AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 18, 1996
REGISTRATION NO. 33-

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM S-3

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

SMITHFIELD FOODS, INC.
(Exact name of Registrant as specified in charter)

DELAWARE 52-0845861
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)

900 DOMINION TOWER
999 WATERSIDE DR.
NORFOLK, VIRGINIA 23510
(804) 365-3000

(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)

AARON D. TRUB
VICE PRESIDENT, SECRETARY AND TREASURER
SMITHFIELD FOODS, INC.
900 DOMINION TOWER
999 WATERSIDE DR.
NORFOLK, VIRGINIA 23510
(804) 365-3000
(Name, address, including zip code, and telephone number, including
area code, of agent for service)

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon after the effectiveness of this Registration Statement as market
conditions warrant.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]

CALCULATION OF REGISTRATION FEE

[CAPTION]

PROPOSED
TITLE OF EACH CLASS PROPOSED MAXIMUM MAXIMUM
OF SECURITIES TO AMOUNT TO BE OFFERING PRICE AGGREGATE
BE REGISTERED REGISTERED PER UNIT (1) OFFERING PRICE (1)

Common Stock,
$.50 par value per share... 1,094,273 shares $25.25 $27,630,393.25
Rights to Purchase Series A
Junior Participating
Preferred Stock, par value
$1.00 per share........... 1,094,273 rights N/A N/A

TITLE OF EACH CLASS
OF SECURITIES TO AMOUNT OF
BE REGISTERED REGISTRATION FEE

Common Stock,
$.50 par value per share... $9,528.00
Rights to Purchase Series A
Junior Participating
Preferred Stock, par value
$1.00 per share........... $100.00

(1) Estimated solely for the purpose of determining the amount of the
registration fee in accordance with Rule 457 under the Securities Act of
1933.

(2) The Rights are attached to and trade with the shares of the Common Stock of
the Company. Value attributable to the Rights, if any, will be reflected in
the market price of the shares of Common Stock. The fee paid represents the
minimum statutory fee pursuant to Section 6(b) of the Securities Act of
1933.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.

SUBJECT TO COMPLETION, DATED JUNE 18, 1996

1,094,273 SHARES
SMITHFIELD FOODS, INC.
COMMON STOCK

All of the 1,094,273 shares of Common Stock of the Company offered hereby
(the "Shares") are being offered for sale by the Selling Stockholder. The Shares
were issued and initially sold to the Selling Stockholder on December 20, 1995,
in a private transaction in connection with the Company's acquisition of a
subsidiary from the Selling Stockholder. See "The Selling Stockholder". The
Company will not receive any of the proceeds from the sale of the Shares.

The Company's Common Stock is traded on the NASDAQ National Market under
the symbol "SFDS". On June 14, 1996, the last sale price of the Common Stock, as
reported by NASDAQ, was $25 1/2 per share. See "Price Range of Common Stock".

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

The Selling Stockholder may offer and sell the Shares from time to time
directly, or through agents or dealers designated from time to time on terms to
be determined at the time of offer or sale. The aggregate proceeds to the
Selling Stockholder from the sale of the Shares will be the total purchase price
of the Shares sold, less the aggregate dealers' or agents' commissions,
discounts or fees, if any, and any other expenses of the offering not borne by
the Company. The Company will pay the estimated $99,628 of expenses in
connection with the registration of sales of Shares pursuant hereto. The Company
has agreed to indemnify the Selling Stockholder and certain other persons
against certain liabilities, including liabilities under the Securities Act of
1933. See "The Selling Stockholder" and "Plan of Distribution".

The Selling Stockholder and any agents or dealers that participate with the
Selling Stockholder in the distribution of the Shares may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933, and any
commission received by them and any profit on the resale of the Shares purchased
by them may be deemed to be underwriting commissions or discounts under the Act.

The date of this Prospectus is , 1996.

AVAILABLE INFORMATION

Smithfield Foods, Inc. is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information may be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549; Northwestern Atrium Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661; and 7 World Trade Center, Suite 1300, New
York, New York 10048. Copies of such materials can be obtained by mail from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates.

