Mr. Pope continued, "Fiscal 2013 was a challenging year in hog production with higher grain prices due to last summer's drought and, more recently, export market disruptions. For the industry, pork exports were down to nearly every major market in the fourth quarter with volumes to China and Russia falling over ractopamine certification requirements and the weakening yen resulting in lower shipments to Japan. This decline in pork exports pushed production back onto the domestic market and negatively impacted our hog production and fresh pork businesses in the fourth quarter."

Sales for the fourth quarter of fiscal 2013 were $3.3 billion, up 3%. Net income was $29.7 million ($.21 per diluted share) in the fourth quarter, compared to net income of $79.5 million ($.49 per diluted share) last year. The fourth quarter of fiscal 2012 included a $16.8 million benefit, or $.06 per diluted share, attributable to insurance reimbursements related to the settlement of the company's Missouri litigation.

Fiscal 2013 sales increased 1% to $13.2 billion. Net income was $183.8 million ($1.26 per diluted share) in fiscal 2013, compared to net income of $361.3 million ($2.21 per diluted share) last year. Fiscal 2013 and fiscal 2012 include a number of noteworthy items which, when adjusted, result in non-GAAP EPS of $1.80 and $2.59 per diluted share, respectively (refer to the "Reconciliation of Non-GAAP Measures" table at the end of this release).

Business Segment Discussion

Fourth Quarter Results


Fresh Pork

Fresh pork operating margins improved from the prior year to 2%, or $3 per head, as live hog prices fell 6%. Retail volume was strong, up 10%. The company processed 3% more hogs. Exports declined double digits on lower shipments to China and Russia due to new ractopamine certification requirements and Japan as the yen depreciated versus the dollar. Smithfield resumed shipments to China in mid-March, sourcing product from its plants in Clinton and Tar Heel, North Carolina and Milan, Missouri, which are 100% ractopamine-free.

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