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SMITHFIELD FOODS REPORTS LOWER THIRD QUARTER EARNINGS

 SMITHFIELD, Va., Feb. 23 /PRNewswire/ -- Joseph W. Luter III, chairman, president and chief executive officer of Smithfield Foods, Inc. (NASDAQ-NMS: SFDS), today announced that the company had net income of $508,000, or 2 cents per share, in the third quarter of fiscal 1993, compared to net income of $10,470,000, or 66 cents per share, in the same quarter of fiscal 1992. Fiscal 1992 third quarter net income included a non-recurring after-tax gain of $874,000 (5 cents per share) on the sale of marketable securities.
 In the first nine months of fiscal 1993, the company had net income of $2,315,000, or 14 cents per share, down from $18,646,000, or $1.18 per share, in the same nine-month period a year ago. The results for the fiscal 1993 nine-month period included a non- recurring after-tax charge of $2,087,000 (13 cents per share) related to the closing of Esskay, Inc.'s meat processing plant in Baltimore. Net income in the first nine months of fiscal 1992 included a non- recurring after-tax gain of $1,868,000 (12 cents per share) on the sale of marketable securities.
 Sales in this year's third quarter were $339,425,000, up from $315,599,000 in the same quarter of fiscal 1992. Sales in the first nine months of fiscal 1993 were $833,279,000, compared to $816,551,000 in the same period a year ago.
 Luter issued the following statement in connection with the company's third quarter financial results:
 The quarter just completed was the most trying quarter the company has had in the last decade. First, operating results were adversely impacted by lower margins on both fresh pork and processed meats. We believe that the pork processing industry as a whole was similarly affected during this time frame and that the lower margins which we experienced were not limited just to Smithfield Foods. Next, we encountered significant start-up losses at our new Bladen County, N.C., fresh pork facility, which began operations on Oct. 1. While these losses were not unexpected, they were more severe than we had originally anticipated, due in part to poor industry fresh pork margins. We also encountered start-up difficulties with an expansion project at Smithfield Packing Company's ham processing plant in Landover, Md., and at a new addition to Gwaltney's plant in Smithfield, Va. The Landover plant was expanded to double its ham processing capacity and the new addition to the Gwaltney plant doubled its ham processing capacity and increased its bacon processing capacity by 30 percent.
 Just before the quarter began, we discovered structural weaknesses at Esskay's plant in Baltimore, Md., which rendered it inherently unsafe and presented an intolerable risk to the employees working there. As a result, we immediately began to curtail operations at the plant and it was, for all intents and purposes, completely shut down by Dec. 31. Because of this unforeseen problem, production of Esskay's products had to be moved to our other plants, which resulted in temporary production difficulties and operating inefficiencies at those plants.
 In addition to all the foregoing, in October we acquired from Valleydale Packers, Inc., the Valleydale and Reelfoot trademarks and product lines, as well as the Valleydale processing plant located in Salem, Va. Those Valleydale products not produced in the Salem plant were shifted to our other plants and, just as with the Esskay situation, we experienced temporary production difficulties, operating inefficiencies and related product distribution problems.
 As we look back at the quarter, everything taken together took a heavy toll on our operations and severely impacted the company's bottom line.
 We have recently made significant progress in our operating picture. Although the Bladen County plant has not performed as well to date as we had originally hoped, operations at the plant improved as the quarter progressed. We have increased the number of hogs slaughtered at the plant from several thousand a day at the beginning of the quarter to more than 11,000 a day today. Yields have improved and operations have become more efficient. Productivity at the new additions to Smithfield Packing's Landover plant and the Gwaltney plant is currently meeting original projections. Production of the Esskay and Valleydale products has been absorbed and the distribution problems associated with them have been alleviated.
 A look at several different facets of our business gives us just cause for optimism about the company's long-range potential. We believe that sales tonnage of both fresh pork and processed meats will show nice gains over the next 12 to 18 months. Margins, while not predictable, should improve over this time span. The company is continuing to aggressively expand into vertical integration. Brown's of Carolina, Inc., our own hog production operation, and Smithfield- Carroll's, our joint hog production arrangement with Carroll Foods, Inc., will together have approximately 65,000 sows in production by May 2, the end of our current fiscal year. These sows will produce more than 1,200,000 market hogs in fiscal 1994.
 We continue to be very excited about our NPD pig project, which is moving along on schedule. Approximately 1,000 hogs per week derived from NPD breeding stock are currently being delivered to our plants. Continued testing confirms the extremely lean characteristics of these genetic lines. The volume of NPD hogs will show significant growth in fiscal 1994 and will enable the company to begin to initiate merchandising programs based upon extremely lean products.
 While the company's near-term performance may continue to be adversely affected by less than favorable industry conditions and by the Bladen County plant, we believe that we have established a strong base at Smithfield Foods that will serve as a springboard for future growth and result in a return to strong profitability in the years ahead.

 SMITHFIELD FOODS, INC.
 Summary Statements of Income
 (Unaudited)
 (In thousands, except per share data)
 13 Weeks 14 Weeks 39 Weeks 40 Weeks
 Ended Ended Ended Ended
 Jan. 31, Feb. 2, Jan. 31, Feb. 2,
 1993 1992 1993 1992
 Sales $339,425 $315,599 $833,279 $816,551
 Income Before
 Income Taxes 806 16,148 3,885 28,921
 Income Taxes 298 5,678 1,570 10,275
 Net Income 508 10,470(C) 2,315(B) 18,646(C)
 Net Income
 Per Share .02(A) .66(C) .14(A)(B) 1.18(C)
 Average Shares
 Outstanding 16,772 15,897 16,264 15,845
 (A) Reflects computation of net income per share after deduction of dividends on preferred stock.
 (B) Includes a non-recurring, after-tax charge of $2,087,000 (13 cents per share)($3,598,000 on a pretax basis) related to a plant closing and relocation of its operations.
 (C) Includes non-recurring, after-tax gains of $874,000 (5 cents per share) and $1,868,000 (12 cents per share) on the sale of marketable securities in the 14 and 40 weeks ended Feb. 2, 1992, respectively.
 -0- 2/23/93
 /CONTACT: Aaron D. Trub of Smithfield Foods, 202-223-4224/
 (SFDS)


CO: Smithfield Foods, Inc. ST: Virginia IN: FOD SU: ERN

DC -- DC009 -- 9372 02/23/93 11:19 EST
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