Smithfield Foods, Inc. has filed with the Commission a Registration
Statement on Form S-3 (herein, together with all amendments, supplements and
exhibits thereto, referred to as the "Registration Statement") under the
Securities Act with respect to the Shares. This Prospectus does not contain all
of the information set forth in the Registration Statement, certain parts of
which are omitted in accordance with the rules and regulations of the
Commission. For further information with respect to Smithfield Foods, Inc. and
the Shares, reference is hereby made to the Registration Statement. The
statements contained in this Prospectus concerning the contents of any contract
or other document referred to are not necessarily complete. Where such contract
or other document is an exhibit to the Registration Statement, each statement is
qualified in all respects by the provisions of such exhibit, to which reference
is hereby made for a full statement of the provisions thereof.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents filed by Smithfield Foods, Inc. with the Commission
(File No. 0-2258) pursuant to the Exchange Act are incorporated herein by
reference:

1. Annual Report on Form 10-K for the fiscal year ended April 30,
1995;

2. Quarterly Reports on Form 10-Q for the quarters ended July 30,
1995, October 29, 1995 and January 28, 1996;

3. Current Reports on Forms 8-K and/or 8-K/A dated May 12 (two),
October 10, October 22, and December 22, 1995, and January 4, February 9,
March 4, and June 14, 1996; and

4. Amendment on Form 8 (including Registration Statement on Form 8-A)
dated May 23, 1991 and Registration Statement on Form 8-A dated May 23,
1991.

All other documents filed by Smithfield Foods, Inc. pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering made hereby shall be
deemed to be incorporated herein by reference.

Any statement contained in any document incorporated or deemed to be
incorporated by reference herein shall be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any
subsequently filed document which is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.

Smithfield Foods, Inc. will provide without charge to each person,
including any beneficial owner, to whom a copy of this Prospectus is delivered,
upon the written or oral request of such person, a copy of any or all of the
documents which are incorporated herein by reference (not including exhibits to
such documents unless such exhibits are specifically incorporated by reference
into such documents). Requests for such copies should be directed to Smithfield
Foods, Inc., 900 Dominion Tower, 999 Waterside Drive, Norfolk, VA 23510,
Attention: Secretary (telephone: (804) 365-3000).

PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE MORE
DETAILED INFORMATION AND HISTORICAL AND PRO FORMA FINANCIAL STATEMENTS
(INCLUDING THE NOTES THERETO) APPEARING ELSEWHERE IN, OR INCORPORATED BY
REFERENCE INTO, THIS PROSPECTUS.

THE COMPANY

Smithfield Foods is one of the largest combined pork slaughterers and
further processors in the United States, producing a wide variety of fresh pork
and processed meat products which it markets domestically and to selected
foreign markets, including Japan, Russia, Mexico and other countries. The
Company's business is based around four strategic initiatives: (i) capitalizing
on the Company's new status as a major national pork processor; (ii) use of the
leanest genetics commercially available to enable the Company to market highly
differentiated pork products; (iii) vertical integration into state-of-the-art
hog production through Company-owned hog production operations and long-term
partnerships and alliances with large and efficient hog producers; and (iv)
continued growth through selective acquisition of regional pork processors and
brands.

Since 1975, when current management assumed control, Smithfield Foods has
expanded both its production capacity and its markets through a combination of
strong internal growth and the acquisition of regional and multi-regional
companies with well-recognized brand identities. On December 20, 1995, the
Company acquired John Morrell, a major Midwestern pork processor with primary
markets in the Midwest, Northeast and Western United States. This acquisition
changed the Company's character from a large multi-regional pork processor to
one with national distribution. It also doubled the Company's sales and
slaughter capacity, added several popular lines of branded processed meat
products along with four efficient processing facilities and more than doubled
the Company's international sales. The Company believes that John Morrell's
strength in smoked sausage, hot dogs, luncheon meats, bacon and smoked hams
complements the strong smoked meats, hot dog and bacon business of the Company's
Eastern operations. In addition, by pooling the operational skills and expertise
of management personnel, the combined Company has already improved operating
performance at a number of its plants. Furthermore, the combination presents
substantial opportunities for cost savings in the areas of processing,
marketing, purchasing and distribution.

THE OFFERING

Shares Offered........................................ 1,094,273 Shares of Common Stock, all of which are being offered by
the Selling Stockholder. See "Selling Stockholder".

