers listed on Annex 1 thereto, and is entitled to the benefits thereof. Capitalized terms used herein and not otherwise defined herein have the meanings specified in the Note Purchase Agreement. As provided in the Note Purchase Agreement, this Note is subject to prepayment, in whole or in part, in certain cases without a Make-Whole Amount and in other cases with a Make-Whole Amount. The Company agrees to make the scheduled required prepayments on account of such Notes in accordance with the provisions of the Note Purchase Agreement.

Exhibit 3.2(B)-1

This Note is a registered Note and is transferable only by surrender hereof at the principal office of the Company as specified in the Note Purchase Agreement, duly endorsed or accompanied by a written instrument of transfer duly executed by the registered holder of this Note or his attorney duly authorized in writing.

Under certain circumstances, as specified in the Note Purchase Agreement, the principal of this Note (together with any applicable Make-Whole Amount) may be declared due and payable in the manner and with the effect provided in the Note Purchase Agreement.

The Company waives presentment, protest and demand, notice of protest, demand and dishonor and agrees to pay all costs of collection when incurred (including, without limitation, attorneys’ fees) and to perform and comply with each of the covenants, conditions, provisions and agreements of the undersigned contained in every Financing Document. Notwithstanding any provision herein or in any instrument now or hereafter securing said indebtedness, the total liability for payments in the nature of interest shall not exceed the limits imposed by the usury laws of the Commonwealth of Virginia.

This Note is secured in accordance with, and entitled to the benefits of, the Security Documents.

All obligations evidenced by the Note are guarantied by the Guarantors pursuant to the Joint and Several Guaranty.

THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, INTERNAL VIRGINIA LAW, EXCLUDING CHOICE-OF-LAW PROVISIONS OF SUCH COMMONWEALTH THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH COMMONWEALTH.

SMITHFIELD FOODS, INC.

By:
Name:
Title:

Exhibit 3.2(B)-2

EXHIBIT 3.2(C)

[FORM OF SERIES C SENIOR SECURED NOTE]

SMITHFIELD FOODS, INC.

8.34% SERIES C SENIOR SECURED NOTE DUE AUGUST 1, 2003

No. RC-[ ]		[Date]

$[ ]		PPN: 832248 A# 5

SMITHFIELD FOODS, INC., a Virginia corporation (the “Company”), for value received, hereby promises to pay to [ ] or registered assigns the principal sum of [ ] DOLLARS ($[ ]) on August 1, 2003 and to pay interest (computed on the basis of a 360-day year of twelve 30-day months) on the unpaid principal balance thereof from the date of this Note at the rate of eight and thirty-four one-hundredths percent (8.34%) per annum plus, at all times during the Incremental Margin Period, the Incremental Margin then in effect, quarterly on the first (1st) day of each February, May, August and November in each year, commencing on the later of August 1, 1996 or the payment date next succeeding the date hereof, until the principal amount hereof shall become due and payable; and to pay on demand interest on any overdue principal (including any overdue prepayment of principal) and Make-Whole Amount, if any, and (to the extent permitted by applicable law) on any overdue installment of interest, at a rate equal to the lesser of (a) the highest rate allowed by applicable law or (b) ten and thirty-four one-hundredths percent (10.34%) per annum plus, at all times during the Incremental Margin Period, the Incremental Margin then in effect.

This Note is one of an issue of Series C Senior Secured Notes of the Company issued in an aggregate principal amount limited to Forty Million Dollars ($40,000,000) pursuant to the Company’s separate Note Purchase Agreements, (collectively as may be amended from time to time, the “Note Purchase Agreement”), each dated as of July 15, 1996, with the purchasers listed on Annex 1 thereto, and is entitled to the benefits thereof. Capitalized terms used herein and not otherwise defined herein have the meanings specified in the Note Purchase Agreement. As provided in the Note Purchase Agreement, this Note is subject to prepayment, in whole or in part, in certain cases without a Make-Whole Amount and in other cases with a Make-Whole Amount. The Company agrees to make the scheduled required prepayments on account of such Notes in accordance with the provisions of the Note Purchase Agreement.

Exhibit 3.2(C)-1

This Note is secured in accordance with, and entitled to the benefits of, the Security Documents.

All obligations evidenced by the Note are guarantied by the Guarantors pursuant to the Joint and Several Guaranty.

SMITHFIELD FOODS, INC.

By:
Name:
Title:

Exhibit 3.2(C)-2

EXHIBIT 3.2(D)

[FORM OF SERIES D SENIOR SECURED NOTE]

SMITHFIELD FOODS, INC.

9.80% SERIES D SENIOR SECURED NOTE DUE AUGUST 1, 2003

No. RD-[ ]		[Date]
$[ ]		PPN: 832248 B* 8

SMITHFIELD FOODS, INC., a Virginia corporation (the “Company”), for value received, hereby promises to pay to [ ] or registered assigns the principal sum of [ ] DOLLARS ($[ ]) on August 1, 2003 and to pay interest (computed on the basis of a 360-day year of twelve 30-day months) on the unpaid principal balance thereof from the date of this Note at the rate of nine and eighty one one-hundredths percent (10.55%) per annum plus, at all times during the Incremental Margin Period, the Incremental Margin then in effect, quarterly on the first (1st) day of each February, May, August and November in each year, commencing on the later of August 1, 1996 or the payment date next succeeding the date hereof, until the principal amount hereof shall become due and payable; and to pay on demand interest on any overdue principal (including any overdue prepayment of principal) and Make-Whole Amount, if any, and (to the extent permitted by applicable law) on any overdue installment of interest, at a rate equal to the lesser of (a) the highest rate allowed by applicable law or (b) eleven and eighty one-hundredths percent (11.80%) per annum plus, at all times during the Incremental Margin Period, the Incremental Margin then in effect.

This Note is one of an issue of Series D Senior Secured Notes of the Company issued in an aggregate principal amount limited to Nine Million Dollars ($9,000,000) pursuant to the Company’s separate Note Purchase Agreements, (collectively as may be amended from time to time, the “Note Purchase Agreement”), each dated as of July 15, 1996, with the purchasers listed on Annex 1 thereto, and is entitled to the benefits thereof. Capitalized terms used herein and not otherwise defined herein have the meanings specified in the Note Purchase Agreement. As provided in the Note Purchase Agreement, this Note is subject to prepayment, in whole or in part, in certain cases without a Make-Whole Amount and in other cases with a Make-Whole Amount. The Company agrees to make the scheduled required prepayments on account of such Notes in accordance with the provisions of the Note Purchase Agreement.

Exhibit 3.2(D)-1

This Note is secured in accordance with, and entitled to the benefits of, the Security Documents.

All obligations evidenced by the Note are guarantied by the Guarantors pursuant to the Joint and Several Guaranty.

SMITHFIELD FOODS, INC.

By:
Name:
Title:

Exhibit 3.2(D)-2

EXHIBIT 3.2(E)

[FORM OF SERIES E SENIOR SECURED NOTE]

SMITHFIELD FOODS, INC.

10.75% SERIES E SENIOR SECURED NOTE DUE AUGUST 1, 2005

No. RE-[ ]		[Date]
$[ ]		PPN: 832248 B@ 6

SMITHFIELD FOODS, INC., a Virginia corporation (the “Company”), for value received, hereby promises to pay to [ ] or registered assigns the principal sum of [ ] DOLLARS ($[ ]) on August 1, 2005 and to pay interest (computed on the basis of a 360-day year of twelve 30-day months) on the unpaid principal balance thereof from the date of this Note at the rate of ten and seventy-five one-hundredths percent (10.75%) per annum plus, at all times during the Incremental Margin Period, the Incremental Margin then in effect, quarterly on the first (1st) day of each February, May, August and November in each year, commencing on the later of August 1, 1996 or the payment date next succeeding the date hereof, until the principal amount hereof shall become due and payable; and to pay on demand interest on any overdue principal (including any overdue prepayment of principal) and Make-Whole Amount, if any, and (to the extent permitted by applicable law) on any overdue installment of interest, at a rate equal to the lesser of (a) the highest rate allowed by applicable law or (b) twelve and seventy-five one-hundredths percent (12.75%) per annum plus, at all times during the Incremental Margin Period, the Incremental Margin then in effect.

