SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) January 20, 2000
SMITHFIELD FOODS, INC.
(Exact name of registrant as specified in its charter)
VIRGINIA 0-2258 52-0845861
(State or other (Commission (IRS Employer
jurisdiction of incorporation File Number) Identification No.)
200 COMMERCE STREET
SMITHFIELD, VIRGINIA 23430
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (757) 365-3000
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
ACQUISITION OF MURPHY FAMILY FARMS
Smithfield Foods, Inc. ( the "Company" or Smithfield Foods") on January
28, 2000 completed the acquisition of Murphy Farms, Inc. and its affiliated
companies (collectively "Murphy Family Farms") for 11.1 million shares of
Smithfield Foods, Inc. common stock and the assumption of approximately $203
million in debt, plus other liabilities. On January 28, 2000, the closing price
of Smithfield Foods common stock on the New York Stock Exchange was $17-3/8.
Certain assets were divested to third parties in connection with the
acquisition.
As previously announced, Murphy Family Farms will join the Company's
other domestic hog production subsidiaries, Brown's of Carolina and Carroll's
Foods, Inc., and together the three operations will produce approximately 12
million high quality market hogs per year.
Going forward, Murphy Family Farms will be conducted as a separate
operating unit of Smithfield Foods that will be managed by its present
management team, which remains substantially intact. "We have worked very
closely with Murphy's for many years and are very comfortable with their
management team", Joseph W. Luter, III, Chairman and CEO of Smithfield Foods,
said.
He also noted that "Given the current outlook for hog prices over the
next 12 months and our anticipated raising costs, we expect this acquisition to
be immediately accretive to earnings." He further stated that this
"substantially completes our long-term goal of vertical integration and allows
us to continue producing the most consistent and leanest pork on the market
today."
DESCRIPTION OF COMPANY
Smithfield Foods is the largest vertically integrated producer and
marketer of fresh pork and processed meats in the United States. The Company's
brands include Smithfield Lean Generation, Smithfield Premium, Gwaltney, John
Morrell, Patrick Cudahy, Schneiders, Krakus, Lykes, Esskay, Kretschmar,
Valleydale, Jamestown, Dinner Bell, Sunnyland, ReaLean, Patrick's Pride, Great,
Tobin's First Prize, Peyton's, Rodeo, IQM, Curly's, Ember Farms and others.
In addition, the Company has operating subsidiaries in Canada, France
and Poland and participates in joint ventures in both Brazil and Mexico. The
French subsidiaries produce and sell processed meats while the Canadian and
Polish subsidiaries have slaughter operations and sell fresh pork, processed
meat and other related food products. The joint ventures are involved in all
aspects of the pork business including hog production and slaughter as well as
the sale of fresh and processed meats.
FORWARD LOOKING INFORMATION
This filing may contain "forward-looking" information within the
meaning of the federal securities laws. The forward-looking information may
include statements concerning the Company's future earnings and 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 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. The risks and
uncertainties include availability and prices of live hogs and raw materials,
product pricing, the competitive environment and related market conditions,
operating efficiencies, access to capital and actions of domestic and foreign
governments.
REORGANIZATION OF THE BOARD OF DIRECTORS
At its meeting on January 20, 2000 the Board of Directors of Smithfield
Foods elected two new outside directors to its Board, reduced the Board size to
9 and established a separate Management Board and an Environmental Compliance
Committee. These changes implement the plan, announced at the 1999 Annual
Meeting of Shareholders, to establish a new Board structure reflecting current
trends in corporate governance. A majority of the new Board consists of outside,
independent directors.
Newly elected to the Board were Carol T. Crawford and Melvin O. Wright.
Ms. Crawford is a Distinguished Visiting Professor of Law at George Mason
University School of Law in Arlington, Virginia. Prior to joining the GMU Law
faculty, she served for eight years as a Commissioner of the U.S. International
Trade Commission, a position President Bush appointed her to in 1991. Previously
Ms. Crawford served in several other important governmental positions including
Assistant Attorney General of the United States, Associate Director of the
Office of Management and Budget (OMB) and Director of the Federal Trade
Commission's Bureau of Consumer Protection.
Mr. Wright currently serves as an advisor to Primco, a Paris merchant
bank, and as a director of several charitable organizations. His background
includes extensive experience in the securities industry, including a long
involvement with the Securities Industry Institute at the Wharton School of
Business where he is currently a Trustee Emeritus, having previously served as
Chairman. Until his retirement in 1992, Mr. Wright was a Senior Vice President
and Director of Dean Witter Reynolds (now Morgan Stanley Dean Witter).