Total Shares Outstanding.............................. 18,016,015 shares of Common Stock, including the 1,094,273 Shares
offered hereby

NASDAQ National Market Symbol......................... SFDS

SUMMARY CONSOLIDATED FINANCIAL INFORMATION

FISCAL YEAR ENDED
APRIL 28, APRIL 30, MAY 1, MAY 2, MAY 3,
1996 1995 1994 1993 1992

(IN THOUSANDS, EXCEPT PER SHARE DATA)

INCOME STATEMENT DATA:
Sales................................................ $ 2,383,893 $ 1,526,518 $ 1,403,485 $ 1,113,712 $ 1,036,613
Gross profit (1)..................................... 180,267 145,932 115,605 76,084 87,413
Income from continuing operations before income taxes
and change in accounting for income taxes......... 30,251 50,438 31,935 4,961 33,645
Net income........................................... 15,886 27,840 19,702 3,989 21,635
Income per share from continuing operations before
cumulative effect of change in accounting for
income taxes...................................... 1.06 1.83 1.11 .18 1.38
Net income per share................................. .84 1.59 1.13 .22 1.37
Weighted average shares outstanding.................. 17,530 17,059 16,768 16,372 15,813
BALANCE SHEET DATA:
Total assets......................................... $ 857,619 $ 550,225 $ 452,279 $ 399,567 $ 277,685
Long-term debt and capital lease obligations......... 188,618 155,047 118,942 124,517 49,091
Total debt (including capital lease obligations)..... 312,573 234,703 180,732 178,985 94,625
Stockholders' equity................................. 242,516 184,015 154,950 135,770 113,754
OPERATING DATA:
Fresh pork sales (pounds)............................ 1,635,300 955,290 820,203 588,284 527,611
Processed meats sales (pounds)....................... 839,341 774,615 661,783 631,521 581,303
Total hogs purchased................................. 12,211 8,678 7,414 5,767 4,790

(1) Certain expenses previously classified as selling, general and
administrative have been reclassified as cost of sales.

THE COMPANY

The Company is one of the largest combined pork slaughterers and further
processors in the United States, producing a wide variety of fresh pork and
processed meat products which it markets domestically and to selected foreign
markets, including Japan, Russia, Mexico and other countries. The Company, as a
holding company, conducts its pork processing operations through four principal
subsidiaries: Gwaltney of Smithfield, Ltd. ("Gwaltney") and The Smithfield
Packing Company, Incorporated ("Smithfield Packing"), both based in Smithfield,
Virginia; John Morrell & Co. ("John Morrell"), based in Cincinnati, Ohio; and
Patrick Cudahy Incorporated ("Patrick Cudahy"), based in Cudahy, Wisconsin. The
Company also conducts hog production operations through its Brown's of Carolina,
Inc. subsidiary ("Brown's") and through Smithfield-Carroll's, a joint hog
production arrangement between the Company and Carroll's Foods of Virginia,
Inc., an affiliate of Carroll's Foods, Inc., Warsaw, North Carolina
("Smithfield-Carroll's"). Both Brown's and Smithfield-Carroll's produce hogs for
the Company's pork processing plants in Bladen County, North Carolina and
Smithfield, Virginia. In this Prospectus, references to "Smithfield Foods" or
"the Company" are to Smithfield Foods, Inc. together with all of its
subsidiaries (including John Morrell from December 20, 1995), unless the context
otherwise indicates.

The Company's principal executive offices are located at 900 Dominion
Tower, 999 Waterside Drive, Norfolk, Virginia 23510, telephone number (804)
365-3000.

USE OF PROCEEDS

The Shares may be sold hereunder from time to time by the Selling
Stockholder, and the Company will not receive any of the proceeds from such
sales.

PRICE RANGE OF COMMON STOCK

The following table sets forth, for the fiscal periods indicated, the
highest and lowest sales prices of the Common Stock on the NASDAQ National
Market, as reported by NASDAQ.