This Note is one of an issue of Series E Senior Secured Notes of the Company issued in an aggregate principal amount limited to Nine Million Two Hundred Fifty Thousand Dollars ($9,250,000) pursuant to the Company’s separate Note Purchase Agreements, (collectively as may be amended from time to time, the “Note Purchase Agreement”), each dated as of July 15, 1996, with the purchasers listed on Annex 1 thereto, and is entitled to the benefits thereof. Capitalized terms used herein and not otherwise defined herein have the meanings specified in the Note Purchase Agreement. As provided in the Note Purchase Agreement, this Note is subject to prepayment, in whole or in part, in certain cases without a Make-Whole Amount and in other cases with a Make-Whole Amount. The Company agrees to make the scheduled required prepayments on account of such Notes in accordance with the provisions of the Note Purchase Agreement.

Exhibit 3.2(E)-1

This Note is secured in accordance with, and entitled to the benefits of, the Security Documents.

All obligations evidenced by the Note are guarantied by the Guarantors pursuant to the Joint and Several Guaranty.

SMITHFIELD FOODS, INC.

By:
Name:
Title:

Exhibit 3.2(E)-2

EXHIBIT 3.2(F)

[FORM OF SERIES F SENIOR SECURED NOTE]

SMITHFIELD FOODS, INC.

8.52% SERIES F SENIOR SECURED NOTE DUE AUGUST 1, 2006

No. RF-[ ]		[Date}
$[ ]		PPN: 832248 B# 4

SMITHFIELD FOODS, INC., a Virginia corporation (the “Company”), for value received, hereby promises to pay to [ ] or registered assigns the principal sum of [ ] DOLLARS ($[ ]) on August 1, 2006 and to pay interest (computed on the basis of a 360-day year of twelve 30-day months) on the unpaid principal balance thereof from the date of this Note at the rate of eight and fifty-two one-hundredths percent (8.52%) per annum plus, at all times during the Incremental Margin Period, the Incremental Margin then in effect, quarterly on the first (1st) day of each February, May, August and November in each year, commencing on the later of August 1, 1996 or the payment date next succeeding the date hereof, until the principal amount hereof shall become due and payable; and to pay on demand interest on any overdue principal (including any overdue prepayment of principal) and Make-Whole Amount, if any, and (to the extent permitted by applicable law) on any overdue installment of interest, at a rate equal to the lesser of (a) the highest rate allowed by applicable law or (b) ten and fifty-two one-hundredths percent (10.52%) per annum plus, at all times during the Incremental Margin Period, the Incremental Margin then in effect.

This Note is one of an issue of Series F Senior Secured Notes of the Company issued in an aggregate principal amount limited to One Hundred Million Dollars ($100,000,000) pursuant to the Company’s separate Note Purchase Agreements, (collectively as may be amended from time to time, the “Note Purchase Agreement”), each dated as of July 15, 1996, with the purchasers listed on Annex 1 thereto, and is entitled to the benefits thereof. Capitalized terms used herein and not otherwise defined herein have the meanings specified in the Note Purchase Agreement. As provided in the Note Purchase Agreement, this Note is subject to prepayment, in whole or in part, in certain cases without a Make-Whole Amount and in other cases with a Make-Whole Amount. The Company agrees to make the scheduled required prepayments on account of such Notes in accordance with the provisions of the Note Purchase Agreement.

Exhibit 3.2(F)-1

This Note is secured in accordance with, and entitled to the benefits of, the Security Documents.

All obligations evidenced by the Note are guarantied by the Guarantors pursuant to the Joint and Several Guaranty.

SMITHFIELD FOODS, INC.

By:
Name:
Title:

Exhibit 3.2(F)-2

EXHIBIT 3.2(G)

[FORM OF SERIES G SENIOR SECURED NOTE]

SMITHFIELD FOODS, INC.

10.35% SERIES G SENIOR SECURED NOTE DUE NOVEMBER 1, 2006

No. RG-[ ]		[Date]
$[ ]		PPN: 832248 C* 7

SMITHFIELD FOODS, INC., a Virginia corporation (the “Company”), for value received, hereby promises to pay to [ ] or registered assigns the principal sum of [ ] DOLLARS ($[ ]) on November 1, 2006 and to pay interest (computed on the basis of a 360-day year of twelve 30-day months) on the unpaid principal balance thereof from the date of this Note at the rate of ten and thirty-five one-hundredths percent (10.35%) per annum plus, at all times during the Incremental Margin Period, the Incremental Margin then in effect, quarterly on the first (1st) day of each February, May, August and November in each year, commencing on the later of August 1, 1996 or the payment date next succeeding the date hereof, until the principal amount hereof shall become due and payable; and to pay on demand interest on any overdue principal (including any overdue prepayment of principal) and Make-Whole Amount, if any, and (to the extent permitted by applicable law) on any overdue installment of interest, at a rate equal to the lesser of (a) the highest rate allowed by applicable law or (b) twelve and thirty-five one-hundredths percent (12.35%) per annum plus, at all times during the Incremental Margin Period, the Incremental Margin then in effect.

This Note is one of an issue of Series G Senior Secured Notes of the Company issued in an aggregate principal amount limited to Fourteen Million Dollars ($14,000,000) pursuant to the Company’s separate Note Purchase Agreements, (collectively as may be amended from time to time, the “Note Purchase Agreement”), each dated as of July 15, 1996, with the purchasers listed on Annex 1 thereto, and is entitled to the benefits thereof. Capitalized terms used herein and not otherwise defined herein have the meanings specified in the Note Purchase Agreement. As provided in the Note Purchase Agreement, this Note is subject to prepayment, in whole or in part, in certain cases without a Make-Whole Amount and in other cases with a Make-Whole Amount. The Company agrees to make the scheduled required prepayments on account of such Notes in accordance with the provisions of the Note Purchase Agreement.

Exhibit 3.2(G)-1

This Note is secured in accordance with, and entitled to the benefits of, the Security Documents.

All obligations evidenced by the Note are guarantied by the Guarantors pursuant to the Joint and Several Guaranty.

SMITHFIELD FOODS, INC.

By:
Name:
Title:

Exhibit 3.2(G)-2

EXHIBIT 3.2(H)

[FORM OF SERIES H SENIOR SECURED NOTE]

SMITHFIELD FOODS, INC.

8.41% SERIES H SENIOR SECURED NOTE DUE AUGUST 1, 2004

No. RH-[ ]		[Date]
$[ ]		PPN: 832248 C@ 5

SMITHFIELD FOODS, INC., a Virginia corporation (the “Company”), for value received, hereby promises to pay to [ ] or registered assigns the principal sum of [ ] DOLLARS ($[ ]) on August 1, 2004 and to pay interest (computed on the basis of a 360-day year of twelve 30-day months) on the unpaid principal balance thereof from the date of this Note at the rate of eight and forty-one one-hundredths percent (8.41%) per annum plus, at all times during the Incremental Margin Period, the Incremental Margin then in effect, quarterly on the first (1st) day of each February, May, August and November in each year, commencing on the later of August 1, 1996 or the payment date next succeeding the date hereof, until the principal amount hereof shall become due and payable; and to pay on demand interest on any overdue principal (including any overdue prepayment of principal) and Make-Whole Amount, if any, and (to the extent permitted by applicable law) on any overdue installment of interest, at a rate equal to the lesser of (a) the highest rate allowed by applicable law or (b) ten and forty-one one-hundredths percent (10.41%) per annum plus, at all times during the Incremental Margin Period, the Incremental Margin then in effect.

This Note is one of an issue of Series H Senior Secured Notes of the Company issued in an aggregate principal amount limited to Fourteen Million Seven Hundred Seventy-Nine Thousand Four Hundred Twelve Dollars ($14,779,412) pursuant to the Company’s separate Note Purchase Agreements, (collectively as may be amended from time to time, the “Note Purchase Agreement”), each dated as of July 15, 1996, with the purchasers listed on Annex 1 thereto, and is entitled to the benefits thereof. Capitalized terms used herein and not otherwise defined herein have the meanings specified in the Note Purchase Agreement. As provided in the Note Purchase Agreement, this Note is subject to prepayment, in whole or in part, in certain cases without a Make-Whole Amount and in other cases with a Make-Whole Amount. The Company agrees to make the scheduled required prepayments on account of such Notes in accordance with the provisions of the Note Purchase Agreement.

