Smithfield Foods, Inc. reported a loss from continuing operations of $105.5 million, or $.73 per diluted share. The loss from continuing operations on a non-GAAP basis was $21.4 million, or $.15 per diluted share.

Sales this year were $3.3 billion versus $3.1 billion a year ago. The current quarter included 14 weeks compared to 13 weeks in last year’s third quarter. A number of non-recurring items and mark to market adjustments on derivative instruments affected the current quarterly results.

"Our results indicate that, despite the difficult environment and losses we have sustained in swine production, many parts of Smithfield are performing extremely well,” said Larry C. Pope, president and chief executive officer. “Our focus on improving packaged meats results is paying off. We earned record margins in this business in this quarter. Once our restructuring plan takes hold, these margins are expected to widen even further.”

By the end of the third quarter, Smithfield had $960 million in available liquidity. The company reduced overall indebtedness by over $700 million since the fourth quarter of fiscal 2008, which includes over $300 million in the third quarter. Debt to total capitalization ratio has been reduced 53 percent. In February, Smithfield Foods entered into new covenant amendments to its US and European credit facilities which provide for a reduction of the applicable interest coverage ratio through the third fiscal quarter of 2010.

Total packaged meat margins expanded substantially but were offset in the pork segment by $84.8 million ($.38 per diluted share) of restructuring charges and weaker fresh pork margins. Fresh pork volume was flat on a comparable basis to last year.

Hog production losses continued due to extremely high feed costs. Raising costs increased to $62 per hundredweight compared to $49 per hundredweight last year. Grain prices have fallen considerably from their record highs last summer. Based on the perception last summer that the industry might run out of corn, Smithfield locked in availability of corn through the end of this fiscal year at prices well above current market prices; thus, pig raising costs will begin to reflect lower corn prices in the first fiscal quarter of 2010.

International segment results were below last year’s results. Campofrio and Groupe Smithfield earnings declined due to high input costs and slow demand in Western Europe.

The merger between Groupe Smithfield and Campofrio was finalized in December. Smithfield owns 37 percent of the new company, Campofrio Food Group. As of the date of the transaction, the market value of the Smithfield holdings was $415 million. The transaction resulted in a pre-tax gain of $56 million (or $.22 per diluted share), which is reflected as “other income” in the consolidated statements of income. The gain reflects the difference between the market value of the new shares in Campofrio and the book value of Smithfield’s investment in Groupe Smithfield.

There was an increase in Other segment sales based on the sell-off of $50.9 million of the company’s cattle inventory.

During November and December, the company bought $93.7 million face value public bonds maturing in 2009, which resulted in a pre-tax gain of $7.5 million ($.03 per diluted share) which is reflected in “other income” in the consolidated statements of income.

“Looking forward, I fully expect the fourth quarter to be another difficult quarter with substantial losses in hog production,” said Mr. Pope. “However, I am reasonably optimistic about fiscal 2010 in spite of the current recession. Our raising costs should decline significantly…Our packaged meats business is improving very nicely and I expect this to continue. In addition, the restructuring of our pork group should deliver significant benefits to the bottom line during the year.”

With sales of $12 billion, Smithfield Foods is the leading processor and marketer of fresh pork and packaged meats in the United States, as well as the largest producer of hogs. For more information, visit www.smithfieldfoods.com.

Disclaimer: This article contains "forward-looking" statements within the meaning of the federal securities laws. The forward-looking statements includes statements concerning the Company's 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. The Company's forward-looking information and 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, fuel 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, the investment performance of the Company's pension plan assets and the availability of legislative funding relief, the cost of compliance with environmental and health standards, adverse results from on-going litigation, actions of domestic and foreign governments, labor relations issues, credit exposure to large customers, the ability to make effective acquisitions and successfully integrate newly acquired businesses into existing operations, the Company's ability to effectively restructure portions of its operations and achieve cost savings from such restructurings and other risks and uncertainties described in the Company's Annual Report on Form 10-K for fiscal 2008 and in its subsequent Quarterly Reports on Form 10-Q. Readers are cautioned not to place undue reliance on forward-looking statements because actual results may differ materially from those expressed in, or implied by, the statements. Any forwardlooking statement that the Company makes speaks only as of the date of such statement, and the Company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless expressed as such, and should only be viewed as historical data.