RANGE OF SALES
PRICES
HIGH LOW

Fiscal year ending April 30, 1995
First quarter....................................................................................... $30.25 $21.50
Second quarter...................................................................................... 31.75 24.00
Third quarter....................................................................................... 34.00 26.50
Fourth quarter...................................................................................... 34.25 20.75
Fiscal year ending April 28, 1996
First quarter....................................................................................... 24.25 19.50
Second quarter...................................................................................... 27.00 19.75
Third quarter....................................................................................... 32.75 25.00
Fourth quarter...................................................................................... 31.06 25.25
Fiscal year ending April 27, 1997
First quarter (through June 1, 1996)................................................................ 29.00 25.50

On June 1, 1996 there were 1,353 holders of record of the Common Stock.

DIVIDEND POLICY

The Company has never paid a cash dividend on its Common Stock and does not
anticipate paying cash dividends on its Common Stock in the foreseeable future.

PRO FORMA CONSOLIDATED STATEMENT OF INCOME

The unaudited Pro Forma Consolidated Statement of Income of Smithfield
Foods, Inc. and subsidiaries (the "Company") is provided to give effect to the
acquisition on December 20, 1995, of all of the outstanding capital stock of
John Morrell & Co. ("John Morrell").

The pro forma information is based on the historical statements of income
of the Company and John Morrell giving effect to the acquisition under the
purchase method of accounting. The pro forma information does not purport to be
indicative of the combined historical or future results of operations that would
have been or will be reported had the assumptions and adjustments been
transacted as described below.

The Pro Forma Consolidated Statement of Income should be read in
conjunction with the Company's accompanying Consolidated Financial Statements
and Notes for the fiscal year ended April 28, 1996 and the accompanying
financial statements and notes of John Morrell for the period ended December 20,
1995.

PRO FORMA CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)

HISTORICAL
SMITHFIELD JOHN
FOODS MORRELL
YEAR 34 WEEKS
ENDED ENDED PRO FORMA
APRIL 28, DEC. 20, ADJUSTMENTS PRO FORMA
1996 1995 (NOTE 2) COMBINED

(IN THOUSANDS, EXCEPT PER SHARE DATA)

Sales $2,383,893 $1,030,668 $ -- $3,414,561
Cost of sales 2,203,626 946,479 -- 3,150,105
Gross profit 180,267 84,189 -- 264,456

Selling, general and administrative expenses 103,095 66,552 (173)(a) 169,271
(203)(b)
Depreciation expense 25,979 6,006 197(c) 32,182
Interest expense 20,942 1,986 1,137(d) 24,065
Income from continuing operations before taxes 30,251 9,645 (958) 38,938

Income taxes 10,465 (12,930) 16,287(e) 13,844
22(f)
Income from continuing operations $ 19,786 $ 22,575 $ (17,267) $ 25,094
Income from continuing operations available to common stockholders $ 18,634 $ 23,942
Income from continuing operations per common share $ 1.06 $ 1.31
Weighted average common shares outstanding 17,530 18,234

See the accompanying Notes to Pro Forma Consolidated Statement of Income.

SMITHFIELD FOODS, INC. AND SUBSIDIARIES

NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF INCOME

(UNAUDITED)

(1) BASIS OF REPORTING

The purchase price of $58 million consisted of $25 million in cash
(borrowed under the Company's $200 million revolving credit facility with a
group of six banks) and the issuance of 1,094,273 shares of its common stock,
par value $.50 per share.

The pro forma information is based on the historical statements of income
of the Company and John Morrell, giving effect to the acquisition under the
purchase method of accounting. The pro forma information does not purport to be
indicative of the combined historical or future results of operations that would
have been or will be reported had the assumptions and adjustments been
transacted as described below.

The pro forma consolidated statement of income for the year ended April 28,
1996 (for the thirty-four weeks ended December 20, 1995 for John Morrell)
presents the results of operations of the consolidated entities assuming that
the acquisition had been completed as of May 1, 1995.

(2) PRO FORMA ADJUSTMENTS

The Pro Forma Consolidated Statement of Income gives effect to the
adjustments described below.

(a) To adjust for changes in amortization expense related to the
valuation of certain intangibles and trademarks and tradenames as a result
of applying the purchase method of accounting.

(b) To eliminate the amortization of unrecognized gain or loss portion
of pension expense on John Morrell's income statement as a result of
applying the purchase method of accounting.

(c) To reflect additional depreciation for the related periods
associated with the change in values for property, plant and equipment as a
result of applying the purchase method of accounting. The average useful
lives used to compute this adjustment are 20 years for buildings and
improvements, and 10 years for machinery and equipment.