Exhibit 3.2(H)-1

This Note is secured in accordance with, and entitled to the benefits of, the Security Documents.

All obligations evidenced by the Note are guarantied by the Guarantors pursuant to the Joint and Several Guaranty.

SMITHFIELD FOODS, INC.

By:
Name:
Title:

Exhibit 3.2(H)-2

EX-4.2 4 dex42.htm EXHIBIT 4.2 Exhibit 4.2

EXHIBIT 4.2

SMITHFIELD FOODS, INC.

AMENDMENT AGREEMENT NO. 2

As of December 31, 2002

To each of the Current Holders

listed in Annex 1 attached hereto

Ladies and Gentlemen:

Smithfield Foods, Inc., a Virginia corporation (together with its respective successors and assigns, the “Issuer”) agrees with you as follows:

1. PRELIMINARY STATEMENTS.

The Issuer issued and sold:

(a) One Hundred Million Dollars ($100,000,000) in aggregate principal amount of 7.89% Series I Senior Secured Notes due October 1, 2009 (as they may be amended, restated or otherwise modified from time to time, the “Series I Notes”);

(b) Fifty Million Dollars ($50,000,000) in aggregate principal amount of its Variable Rate Series J Senior Secured Notes due October 1, 2009 (as they may be amended, restated or otherwise modified from time to time, the “Series J Notes”);

(c) Fifty Million Dollars ($50,000,000) in aggregate principal amount of its 8.44% Series K Senior Secured Notes due October 1, 2009 (as they may be amended, restated or otherwise modified from time to time, the “Series K Notes”); and

(d) Twenty-Five Million Dollars ($25,000,000) in aggregate principal amount of its LIBOR Rate Series L Senior Secured Notes due October 1, 2009 (as they may be amended, restated or otherwise modified from time to time, the “Series L Notes” and, together with the Series I Notes, the Series J Notes, the Series K Notes, collectively, the “Notes”),

pursuant to those separate Note Purchase Agreements each dated as of October 27, 1999 between the Issuer and the purchasers named in Annex 1 thereto (as amended by that certain Amendment Agreement No. 1, dated as of December 7, 2001, among the Issuer and the other parties listed on the signature pages thereto, the “Existing Purchase Agreements”). The register kept by the Issuer for the registration and transfer of the Notes indicates that each of the Persons named in Annex 1 hereto (collectively, the “Current Holders”) is currently a holder of the original aggregate principal amount of the Notes indicated in such Annex.

2. DEFINED TERMS.

Capitalized terms used herein and not otherwise defined herein have the meanings ascribed to them in the Existing Purchase Agreements.

3. AMENDMENTS TO EXISTING PURCHASE AGREEMENTS AND NOTES.

3.1. Amendments to Existing Purchase Agreements.

3.2. Amendments to Notes.

Subject to Section 5, the Current Holders and the Issuer hereby agree that (a) each of the Series I Notes and Series K Notes shall be deemed to be automatically amended without any further action required on the part of any other Person, to conform to and have the terms provided in Exhibit 3.2(I) and Exhibit 3.2(K), respectively, hereto (except that the principal amount and payee of each Note shall remain unchanged) and (b) any Series I Notes and Series K Notes issued after the Effective Date shall be in the form of Exhibit 3.2(I) and Exhibit 3.2(K), respectively, hereto. Such amendment and issuance are referred to herein, collectively, as the “Existing Note Amendments” and, together with the Existing Purchase Agreement Amendments, collectively as the “Amendments”.

4. REPRESENTATIONS AND WARRANTIES OF THE ISSUER.

To induce you to enter into this Amendment Agreement and to consent to the Amendments, the Issuer represents and warrants as follows:

4.1. Material Adverse Effect.

4.2. Organization, Power and Authority, etc.

4.3. Legal Validity.

4.4. No Defaults.

Immediately prior to and after giving effect to the Amendments set forth in this Amendment Agreement, no Default or Event of Default will exist.

5. EFFECTIVENESS OF AMENDMENTS.

5.1. Amendment to Credit Facility.

5.2. Amendment of Other Note Agreements.

dated as of June 2, 2000 between the Issuer and each of the purchasers listed on Annex 1 thereto, and those certain separate Amended and Restated Note Purchase Agreements, dated as of October 31, 1999, between the Issuer and each of the noteholders listed on Annex 1 thereto. Each such amendment shall be substantially in the form of this Amendment Agreement;

5.3. Opinion of Counsel.

5.4. Amendment Fee.

The fee to be paid to the Current Holders pursuant to Section 7 of this Amendment Agreement shall have been paid in full;

5.5. Expenses.

6. CONSENT.

7. AMENDMENT FEE.

8. EXPENSES.

9. MISCELLANEOUS.

9.1. Part of Existing Purchase Agreements; Future References, etc.

9.2. Counterparts.

9.3. Governing Law.

[Remainder of page intentionally left blank. Next page is signature page.]

SMITHFIELD FOODS, INC.

By:		/s/ Daniel G. Stevens
Name:		Daniel G. Stevens
Title:		Vice President and Chief Financial Officer

[Signature Page to Amendment Agreement No. 2 (I-L)]

The foregoing Amendment Agreement is hereby accepted as of the date first above written.

CAPE FEAR FARM CREDIT, ACA

By:		/s/ Randy T. Pope
Name:		Randy T. Pope
Title:		Assistant Vice President

JOHN HANCOCK LIFE INSURANCE COMPANY

By:		/s/ David E. Johnson
Name:		David E. Johnson
Title:		Managing Director

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

By:		/s/ David E. Johnson
Name:		David E. Johnson
Title:		Authorized Signatory

INVESTORS PARTNER LIFE INSURANCE COMPANY

By:		/s/ David E. Johnson
Name:		David E. Johnson
Title:		Authorized Signatory

COMMONWEALTH OF PENNSYLVANIA

STATE EMPLOYEES’ RETIREMENT SYSTEM

By: John Hancock Life Insurance Company, as Investment Advisor


By:		/s/ David E. Johnson
Name:		David E. Johnson
Title:		Managing Director

JOHN HANCOCK LIFE INSURANCE COMPANY

(On behalf of Private Placement Separate Account 1Z)


By:		/s/ David E. Johnson
Name:		David E. Johnson
Title:		Managing Director

[Signature Page to Amendment Agreement No. 2 (I-L)]

MELLON BANK, N.A., solely in its capacity as Trustee for the BELL ATLANTIC MASTER TRUST, (as directed by John Hancock Financial Services, Inc.), and not in its individual capacity

By:		/s/ Bernadette Rist
Name:		Bernadette Rist
Title:		Authorized Signatory

MELLON BANK, N. A., solely in its capacity as Trustee for the LONG-TERM INVESTMENT TRUST, (as directed by John Hancock Financial Services, Inc.), and not in its individual capacity

By:		/s/ Bernadette Rist
Name:		Bernadette Rist
Title:		Authorized Signatory

THE NORTHERN TRUST COMPANY,

AS TRUSTEE OF THE LUCENT TECHNOLOGIES INC. MASTER PENSION TRUST

By: John Hancock Life Insurance Company, as Investment Manager


By:		/s/ David E. Johnson
Name:		David E. Johnson
Title:		Managing Director

SIGNATURE 4 LIMITED

By: John Hancock Life Insurance Company, Portfolio Advisor


By:		/s/ David E. Johnson
Name:		David E. Johnson
Title:		Authorized John Hancock Officer

SIGNATURE 1A (CAYMAN), LTD.

By: John Hancock Life Insurance Company, Portfolio Advisor


By:		/s/ David E. Johnson
Name:		David E. Johnson
Title:		Authorized John Hancock Officer

[Signature Page to Amendment Agreement No. 2 (I-L)]

THE VARIABLE ANNUITY LIFE INSURANCE COMPANY

AMERICAN GENERAL LIFE INSURANCE COMPANY

By: American General Investment Management, L.P.

By: American General Investment Management Corporation, its general partner


By:		/s/ Lochlan O. McNew
Name:		Lochlan O. McNew
Title:		Vice President

[Signature Page to Amendment Agreement No. 2 (I-L)]

The undersigned consent to the Amendments effected by the foregoing Amendment Agreement.

CODDLE ROASTED MEATS, INC.

