010444 Smithfield Sees Higher Profits, Stock Split

Smithfield, VA - Smithfield Foods Inc., the No. 1 U.S. pork producer, said it expects fourth quarter earnings to exceed Wall Street estimates due to strong results at its meat processing business and the company intends a 2-for-1 stock split.

The company also said it agreed to acquire Moyer Packing Co., the ninth- largest beef processor in the U.S. with annual sales of almost $600 million. Terms were not disclosed.

Smithfield said earnings for the fiscal fourth quarter ending April 29 will exceed 85 cents a share, before unusual items. This compares with 51 cents earned in the same quarter last year and 74 cents a share estimated by analysts polled by market research firm Thomson Financial/First Call.

“While relatively high hog prices have produced strong results in the hog production group, we are most gratified with the meat processing group performance, as earnings are expected to more than double those of the prior year,” Joseph Luter III, Smithfield chairman, president and chief executive officer, said in a news release.

In the fourth quarter, Smithfield said it will record unusual gains of about 5 cents a share on the sale of a processing plant in Canada and about 3 cents a share on the sale of beef processor IBP Inc. stock.

Smithfield held less than a 5% stake in IBP, which had about 106 million shares outstanding at the end of last year.

Smithfield was ousted in January from its attempt to acquire IBP by rival bidder poultry giant Tyson Foods Inc. In late March, Tyson withdrew its $3.2 billion cash and stock offer for IBP. Smithfield has not publicly renewed its interest, but analysts have speculated the company may again enter the bidding process.

“At this point, we've expressed absolutely no interest,” Smithfield spokesman Jerry Hostetter. “They are facing some lengthy and costly lawsuits. It's certainly not the time to be looking at an acquisition there.”

Smithfield also said its directors agreed to recommend to shareholders at the company's annual shareholder meeting Aug. 29 that they approve an increase in authorized shares. If approved, the company said its board currently intends to declare a 2-for-1 stock split after the annual meeting. The company currently has 52.5 million shares outstanding.

Moyer Packing, a closely-held company based in Souderton, Pa., is the largest beef processor in the Eastern United States, with a strong presence in the Connecticut, Maryland, Massachusetts, New Jersey, New York and Pennsylvania markets, as well as exporting to Japan.

The proposed transaction requires regulatory approval and is expected to close in the first quarter of fiscal 2002.

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