(d) To record the interest cost related to the $25 million cash
portion of the purchase price, borrowed under the Company's revolving
credit facility. The weighted average interest rate is 6.8%, reflecting the
Company's actual borrowing rate.

(e) To record the tax effect of the pro forma adjustments at the
marginal tax rate of 38.9% and to eliminate the change in valuation
allowance assuming the acquisition occurred as of May 1, 1995.

(f) To reflect the marginal tax rate of 38.9% on John Morrell
historical income.

SELECTED CONSOLIDATED FINANCIAL DATA

The selected consolidated financial data set forth below for the fiscal
years indicated were derived from the Company's audited consolidated financial
statements. The information should be read in conjunction with the Company's
consolidated financial statements (including the notes thereto) and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" appearing elsewhere in, or incorporated by reference into, this
Prospectus.

FISCAL YEAR ENDED
APRIL 28, APRIL 30, MAY 1, MAY 2, MAY 3,
1996 1995 1994 1993 1992

(IN THOUSANDS, EXCEPT PER SHARE DATA)
INCOME STATEMENT DATA:
Sales................................................ $2,383,893 $1,526,518 $ 1,403,485 $1,113,712 $1,036,613
Cost of sales (1).................................... 2,203,626 1,380,586 1,287,880 1,037,628 949,200
Gross profit (1)..................................... 180,267 145,932 115,605 76,084 87,413

Selling, general and administrative expenses (1)..... 103,095 61,723 50,738 42,924 40,065
Depreciation expense................................. 25,979 19,717 21,327 18,418 12,630
Interest expense..................................... 20,942 14,054 11,605 6,183 3,903
Plant closing costs.................................. -- -- -- 3,598 --
Gain on sale of marketable securities................ -- -- -- -- (2,830)
Income from continuing operations before
income taxes and change in accounting
for income taxes.................................. 30,251 50,438 31,935 4,961 33,645
Income taxes......................................... 10,465 18,523 12,616 1,690 11,821
Income from continuing operations before change in
accounting for income taxes....................... 19,786 31,915 19,319 3,271 21,824
Income (loss) from discontinued operations........... (3,900) (4,075) 383 (420) (189)
Cumulative effect of change in accounting for income
taxes............................................. -- -- -- 1,138 --
Net income........................................ $ 15,886 $ 27,840 $ 19,702 $ 3,989 $ 21,635
NET INCOME (LOSS) PER SHARE:
Continuing operations before cumulative effect of
change in accounting for income taxes............. $ 1.06 $ 1.83 $ 1.11 $ .18 $ 1.38
Discontinued operations.............................. (.22) (.24) .02 (.03) (.01)
Cumulative effect of change in accounting for
income taxes...................................... -- -- -- .07 --
Net income........................................... $ .84 $ 1.59 $ 1.13 $ .22 $ 1.37
Weighted average shares outstanding.................. 17,530 17,059 16,768 16,372 15,813
BALANCE SHEET DATA:
Working capital...................................... $ 88,026 $ 60,911 $ 81,529 $ 64,671 $ 26,672
Total assets......................................... 857,619 550,225 452,279 399,567 277,685
Long-term debt and capital lease obligations......... 188,618 155,047 118,942 124,517 49,091
Stockholders' equity................................. 242,516 184,015 154,950 135,770 113,754
OPERATING DATA:
Fresh pork sales (pounds)............................ 1,635,300 955,290 820,203 588,284 527,611
Processed meats sales (pounds)....................... 839,341 774,615 661,783 631,521 581,303
Total hogs purchased................................. 12,211 8,678 7,414 5,767 4,790

(1) Certain expenses previously classified as selling, general and
administrative have been reclassified as cost of sales.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

Management's discussion and analysis set forth below should be read in
conjunction with the historical and pro forma financial statements (including
the notes thereto) appearing elsewhere in, or incorporated by reference into,
this Prospectus.

FISCAL 1996 COMPARED TO FISCAL 1995

On December 20, 1995, the Company acquired all of the capital stock of John
Morrell & Co. ("John Morrell") for $58.0 million comprised of $25.0 million in
cash and $33.0 million of the Company's common stock plus the assumption of all
of John Morrell's liabilities. The Company's fiscal 1996 operating results
include the results of operations of John Morrell for the period from December
20, 1995 through April 28, 1996.