GWALTNEY OF SMITHFIELD, LTD.

HANCOCK’S OLD FASHIONED COUNTRY HAM, INC.

IOWA QUALITY MEATS, LTD.

JOHN MORRELL & CO.

LYKES MEAT GROUP, INC.

MOYER PACKING COMPANY

NORTH SIDE FOODS CORP.

PACKERLAND HOLDINGS, INC.

PACKERLAND PROCESSING COMPANY, INC.

PACKERLAND-PLAINWELL, INC. (f/k/a Murco Foods, Inc.)

PATRICK CUDAHY INCORPORATED

PREMIUM PORK, INC.

QUIK-TO-FIX FOODS, INC.

SFFC, INC.

SMITHFIELD PURCHASE CORPORATION (successor by merger to Carroll’s Realty, Inc.)

STADLER’S COUNTRY HAMS, INC.

SUN LAND BEEF COMPANY

SUNNYLAND, INC.

THE SMITHFIELD COMPANIES, INC.

THE SMITHFIELD PACKING COMPANY INCORPORATED

MURPHY-BROWN LLC

By: John Morrell & Co., as sole member

MURPHY FARMS LLC

QUARTER M FARMS LLC

CARROLL’S FOODS OF VIRGINIA LLC

CARROLL’S FOODS LLC

CIRCLE FOUR LLC

CENTRAL PLAINS FARMS LLC

BROWN’S OF CAROLINA LLC

By: Murphy-Brown LLC, as sole member

By: John Morrell & Co., as sole member

BROWN’S FARMS, LLC

By: Brown’s of Carolina LLC, as sole member

By: Murphy-Brown LLC, as sole member

By: John Morrell & Co., as sole member

CARROLL’S REALTY PARTNERSHIP

By: Smithfield Purchase Corporation, as general partner

SMITHFIELD PACKING REAL ESTATE, LLC

By: The Smithfield Packing Company Incorporated, as sole member

GREAT LAKES CATTLE CREDIT COMPANY, LLC

By: Packerland Holdings, Inc., as sole member

[Signature Page to Amendment Agreement No. 2 (I-L)]

SMITHFIELD-CARROLL’S FARMS

By: Smithfield Purchase Corporation, as general partner

BROWN’S REALTY PARTNERSHIP

By: Brown’s Farms, LLC, its partner

By: Brown’s of Carolina LLC, its sole member and manager

By: Murphy-Brown LLC, its sole member and manager

By: John Morrell & Co., as sole member

and

By: Smithfield Purchase Corporation, its partner

SMITHFIELD PACKING REALTY PARTNERSHIP

By: Smithfield Packing Real Estate, LLC, its partner

By: The Smithfield Packing Company, Incorporated, its sole member and manager

and

By: Smithfield Purchase Corporation, its partner


By:		/s/ Daniel G. Stevens
Name:		Daniel G. Stevens
Title:		Vice President and Chief Financial Officer

[Signature Page to Amendment Agreement No. 2 (I-L)]

ANNEX 1

CURRENT HOLDERS AND PRINCIPAL AMOUNTS

Name of Current Holder	Aggregate Principal Amount of Series I Notes Held		Aggregate Principal Amount of Series J Notes Held		Aggregate Principal Amount of Series K Notes Held		Aggregate Principal Amount of Series L Notes Held
Cape Fear Farm Credit, ACA	$	100,000,000	$	50,000,000	$	-0-	$	-0-
John Hancock Life Insurance Company	$	-0-	$	-0-	$	15,500,000	$	15,000,000
John Hancock Variable Life Insurance Company	$	-0-	$	-0-	$	1,000,000	$	1,000,000
John Hancock Life Insurance Company (Private Placement Separate Account)	$	-0-	$	-0-	$	1,000,000	$	1,000,000
Investors Partner Life Insurance Company	$	-0-	$	-0-	$	500,000	$	500,000
Commonwealth of Pennsylvania State Employees’ Retirement System	$	-0-	$	-0-	$	2,000,000	$	1,000,000
Mellon Bank, N.A. as Trustee for Bell Atlantic Master Trust	$	-0-	$	-0-	$	1,000,000	$	1,000,000
The Northern Trust Company, as Trustee for the Lucent Technologies Inc. Master Pension Trust	$	-0-	$	-0-	$	2,000,000	$	1,000,000
Merrill Lynch International (Signature 4)	$	-0-	$	-0-	$	10,000,000	$	-0-
Signature 1A (Cayman), Ltd.	$	-0-	$	-0-	$	-0-	$	3,500,000
Mellon Bank, N.A. as Trustee for the Long-Term Investment Trust	$	-0-	$	-0-	$	2,000,000	$	1,000,000
The Variable Annuity Life Insurance Company	$	-0-	$	-0-	$	10,000,000	$	-0-
American General Life Insurance Company	$	-0-	$	-0-	$	5,000,000	$	-0-
Total	$	100,000,000	$	50,000,000	$	50,000,000	$	25,000,000

EXHIBIT 3.1

AMENDMENTS TO EXISTING PURCHASE AGREEMENTS

1. The Existing Purchase Agreements are hereby amended by adding a new Section 4.10 to read as follows:

4.10. Incremental Margin Period.

2. Section 6.7 of the Existing Purchase Agreements is hereby amended and restated in its entirety to read as follows:

6.7. Maintenance of Funded Debt.

Subsection (c) of Section 6.15 of the Existing Purchase Agreements is hereby amended and restated in its entirety to read as follows:

(c) Transfers of Collateral. The Company shall not, and shall not permit any Subsidiary to, sell or otherwise Transfer any Property constituting Collateral, except:

(i) Transfers for an Acceptable Consideration of obsolete or worn-out equipment constituting Collateral, or excess equipment constituting Collateral, in each case that is no longer useful in the business of the Company or such Subsidiary, if each of the following conditions would be satisfied with respect to such Transfer:

(A) the sum of

(x) the current book value of such Property, plus

Exhibit 3.1-1

(y) the aggregate book value of all other Property of the Company and the Subsidiaries Transferred pursuant to this Section 6.15(c) during the period beginning on the first day of the then current fiscal year of the Company and ended immediately prior to the date of such Transfer,

would not exceed five million dollars ($5,000,000),

(B) the sum of

(x) the current book value of such Property, plus

(y) the aggregate book value of all other Property of the Company and the Subsidiaries Transferred pursuant to this Section 6.15(c) during the period commencing on the Closing Date and ended at the time of such Transfer,

would not exceed twenty million dollars ($20,000,000) and

(C) immediately prior to, and immediately after the consummation of such transaction, and after giving effect thereto, no Default or Event of Default exists or would exist,

provided, that all or any portion of the assets which are the subject of any Transfer of Property shall be excluded for purposes of clause (A) and clause (B) of this Section 6.15(c)(i) if, within one hundred twenty (120) days after such Transfer, the entire proceeds of such Transfer (net of ordinary and reasonable transaction costs and expenses incurred in connection with such Transfer) are applied by the Company or such Subsidiary to:

(A) the purchase of Property of the Company or any Subsidiary reasonably equal in value or use to the Property which is the subject of such Transfer, so long as (x) such Property is subject to a perfected first-priority security interest in favor of the Security Trustee for the benefit of the holders from time to time of the Notes, (y) such Property constitutes Collateral and (z) each such investment shall not have been included in the calculation of any other exclusion of any other Transfer proposed to be excluded from the operation of clause (A) or clause (B) of this Section 6.15(c)(i), or

(B) an optional prepayment of Notes pursuant to Section 4.4.

Exhibit 3.1-2

The Company acknowledges and agrees that until applied pursuant to this Section 6.15(c)(i), the net proceeds of any such Transfer of Collateral by the Company or any Subsidiary shall be held in trust by the Security Trustee pursuant to the terms of the Security Documents.