In addition to Ms. Crawford and Mr. Wright, the new Board continues to
include the following persons, all of whom were most recently elected to the
Board of Directors at the 1999 Annual Meeting of Shareholders: Joseph W. Luter,
III, Chairman and Chief Executive Officer of Smithfield Foods; Lewis R. Little,
President and Chief Operating Officer of Smithfield Foods; Robert L. Burrus,
Jr., Chairman of McGuire, Woods, Battle & Boothe LLP; Ray A. Goldberg, Moffett
Professor of Agriculture and Business, Emeritus, Harvard Business School; George
E. Hamilton, Jr., retired former President and Chief Operating Officer of The
Smithfield Packing Company, Inc.; Richard J. Holland, Chairman of the Board of
The Farmers Bank; and William H. Prestage, Chairman of the Board, President and
Chief Executive Officer of Prestage Farms, Inc. Mr. Wright joins Messrs. Burrus,
Goldberg and Holland on the Audit Committee, and Ms. Crawford joins Messrs.
Burrus, Goldberg and Holland on the Compensation Committee.
Six other persons who were serving as Directors on January 20, 2000,
each of whom is the senior manager at one of the Company's operations, resigned
from the Board of Directors, and were appointed to the newly created Management
Board. They are Douglas W. Dodds, Chairman and Chief Executive Officer of
Schneider Corporation, F. J. Faison, Jr., President and Chief Operating Officer
of Carroll's Foods, Inc., Robert G. Hoffman, II, President and Chief Executive
Officer of North Side Foods Corp., Roger R. Kapella, President and Chief
Operating Officer of Patrick Cudahy Incorporated, Joseph B. Sebring, President
and Chief Operating Officer of John Morrell & Co. and Timothy A. Seely,
President and Chief Operating Officer of Gwaltney of Smithfield, Ltd.
The Management Board also includes the following other officers: C.
Larry Pope, Vice President and Chief Financial Officer, and Richard J.M.
Poulson, Vice President and Senior Advisor to the Chairman, of Smithfield Foods;
Robert Zulewski, President of the Management Board of Animex, S.A. (Poland); and
Jean Quentin, Managing Director of Smithfield France, S.A., as well as Messrs.
Luter and Little.
In addition to his other duties, Mr. Little also serves as the
President and Chief Operating Officer of The Smithfield Packing Company,
Incorporated and the Lykes Meat Group, Inc. In addition to his other duties, Mr.
Poulson also serves as Chairman of the Supervisory Board of Animex S.A. Mr.
Quentin also serves as President and Chief Executive Officer of the Company's
operating subsidiaries in France. Smithfield Packing, Lykes and Animex are all
operating subsidiaries of Smithfield Foods, while Smithfield France, S.A. is a
wholly owned subsidiary responsible for the Company's operations in France.
The Board of Directors also established a senior management level
Environmental Compliance Committee which will be chaired by Mr. Little and
vice-chaired by Robert F. Urell, Vice President, Engineering of Smithfield
Foods. This Committee will be responsible for developing and monitoring the
environmental policies of the Company and for continued development and
implementation of the Company's Environmental Management System. The Committee
will focus initially on hog production operations in the State of North
Carolina, especially those located in areas adversely impacted by recent
hurricanes, and will provide assistance to the Company's operating subsidiaries
and their families of contract growers in the development of alternative animal
waste management systems.
INCREASE OF STOCK REPURCHASE PROGRAM
In addition, the Board on January 20, 2000 approved an increase, from 3
million to 4 million aggregate shares, in the number of shares of common stock
that the Company may purchase from time to time in the open market or in private
transactions. The Company had purchased approximately 2.8 million shares in open
market and private transactions from September 1999 to January 20, 2000 pursuant
to the share repurchase program previously authorized by the Board.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements.
As of the date of filing of this Current Report on Form 8-K, it is
impracticable for the Company to provide the financial statements required by
this Item 7(a). In accordance with Item 7(a)(4) of Form 8-K, the registrant
expects to file such financial statements by amendment to this Form 8-K no later
than April 12, 2000.
(b) Pro Forma Financial Information.
As of the date of filing of this Current Report on Form 8-K, it is
impracticable for the Company to provide the pro forma financial information
required by this Item 7(b). In accordance with Item 7(b) of Form 8-K, the
registrant expects to file such pro forma financial information by amendment to
this Form 8-K no later than April 12, 2000.
(c) Exhibits.
2.1 Acquisition Agreement and Plan of Reorganization among Smithfield
Foods, Inc., Wendell H. Murphy, Harry D. Murphy, Joyce M. Norman,
Wendell H. Murphy, Jr., Wendy Murphy Crumpler, Stratton K. Murphy, Marc
D. Murphy and Angela Brown (excluding Smithfield Foods, Inc., the
"Murphy Selling Shareholders"), dated as of November 15, 1999, as
amended as of January 1, 2000 (schedules and exhibits omitted, but the
registrant hereby agrees upon request of the Commission to furnish the
same supplementally).
2.2 Registration Rights Agreement between Smithfield Foods, Inc. and the
Murphy Selling Shareholders.
2.3 Agreement with Shareholders between Smithfield Foods, Inc. and the
Murphy Selling Shareholders.
3.1 Bylaws of Smithfield Foods, Inc. as amended through January 20, 2000.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SMITHFIELD FOODS, INC.
(Registrant)
By: /s/ Michael H. Cole
---------------------
(Signature)
Michael H. Cole
Secretary
Dated: February 14, 2000