Sales in fiscal 1996 increased $857.4 million, or 56.2%, from fiscal 1995.
The increase was primarily due to the inclusion of the sales of John Morrell for
the eighteen-week period and increased sales of fresh pork related to increased
slaughter levels at the Company's Bladen County, North Carolina plant. The
increase in sales was the result of a 42.0% increase in sales tonnage combined
with a 9.9% increase in unit selling prices, reflecting the passthrough to the
consumer of higher raw material (live hog) costs. The increase in sales tonnage
reflected a 71.2% increase in fresh pork tonnage and a 8.4% increase in
processed meats tonnage.

Cost of sales increased $823.0 million, or 59.6%, in fiscal 1996,
reflecting the increased sales tonnage, a 20.0% increase in live hog costs and
higher warehousing and distribution costs associated with the increase in sales
tonnage. During fiscal 1996, certain warehousing and distribution costs were
reclassified from selling, general and administrative expenses to cost of sales.
Gross profit increased $34.3 million, or 23.5%, in fiscal 1996, compared to
fiscal 1995. The increase in gross profit resulted from the increased sales
tonnage of both fresh pork (58.8% of dollar sales) and processed meats (36.7% of
dollar sales), offset by lower sales margins on both fresh pork and processed
meats. In addition, gross profit was favorably affected by a $10.8 million
reduction in cost of sales as a result of the Company's hog production
operations and joint hog production arrangements. In fiscal 1995, gross profit
was adversely affected by a $0.2 million increase in cost of sales as a result
of the performance of these operations. During fiscal 1996, the Company obtained
11.3% of the hogs it processed from Brown's and Smithfield-Carroll's.

The Company uses recognized price risk management and hedging techniques to
enhance sales and to reduce the effect of adverse price changes on the Company's
profitability. The Company's price risk management and hedging activities
currently are utilized in the areas of forward sales, hog production margin
management, procurement of raw materials (ham and bacon) for seasonal demand
peaks and inventory hedging. The Company recognizes gains and losses resulting
from hedging transactions when the related sales are made and hedges are lifted.
As of April 28, 1996, the Company had deferred $2.2 million of unrealized
hedging gains on outstanding futures contracts pending the completion of the
sales transaction and lifting of the hedges.

Selling, general and administrative expenses increased $41.4 million, or
67.0%, in fiscal 1996. The increase was primarily due to the inclusion of the
operations of John Morrell and higher selling and marketing costs associated
with the increase in fresh pork tonnage.

Depreciation expense increased $6.3 million, or 31.8%, in fiscal 1996 from
fiscal 1995. The increase was related to continued expansion at the Bladen
County plant, additional hog production facilities at Brown's and the inclusion
of the operations of John Morrell.

Interest expense increased $6.9 million, or 49.0%, in fiscal 1996,
reflecting increased carrying costs on long-term debt related to the funding of
capital projects at the Bladen County plant and Brown's, higher short- and
long-term interest rates, and interest costs associated with the cash portion of
the purchase price related to the acquisition of John Morrell.

The effective income tax rate in fiscal 1996 decreased to 34.6% from 36.7%
in fiscal 1995 reflecting a lower tax rate on foreign sales and benefits related
to certain insurance contracts. The Company had no valuation allowance related
to income tax assets as of April 28, 1996, and there was no change in the
valuation allowance during fiscal 1996.

Income from continuing operations decreased $12.1 million in fiscal 1996,
reflecting lower sales margins on both fresh pork and processed meats compared
to fiscal 1995. The prior year's results reflected exceptionally strong margins
on fresh pork due to unusually low hog prices. In addition, the Company's fiscal
1996 profitability was adversely affected by inefficiencies and increased costs
associated with the start-up of the second shift at the Bladen County plant
which brought the operation of the plant to 75% of its planned slaughter
capacity. John Morrell made a significant contribution to the Company's overall
profitability in fiscal 1996. In the first quarter of fiscal 1997, the Company
continues to experience strong

pressure on both fresh pork and processed meats margins as a result of sharply
higher live hog costs, continued industry overcapacity, large supplies of
low-priced beef and consumer resistance to higher-priced pork products. While
the pork industry is cyclical and financial performance is not highly
predictable, the Company anticipates that the present highly-competitive and
difficult environment will moderate as fiscal 1997 progresses. In addition, the
Company expects that its export business will continue to grow and positively
impact profitability in fiscal 1997.