(ii) Transfers for an Acceptable Consideration of other Collateral, if each of the following conditions would be satisfied with respect to such Transfer:

(A) the sum of

(x) the current book value of such Property, plus

(y) the aggregate book value of all other Property of the Company and the Subsidiaries Transferred pursuant to this Section 6.15(c)(ii) during the period commencing on the Closing Date and ended at the time of such Transfer,

would not exceed three million dollars ($3,000,000) and

(B) immediately prior to, and immediately after the consummation of such transaction, and after giving effect thereto, no Default or Event of Default exists or would exist,

provided, that the Company shall furnish to each of the holders of the Notes, in connection with each such Transfer, a certificate of (x) a Senior Financial Officer and satisfaction of such condition stating (1) the book value of the Property to be Transferred, (2) the aggregate book value of all other Property Transferred prior to such transfer pursuant to this Section 6.15(c)(ii), (3) to the extent such Property Transferred includes real property, that such Transfer shall not adversely affect the access to, or value of, any remaining real property constituting Collateral, and (4) immediately prior to, and immediately after the consummation of such transaction, and after giving effect thereto, no Default or Event of Default exists or would exist, and (y) the Secretary or Assistant Secretary of the transferor certifying the establishment of Acceptable Consideration for such transfer. Upon receipt of each such certificate, each of the holders of each of the Notes shall promptly advise the Security Trustee in writing to execute and deliver appropriate releases of such Property from the Liens created by the Security Documents.

4. Section 9.1 of the Existing Purchase Agreements is hereby amended by adding the following new definitions in the appropriate alphabetical order to read as follows:

3FQ03 – means the fiscal quarter of the Company ending on January 26, 2003.

4FQ03 – means the fiscal quarter of the Company ending on April 27, 2003.

Exhibit 3.1-3

1FQ04 – means the fiscal quarter of the Company ending on July 27, 2003.

2FQ04 – means the fiscal quarter of the Company ending on October 26, 2003.

3FQ04 – means the fiscal quarter of the Company ending on January 25, 2004.

Applicable Funded Debt Percentage – means, at any fiscal quarter end, the percentage applicable to such fiscal quarter end in the table set forth below:

Fiscal Quarter End		Percentage
All fiscal quarter ends prior to the end of 3FQ03		400%
3FQ03		450% plus New Debt Step Up
4FQ03		450% plus New Debt Step Up
1FQ04		450% plus New Debt Step Up
2FQ04		400% plus New Debt Step Up
All fiscal quarter ends after the end of 2FQ04		400%

Applicable Senior Funded Debt Percentage—means, at any fiscal quarter end, the percentage applicable to such fiscal quarter end in the table set forth below:

Fiscal Quarter End		Percentage
All fiscal quarter ends prior to the end of 3FQ03		320%
3FQ03		400% plus New Debt Step Up
4FQ03		400% plus New Debt Step Up
1FQ04		400% plus New Debt Step Up
2FQ04		375% plus New Debt Step Up
All fiscal quarter ends after the end of 2FQ04		320%

Exhibit 3.1-4

Incremental Margin Period – means the period from the start of 4FQ03 to and including the end of 3FQ04.

Exhibit 3.1-5

EXHIBIT 3.2(I)

[FORM OF 7.89% SERIES I SENIOR SECURED NOTE]

SMITHFIELD FOODS, INC.

7.89% SERIES I SENIOR SECURED NOTE DUE OCTOBER 1, 2009

No. RI-[ ]				[Date]
$[ ]				PPN: 832248 C# 3

SMITHFIELD FOODS, INC., a Virginia corporation (the “Company”), for value received, hereby promises to pay to [ ] or registered assigns the principal sum of [ ] DOLLARS ($[ ])on October 1, 2009 and to pay interest (computed on the basis of a 360-day year and actual days elapsed) on the unpaid principal balance thereof from the date of this Note at the rate of seven and eighty-nine one-hundredths percent (7.89%) per annum plus, at all times during the Incremental Margin Period, the Incremental Margin then in effect, quarterly on the first (1st) day of January, April, July and October in each year, commencing on the later of January 1, 2000 and the payment date next succeeding the date hereof, until the principal amount hereof shall become due and payable; and to pay on demand interest on any overdue principal (including any overdue prepayment of principal) and Make-Whole Amount, if any, and (to the extent permitted by applicable law) on any overdue installment of interest, at a rate equal to the lesser of (a) the Maximum Legal Rate of Interest or (b) nine and eighty-nine one-hundredths percent (9.89%) per annum plus, at all times during the Incremental Margin Period, the Incremental Margin then in effect.

This Note is one of an issue of Series I Senior Secured Notes of the Company issued in an aggregate principal amount limited to One Hundred Million Dollars ($100,000,000) pursuant to the Company’s separate Note Purchase Agreements (collectively, as may be amended from time to time, the “Note Purchase Agreement”), each dated as of October 27, 1999, with the purchasers listed on Annex 1 thereto, and is entitled to the benefits thereof. Capitalized terms used herein and not otherwise defined herein have the meanings specified in the Note Purchase Agreement. As provided in the Note Purchase Agreement, this Note is subject to prepayment, in whole or in part, in certain cases without a Make-Whole Amount and in other cases with a Make-Whole Amount. The Company agrees to make the scheduled required prepayments on account of such Notes in accordance with the provisions of the Note Purchase Agreement.

Exhibit 3.2(I)-1

This Note is secured in accordance with, and entitled to the benefits of, the Security Documents.

All obligations evidenced by the Note are guarantied by the Guarantors pursuant to the Joint and Several Guaranty.


SMITHFIELD FOODS, INC.

By:
Name:
Title:

Exhibit 3.2(I)-2

EXHIBIT 3.2(K)

[FORM OF 8.44% SERIES K SENIOR SECURED NOTE]

SMITHFIELD FOODS, INC.

8.44% SERIES K SENIOR SECURED NOTE DUE OCTOBER 1, 2009

No. RK-[ ]				[Date]
$[ ]				PPN: 832248 D@ 4

SMITHFIELD FOODS, INC., a Virginia corporation (the “Company”), for value received, hereby promises to pay to [ ] or registered assigns the principal sum of [ ] DOLLARS ($[ ])on October 1, 2009 and to pay interest (computed on the basis of a 360-day year of twelve 30-day months) on the unpaid principal balance thereof from the date of this Note at the rate of eight and forty-four one-hundredths percent (8.44%) per annum plus, at all times during the Incremental Margin Period, the Incremental Margin then in effect, quarterly on the first (1st) day of January, April, July and October in each year, commencing on the later of January 1, 2000 and the payment date next succeeding the date hereof, until the principal amount hereof shall become due and payable; and to pay on demand interest on any overdue principal (including any overdue prepayment of principal) and Make-Whole Amount, if any, and (to the extent permitted by applicable law) on any overdue installment of interest, at a rate equal to the lesser of (a) the Maximum Legal Rate of Interest or (b) ten and forty-four one-hundredths percent (10.44%) per annum plus, at all times during the Incremental Margin Period, the Incremental Margin then in effect.

This Note is one of an issue of Series K Senior Secured Notes of the Company issued in an aggregate principal amount limited to Fifty Million Dollars ($50,000,000) pursuant to the Company’s separate Note Purchase Agreements (collectively, as may be amended from time to time, the “Note Purchase Agreement”), each dated as of October 27, 1999, with the purchasers listed on Annex 1 thereto, and is entitled to the benefits thereof. Capitalized terms used herein and not otherwise defined herein have the meanings specified in the Note Purchase Agreement. As provided in the Note Purchase Agreement, this Note is subject to prepayment, in whole or in part, in certain cases without a Make-Whole Amount and in other cases with a Make-Whole Amount. The Company agrees to make the scheduled required prepayments on account of such Notes in accordance with the provisions of the Note Purchase Agreement.

Exhibit 3.2(K)-1

This Note is secured in accordance with, and entitled to the benefits of, the Security Documents.

All obligations evidenced by the Note are guarantied by the Guarantors pursuant to the Joint and Several Guaranty.


SMITHFIELD FOODS, INC.

By:
Name:
Title:

Exhibit 3.2(K)-2

EX-4.3 5 dex43.htm EXHIBIT 4.3 Exhibit 4.3

EXHIBIT 4.3

SMITHFIELD FOODS, INC.

AMENDMENT AGREEMENT NO. 2

As of December 31, 2002

To each of the Current Holders

listed in Annex 1 attached hereto

Ladies and Gentlemen:

Smithfield Foods, Inc., a Virginia corporation (together with its respective successors and assigns, the “Issuer”) agrees with you as follows:

1. PRELIMINARY STATEMENTS.

The Issuer issued and sold:

(a) Seventy-Five Million Dollars ($75,000,000) in aggregate principal amount of 8.25% Series M Senior Secured Notes due March 2, 2006 (as they may be amended, restated or otherwise modified from time to time, the “Notes”); and

(b) Twenty-Five Million Dollars ($25,000,000) in aggregate principal amount of its LIBOR Rate Series N Senior Secured Notes due March 2, 2002 (as they may be amended, restated or otherwise modified from time to time, the “Series N Notes”);

pursuant to those separate Note Purchase Agreements each dated as of June 2, 2000 between the Issuer and the purchasers named in Annex 1 thereto (as amended by that certain Amendment Agreement No. 1, dated as of December 7, 2001, among the Issuer and the other parties listed on the signature pages thereto, the “Existing Purchase Agreements”). The register kept by the Issuer for the registration and transfer of the Notes indicates that each of the Persons named in Annex 1 hereto (collectively, the “Current Holders”) is currently a holder of the original aggregate principal amount of the Notes indicated in such Annex. The Series N Notes became due and all then outstanding principal and interest thereon was paid in full on March 2, 2002.

2. DEFINED TERMS.

Capitalized terms used herein and not otherwise defined herein have the meanings ascribed to them in the Existing Purchase Agreements.

3. AMENDMENTS TO EXISTING PURCHASE AGREEMENTS AND NOTES.

3.1. Amendments to Existing Purchase Agreements.

3.2. Amendments to Notes.

Subject to Section 5, the Current Holders and the Issuer hereby agree that (a) each of the Notes shall be deemed to be automatically amended, without any further action required on the part of any other Person, to conform to and have the terms provided in Exhibit 3.2(M) hereto (except that the principal amount and payee of each Note shall remain unchanged) and (b) any Notes issued after the Effective Date shall be in the form of Exhibit 3.2(M) hereto. Such amendment and issuance are referred to herein, collectively, as the “Existing Note Amendments” and, together with the Existing Purchase Agreement Amendments, collectively as the “Amendments”.

4. REPRESENTATIONS AND WARRANTIES OF THE ISSUER.

To induce you to enter into this Amendment Agreement and to consent to the Amendments, the Issuer represents and warrants as follows:

4.1. Material Adverse Effect.

4.2. Organization, Power and Authority, etc.

4.3. Legal Validity.

4.4. No Defaults.

Immediately prior to and after giving effect to the Amendments set forth in this Amendment Agreement, no Default or Event of Default will exist.

5. EFFECTIVENESS OF AMENDMENTS.

5.1. Amendment to Credit Facility.

5.2. Amendment of Other Note Agreements.

Each Current Holder shall have received true and correct copies of the fully executed amendments (collectively, the “Other Purchase Agreement Amendments”) to those certain separate Note Purchase Agreements, dated as of March 1, 2002, between the Issuer and each of the purchasers listed on Annex 1 thereto, those certain separate Amended and Restated Note Purchase Agreements, dated as of October 31, 1999 between the Issuer and each of the noteholders listed on Annex 1 thereto, and those certain separate Note Purchase Agreements, dated as of October 27, 1999, between the Issuer and each of the purchasers listed on Annex 1 thereto. Each such amendment shall be substantially in the form of this Amendment Agreement;

5.3. Opinion of Counsel.

5.4. Amendment Fee.

The fee to be paid to the Current Holders pursuant to Section 7 of this Amendment Agreement shall have been paid in full;

5.5. Expenses.

6. CONSENT.

7. AMENDMENT FEE.

8. EXPENSES.

9. MISCELLANEOUS.

9.1. Part of Existing Purchase Agreements; Future References, etc.

9.2. Counterparts.

signed by all, of the parties hereto. Delivery of a facsimile of an executed signature page hereto shall be effective as delivery of an original.

9.3. Governing Law.

[Remainder of page intentionally left blank. Next page is signature page.]

SMITHFIELD FOODS, INC.


By:		/s/ Daniel G. Stevens
Name:		Daniel G. Stevens
Title:		Vice President and Chief Financial Officer

[Signature Page to Amendment Agreement No. 2 (M-N)]

The foregoing Amendment Agreement is hereby accepted as of the date first above written.

JOHN HANCOCK LIFE INSURANCE COMPANY

By:		/s/ David E. Johnson
Name:		David E. Johnson
Title:		Managing Director

MELLON BANK, N. A., solely in its capacity as

Trustee for the LONG-TERM INVESTMENT

TRUST, (as directed by John Hancock Financial

Services, Inc.), and not in its individual capacity

By:		/s/ Bernadette Rist
Name:		Bernadette Rist
Title:		Authorized Signatory

LUCENT TECHNOLOGIES, INC. MASTER PENSION TRUST

By:

John Hancock Life Insurance Company, as Investment Advisor

By:		/s/ David E. Johnson
Name:		David E. Johnson
Title:		Managing Director

INVESTORS PARTNER LIFE INSURANCE COMPANY

By:		/s/ David E. Johnson
Name:		David E. Johnson
Title:		Authorized Signatory

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

By:		/s/ David E. Johnson
Name:		David E. Johnson
Title:		Authorized Signatory

[Signature Page to Amendment Agreement No. 2 (M-N)]

The undersigned consent to the Amendments effected by the foregoing Amendment Agreement.

CODDLE ROASTED MEATS, INC.

GWALTNEY OF SMITHFIELD, LTD.

HANCOCK’S OLD FASHIONED COUNTRY HAM, INC.

IOWA QUALITY MEATS, LTD.

JOHN MORRELL & CO.

LYKES MEAT GROUP, INC.

MOYER PACKING COMPANY

NORTH SIDE FOODS CORP.

PACKERLAND HOLDINGS, INC.

PACKERLAND PROCESSING COMPANY, INC.

PACKERLAND-PLAINWELL, INC. (f/k/a Murco Foods, Inc.)

PATRICK CUDAHY INCORPORATED

PREMIUM PORK, INC.

QUIK-TO-FIX FOODS, INC.

SFFC, INC.

SMITHFIELD PURCHASE CORPORATION (successor by merger to Carroll’s Realty, Inc.)

STADLER’S COUNTRY HAMS, INC.

SUN LAND BEEF COMPANY

SUNNYLAND, INC.

THE SMITHFIELD COMPANIES, INC.

THE SMITHFIELD PACKING COMPANY INCORPORATED

MURPHY-BROWN LLC

By: John Morrell & Co., as sole member

MURPHY FARMS LLC

QUARTER M FARMS LLC

CARROLL’S FOODS OF VIRGINIA LLC

CARROLL’S FOODS LLC

CIRCLE FOUR LLC

CENTRAL PLAINS FARMS LLC

BROWN’S OF CAROLINA LLC

By: Murphy-Brown LLC, as sole member

By: John Morrell & Co., as sole member

BROWN’S FARMS, LLC

By: Brown’s of Carolina LLC, as sole member

By: Murphy-Brown LLC, as sole member

By: John Morrell & Co., as sole member

CARROLL’S REALTY PARTNERSHIP

By: Smithfield Purchase Corporation, as general partner

SMITHFIELD PACKING REAL ESTATE, LLC

By: The Smithfield Packing Company Incorporated, as sole member

GREAT LAKES CATTLE CREDIT COMPANY, LLC

By: Packerland Holdings, Inc., as sole member

[Signature Page to Amendment Agreement No. 2 (M-N)]

SMITHFIELD-CARROLL’S FARMS

By: Smithfield Purchase Corporation, as general partner

BROWN’S REALTY PARTNERSHIP

By: Brown’s Farms, LLC, its partner

By: Brown’s of Carolina LLC, its sole member and manager

By: Murphy-Brown LLC, its sole member and manager

By: John Morrell & Co., as sole member

and

By: Smithfield Purchase Corporation, its partner

SMITHFIELD PACKING REALTY PARTNERSHIP

By: Smithfield Packing Real Estate, LLC, its partner

By: The Smithfield Packing Company, Incorporated, its sole member and manager

and

By: Smithfield Purchase Corporation, its partner

By:		/s/ Daniel G. Stevens
Name:		Daniel G. Stevens
Title:		Vice President and Chief Financial Officer

[Signature Page to Amendment Agreement No. 2 (M-N)]

ANNEX 1

CURRENT HOLDERS AND PRINCIPAL AMOUNTS

Name of Current Holder	Aggregate Principal Amount of Notes Held
John Hancock Life Insurance Company	$	66,500,000
Mellon Bank, N.A., Trustee under the Long-Term Investment Trust dated October 1, 1996	$	2,000,000
Lucent Technologies, Inc. Master Pension Trust	$	3,000,000
Investors Partner Life Insurance Company	$	1,000,000
John Hancock Variable Life Insurance Company	$	2,500,000

Annex 1-1

EXHIBIT 3.1

AMENDMENTS TO EXISTING PURCHASE AGREEMENTS

1. The Existing Purchase Agreements are hereby amended by adding a new Section 4.9 to read as follows:

4.9. Incremental Margin Period.

2. Section 6.7 of the Existing Purchase Agreements is hereby amended and restated in its entirety to read as follows:

6.7. Maintenance of Funded Debt.

3. Section 9.1 of the Existing Purchase Agreements is hereby amended by adding the following new definitions in the appropriate alphabetical order to read as follows:

3FQ03 – means the fiscal quarter of the Company ending on January 26, 2003.