In fiscal 1996, the Company completed the disposition of the assets and
business of Ed Kelly, Inc. ("Kelly"), its former retail electronics subsidiary,
which is reported separately as discontinued operations in the consolidated
statements of income. The delay in the final disposition of the assets and
business led to an unanticipated deterioration of Kelly's estimated realization
value, resulting in an additional loss from discontinued operations of $3.9
million in fiscal 1996. Fiscal 1995 reflected a loss from discontinued
operations related to Kelly of $4.1 million.

Reflecting the factors discussed above, net income decreased to $15.9
million in fiscal 1996 from $27.8 million in fiscal 1995.

FISCAL 1995 COMPARED TO FISCAL 1994

Sales in fiscal 1995 increased $123.0 million, or 8.8%, from fiscal 1994.
The increase was the result of an 18.0% increase in sales tonnage offset by a
7.8% decrease in unit selling prices due to lower live hog costs. The increase
in sales tonnage was the result of a 16.5% increase in fresh pork tonnage
combined with a 17.1% increase in processed meats tonnage.

Cost of sales increased $92.7 million, or 7.2%, in fiscal 1995, primarily
due to the increased sales tonnage offset by a 16.0% decrease in the cost of
live hogs. Gross profit increased $30.3 million, or 26.2%, in fiscal 1995,
compared to fiscal 1994. The increase in gross profit resulted from the
increased sales tonnage of both fresh pork (51.2% of dollar sales) and processed
meats (44.6% of dollar sales), and increased margins on sales of both fresh pork
and processed meats.

Gross profit in fiscal 1995 was adversely affected by a $0.2 million
increase in cost of sales as a result of the performance of Brown's and
Smithfield-Carroll's. In fiscal 1994, the performance of these operations
resulted in a reduction in cost of sales of $10.3 million. The Company obtained
12.1% of the hogs which it processed in fiscal 1995 from Brown's and
Smithfield-Carroll's, compared with 11.4% in fiscal 1994.

Selling, general and administrative expenses increased $10.9 million, or
21.7%, in fiscal 1995. The increase reflected higher personnel costs and
administrative expenses related to additional supervisory and support staff for
current and anticipated future growth.

Depreciation expense decreased $1.6 million, or 7.5%, in fiscal 1995.
Increased depreciation charges related to expansion at the Bladen County plant
and Brown's were offset by reduced depreciation charges resulting from a
revision in estimated useful lives of certain assets beginning in the third
quarter of fiscal 1994. This change in accounting estimate reduced depreciation
by $7.7 million in fiscal 1995 and $3.9 million in fiscal 1994.

Interest expense increased $2.4 million, or 21.1%, reflecting higher
long-term debt related to the funding of capital projects at the Bladen County
plant and Brown's, and higher short- and long-term rates.

The effective income tax rate in fiscal 1995 decreased to 36.7% from 39.5%
in the prior year, reflecting the impact of increased employment incentive
credits, lower taxes on foreign sales and benefits related to certain insurance
contracts. The Company had no valuation allowance related to income tax assets
as of April 30, 1995, and there was no change in the valuation allowance during
fiscal 1995.

The increase in income from continuing operations in fiscal 1995 was
largely attributable to substantially higher sales margins on fresh pork in the
second and third quarters which resulted from a large supply of hogs and the
lowest hog prices in a decade.

As of April 30, 1995, the Company adopted a plan to sell the assets and
business of Kelly, the Company's former retail electronics subsidiary and
reflected the operations as discontinued operations on the consolidated
statements of income. The loss from discontinued operations in fiscal 1995
includes the write-off of the goodwill and all estimated costs and write-downs
related to the planned disposal of the assets and business of Kelly.

Reflecting the factors discussed above, net income increased to $27.8
million in fiscal 1995 from $19.7 million in fiscal year 1994.