4FQ03 – means the fiscal quarter of the Company ending on April 27, 2003.

1FQ04 – means the fiscal quarter of the Company ending on July 27, 2003.

2FQ04 – means the fiscal quarter of the Company ending on October 26, 2003.

3FQ04 – means the fiscal quarter of the Company ending on January 25, 2004.

Applicable Funded Debt Percentage – means, at any fiscal quarter end, the percentage applicable to such fiscal quarter end in the table set forth below:

Exhibit 3.1-1

Fiscal Quarter End		Percentage
All fiscal quarter ends prior to the end of 3FQ03		400%
3FQ03		450% plus New Debt Step Up
4FQ03		450% plus New Debt Step Up
1FQ04		450% plus New Debt Step Up
2FQ04		400% plus New Debt Step Up
All fiscal quarter ends after the end of 2FQ04		400%

Applicable Senior Funded Debt Percentage – means, at any fiscal quarter end, the percentage applicable to such fiscal quarter end in the table set forth below:

Fiscal Quarter End		Percentage
All fiscal quarter ends prior to the end of 3FQ03		320%
3FQ03		400% plus New Debt Step Up
4FQ03		400% plus New Debt Step Up
1FQ04		400% plus New Debt Step Up
2FQ04		375% plus New Debt Step Up
All fiscal quarter ends after the end of 2FQ04		320%

Incremental Margin Period – means the period from the start of 4FQ03 to and including the end of 3FQ04.

Exhibit 3.1-2

Exhibit 3.1-3

EXHIBIT 3.2(M)

[FORM OF 8.25% SERIES M SENIOR SECURED NOTE]

SMITHFIELD FOODS, INC.

8.25% SERIES M SENIOR SECURED NOTE DUE MARCH 2, 2006

No. RM-[ ]		[Date]
$[ ]		PPN: 832248 E* 5

SMITHFIELD FOODS, INC., a Virginia corporation (the “Company”), for value received, hereby promises to pay to [ ] or registered assigns the principal sum of [ ] DOLLARS ($[ ]) on March 2, 2006 and to pay interest (computed on the basis of a 360-day year and actual days elapsed) on the unpaid principal balance thereof from the date of this Note at the rate of eight and twenty-five one-hundredths percent (8.25%) per annum plus, at all times during the Incremental Margin Period, the Incremental Margin then in effect, quarterly on the second (2^nd) day of March, June, September and December in each year, commencing on the later of September 2, 2000 and the payment date next succeeding the date hereof, until the principal amount hereof shall become due and payable; and to pay on demand interest on any overdue principal (including any overdue prepayment of principal) and Make-Whole Amount, if any, and (to the extent permitted by applicable law) on any overdue installment of interest, at a rate equal to the lesser of (a) the Maximum Legal Rate of Interest or (b) ten and twenty-five one-hundredths percent (10.25%) per annum plus, at all times during the Incremental Margin Period, the Incremental Margin then in effect.

This Note is one of an issue of Series M Senior Secured Notes of the Company issued in an aggregate principal amount limited to Seventy-Five Million Dollars ($75,000,000) pursuant to the Company’s separate Note Purchase Agreements (collectively, as may be amended from time to time, the “Note Purchase Agreement”), each dated as of June 2, 2000, with the purchasers listed on Annex 1 thereto, and is entitled to the benefits thereof. Capitalized terms used herein and not otherwise defined herein have the meanings specified in the Note Purchase Agreement. As provided in the Note Purchase Agreement, this Note is subject to prepayment, in whole or in part, in certain cases without a Make-Whole Amount and in other cases with a Make-Whole Amount. The Company agrees to make the scheduled required prepayments on account of such Notes in accordance with the provisions of the Note Purchase Agreement.

Exhibit 3.2(M)-1

This Note is secured in accordance with, and entitled to the benefits of, the Security Documents.

All obligations evidenced by the Note are guarantied by the Guarantors pursuant to the Joint and Several Guaranty.

SMITHFIELD FOODS, INC.


By:
Name:
Title:

Exhibit 3.3(M)-2

EX-4.4 6 dex44.htm EXHIBIT 4.4 Exhibit 4.4

EXHIBIT 4.4

SMITHFIELD FOODS, INC.

AMENDMENT AGREEMENT NO. 1

As of December 31, 2002

To each of the Current Holders

listed in Annex 1 attached hereto

Ladies and Gentlemen:

Smithfield Foods, Inc., a Virginia corporation (together with its respective successors and assigns, the “Issuer”) agrees with you as follows:

1. PRELIMINARY STATEMENTS.

The Issuer issued and sold:

(a) Twenty-Five Million Dollars ($25,000,000) in aggregate principal amount of Reset Rate Series O 5/10 Year Senior Secured Notes (as they may be amended, restated or otherwise modified from time to time, the “Series O Notes”); and

(b) Thirty Million Dollars ($30,000,000) in aggregate principal amount of its Adjustable Rate Series P 5/10 Year Senior Secured Notes (as they may be amended, restated or otherwise modified from time to time, the “Series P Notes” and, together with the Series O Notes, collectively, the “Notes”),

pursuant to those separate Note Purchase Agreements each dated as of March 1, 2002 between the Issuer and the purchasers named in Annex 1 thereto (the “Existing Purchase Agreements”). The register kept by the Issuer for the registration and transfer of the Notes indicates that each of the Persons named in Annex 1 hereto (collectively, the “Current Holders”) is currently a holder of the original aggregate principal amount of the Notes indicated in such Annex.

2. DEFINED TERMS.

Capitalized terms used herein and not otherwise defined herein have the meanings ascribed to them in the Existing Purchase Agreements.

3. AMENDMENTS TO EXISTING PURCHASE AGREEMENTS.

Subject to Section 5, the Current Holders and the Issuer hereby agree to each of the amendments to the Existing Purchase Agreements as provided for by this Amendment Agreement No. 1 (this “Amendment Agreement”) in the manner specified in Exhibit 3. Such amendments are referred to herein, collectively, as the “Amendments”.

4. REPRESENTATIONS AND WARRANTIES OF THE ISSUER.

To induce you to enter into this Amendment Agreement and to consent to the Amendments, the Issuer represents and warrants as follows:

4.1. Material Adverse Effect.

4.2. Organization, Power and Authority, etc.

4.3. Legal Validity.

4.4. No Defaults.

Immediately prior to and after giving effect to the Amendments set forth in this Amendment Agreement, no Default or Event of Default will exist.

5. EFFECTIVENESS OF AMENDMENTS.

Amendment Agreement. It is understood that any Current Holder may withhold its consent for any reason, and that, without limitation of the foregoing, each Current Holder hereby makes the granting of its consent contingent upon satisfaction of the following conditions:

5.1. Amendment to Credit Facility.

5.2. Amendment of Other Note Agreements.

Each Current Holder shall have received true and correct copies of the fully executed amendments (collectively, the “Other Purchase Agreement Amendments”) to those certain separate Note Purchase Agreements, dated as of June 2, 2000 between the Issuer and each of the purchasers listed on Annex 1 thereto, those certain separate Amended and Restated Note Purchase Agreements, dated as of October 31, 1999, between the Issuer and each of the noteholders listed on Annex 1 thereto and those certain separate Note Purchase Agreements, dated as of October 27, 1999, between the Issuer and each of the purchasers listed on Annex 1 thereto. Each such amendment shall be substantially in the form of this Amendment Agreement;

5.3. Opinion of Counsel.

5.4. Amendment Fee.

The fee to be paid to the Current Holders pursuant to Section 7 of this Amendment Agreement shall have been paid in full;

5.5. Expenses.

6. CONSENT.

7. AMENDMENT FEE.

8. EXPENSES.

9. MISCELLANEOUS.

9.1. Part of Existing Purchase Agreements; Future References, etc.

9.2. Counterparts.

9.3. Governing Law.

SMITHFIELD FOODS, INC.


By:		/s/ Daniel G. Stevens
Name:		Daniel G. Stevens
Title:		Vice President and Chief Financial Officer

[Signature Page to Amendment Agreement No. 1 (O-P)]

The foregoing Amendment Agreement is hereby accepted as of the date first above written.

JOHN HANCOCK LIFE INSURANCE COMPANY

By:		/s/ David E. Johnson
Name:		David E. Johnson
Title:		Managing Director

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

By:		/s/ David E. Johnson
Name:		David E. Johnson
Title:		Authorized Signatory

INVESTORS PARTNER LIFE INSURANCE COMPANY

By:		/s/ David E. Johnson
Name:		David E. Johnson
Title:		Authorized Signatory

SIGNATURE 5 L.P.

By: John Hancock Life Insurance Company, as Portfolio Advisor

By:		/s/ David E. Johnson
Name:		David E. Johnson
Title:		Managing Director

COBANK, ACB

By:		/s/ Kenneth L. Warlick
Name:		Kenneth L. Warlick
Title:		Vice President

[Signature Page to Amendment Agreement No. 1 (O-P)]

The undersigned consent to the Amendments effected by the foregoing Amendment Agreement.

CODDLE ROASTED MEATS, INC.

GWALTNEY OF SMITHFIELD, LTD.

HANCOCK’S OLD FASHIONED COUNTRY HAM, INC.

IOWA QUALITY MEATS, LTD.

JOHN MORRELL & CO.

LYKES MEAT GROUP, INC.

MOYER PACKING COMPANY

NORTH SIDE FOODS CORP.

PACKERLAND HOLDINGS, INC.

PACKERLAND PROCESSING COMPANY, INC.

PACKERLAND-PLAINWELL, INC. (f/k/a Murco Foods, Inc.)

PATRICK CUDAHY INCORPORATED

PREMIUM PORK, INC.

QUIK-TO-FIX FOODS, INC.

SFFC, INC.

SMITHFIELD PURCHASE CORPORATION (successor by merger to Carroll’s Realty, Inc.)

STADLER’S COUNTRY HAMS, INC.

SUN LAND BEEF COMPANY

SUNNYLAND, INC.

THE SMITHFIELD COMPANIES, INC.

THE SMITHFIELD PACKING COMPANY INCORPORATED

MURPHY-BROWN LLC

By: John Morrell & Co., as sole member

MURPHY FARMS LLC

QUARTER M FARMS LLC

CARROLL’S FOODS OF VIRGINIA LLC

CARROLL’S FOODS LLC

CIRCLE FOUR LLC

CENTRAL PLAINS FARMS LLC

BROWN’S OF CAROLINA LLC

By: Murphy-Brown LLC, as sole member

By: John Morrell & Co., as sole member

BROWN’S FARMS, LLC

By: Brown’s of Carolina LLC, as sole member

By: Murphy-Brown LLC, as sole member

By: John Morrell & Co., as sole member

CARROLL’S REALTY PARTNERSHIP

By: Smithfield Purchase Corporation, as general partner

SMITHFIELD PACKING REAL ESTATE, LLC

By: The Smithfield Packing Company Incorporated, as sole member

GREAT LAKES CATTLE CREDIT COMPANY, LLC

By: Packerland Holdings, Inc., as sole member

[Signature page to Amendment Agreement No. 1 (O-P)]

SMITHFIELD-CARROLL’S FARMS

By: Smithfield Purchase Corporation, as general partner

BROWN’S REALTY PARTNERSHIP

By: Brown’s Farms, LLC, its partner

By: Brown’s of Carolina LLC, its sole member and manager

By: Murphy-Brown LLC, its sole member and manager

By: John Morrell & Co., as sole member

and

By: Smithfield Purchase Corporation, its partner

SMITHFIELD PACKING REALTY PARTNERSHIP

By: Smithfield Packing Real Estate, LLC, its partner

By: The Smithfield Packing Company, Incorporated, its sole member and manager

and

By: Smithfield Purchase Corporation, its partner


By:		/s/ Daniel G. Stevens
Name:		Daniel G. Stevens
Title		Vice President and Chief Financial Officer

[Signature Page to Amendment Agreement No. 1 (O-P)]

ANNEX 1

CURRENT HOLDERS AND PRINCIPAL AMOUNTS

Name of Current Holder	Aggregate Principal Amount of Series O Notes Held		Aggregate Principal Amount of Series P Notes Held
John Hancock Life Insurance Company	$	19,000,000	$	-0-
John Hancock Variable Life Insurance Company	$	750,000	$	-0-
Investors Partner Life Insurance Company	$	250,000	$	-0-
Signature 5 L.P.	$	5,000,000	$	-0-
CoBank, ACB	$	-0-	$	- 30,000,0000-

Annex 1-1

EXHIBIT 3

AMENDMENTS TO EXISTING PURCHASE AGREEMENTS

1. The Existing Purchase Agreements are hereby amended by adding a new Section 4.9 to read as follows:

4.9. Incremental Margin Period.

2. Section 6.7 of the Existing Purchase Agreements is hereby amended and restated in its entirety to read as follows:

6.7. Maintenance of Funded Debt.

3. Section 9.1 of the Existing Purchase Agreements is hereby amended by adding the following new definitions in the appropriate alphabetical order to read as follows:

3FQ03 – means the fiscal quarter of the Company ending on January 26, 2003.

4FQ03 – means the fiscal quarter of the Company ending on April 27, 2003.

1FQ04 – means the fiscal quarter of the Company ending on July 27, 2003.

2FQ04 – means the fiscal quarter of the Company ending on October 26, 2003.

3FQ04 – means the fiscal quarter of the Company ending on January 25, 2004.

Applicable Funded Debt Percentage – means, at any fiscal quarter end, the percentage applicable to such fiscal quarter end in the table set forth below:

Exhibit 3-1

Fiscal Quarter End		Percentage
All fiscal quarter ends prior to the end of 3FQ03		400%
3FQ03		450% plus New Debt Step Up
4FQ03		450% plus New Debt Step Up
1FQ04		450% plus New Debt Step Up
2FQ04		400% plus New Debt Step Up
All fiscal quarter ends after the end of 2FQ04		400%

Applicable Senior Funded Debt Percentage – means, at any fiscal quarter end, the percentage applicable to such fiscal quarter end in the table set forth below:

Fiscal Quarter End		Percentage
All fiscal quarter ends prior to the end of 3FQ03		320%
3FQ03		400% plus New Debt Step Up
4FQ03		400% plus New Debt Step Up
1FQ04		400% plus New Debt Step Up
2FQ04		375% plus New Debt Step Up
All fiscal quarter ends after the end of 2FQ04		320%

Incremental Margin Period – means the period from the start of 4FQ03 to and including the end of 3FQ04.

Exhibit 3-2

Exhibit 3-3

EX-99.1 7 dex991.htm EXHIBIT 99.1 Exhibit 99.1

EXHIBIT 99.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Smithfield Foods, Inc. (the “Company”) on Form 10-Q for the period ended January 26, 2003 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Joseph W. Luter, III, Chairman of the Board and Chief Executive Officer of the Company certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) 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/ Joseph W. Luter, III
Joseph W. Luter, III Chairman of the Board and Chief Executive Officer

Date: March 12, 2003

EX-99.2 8 dex992.htm EXHIBIT 99.2 Exhibit 99.2

EXHIBIT 99.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Smithfield Foods, Inc. (the “Company”) on Form 10-Q for the period ended January 26, 2003 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Daniel G. Stevens, Vice President and Chief Financial Officer of the Company certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) 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/ Daniel G. Stevens
Daniel G. Stevens Vice President and Chief Financial Officer

Date: March 12, 2003

-----END PRIVACY-ENHANCED MESSAGE-----

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