FINANCIAL CONDITION

The pork processing industry is characterized by high sales tonnage and
rapid turnover of inventories and accounts receivable. Because of the rapid
turnover rate, the Company considers its inventories and accounts receivable
highly liquid and readily convertible into cash. Borrowings under the Company's
lines of credit are used to finance increases in the levels of inventories and
accounts receivable resulting from seasonal and other market-related
fluctuations in raw material costs. The demand for seasonal borrowings usually
peaks in early November when ham inventories are at their highest levels and
borrowings are repaid in January when accounts receivable generated by sales of
these hams are collected.

On December 20, 1995, the Company acquired from Chiquita Brands
International, Inc. all of the capital stock of John Morrell for a total
purchase price of $58.0 million, consisting of $25.0 million in cash and $33.0
million of its common stock (1,094,273 shares). The Company also assumed all of
John Morrell's liabilities, including $71.7 million in unfunded pension
liabilities.

As of April 28, 1996, the Company had aggregate lines of credit of $265.0
million, including a $75.0 million line of credit assumed in connection with the
acquisition of John Morrell. Borrowings under the lines are secured by
substantially all of the Company's inventories and accounts receivable. Weighted
average borrowings under the lines were $133.4 million in fiscal 1996, $69.9
million in fiscal 1995 and $66.6 million in fiscal 1994 at weighted average
interest rates of approximately 7%, 6% and 4%, respectively. Maximum borrowings
were $179.8 million in fiscal 1996, $117.0 million in fiscal 1995 and $105.1
million in fiscal 1994. The outstanding balances under these lines totaled
$151.3 million and $67.2 million as of April 28, 1996 and April 30, 1995,
respectively, at a weighted average interest rate of 7% for both years.
Subsequent to year-end, the Company consolidated its lines of credit into a
single line of credit by increasing a previously existing $200.0 million line of
credit to $255.0 million. This line consists of a 364-day, $205.0 million
revolving credit facility and a two-year, $50.0 million revolving credit
facility. The short-term facility is being used for seasonal inventory and
receivable needs and the long-term facility is being used for working capital
and capital expenditures. The Company terminated the $75.0 million John Morrell
credit facility on April 30, 1996.

Capital expenditures totaled $74.9 million in fiscal 1996 and consisted
primarily of $26.1 million for hog production facilities at Brown's and $23.4
million for capital projects at the Bladen County plant, including a new storage
and distribution center. The capital expenditures were funded with a portion of
the $50.0 million bank revolving credit facility and $20.0 million in cash from
the private sale of the Company's Series C 6.75% cumulative convertible
redeemable preferred stock to Sumitomo Corporation of America. This preferred
stock is convertible into 666,666 shares of the Company's common stock at $30.00
per share.

During fiscal 1996, all of the Company's Series B 6.75% preferred stock was
converted into 465,116 shares of the Company's common stock at $21.50 per share.

The Company has negotiated the private placement of $140.0 million of 7-
and 10-year senior secured notes with a group of institutional lenders. The
proceeds from this financing will be used to repay $65.7 million of presently
existing long-term debt and reduce short-term borrowings. The Company expects to
close this transaction in the first quarter of fiscal 1997.

In fiscal 1997, the Company expects a reduction in capital spending from
its levels in recent years. The fiscal 1997 capital expenditure plans include
certain capital improvements to John Morrell's Sioux Falls, South Dakota plant,
completion of Patrick Cudahy Incorporated's new dry sausage facility and
completion of Brown's expansion program including a feed mill.

The Company's various debt agreements contain covenants regarding working
capital, current ratio, fixed charges coverage and net worth, and, among other
restrictions, limit additional borrowings, the acquisition, disposition and
leasing of assets, and payment of dividends to stockholders. Additionally,
existing loan covenants contain provisions which substantially limit the amount
of funds available for transfer from its subsidiaries to Smithfield Foods, Inc.
without the consent of certain lenders.

BUSINESS

GENERAL

As consumers have become more health conscious, pork producers and
processors, including the Company, have focused on providing leaner fresh pork
products as well as fat-free, lower-fat and lower-salt processed meats.
Management believes that lean pork products which are more attractive to
diet-conscious Americans, together with the industry's efforts to heighten
public awareness of pork as an attractive protein source, have led to increased
consumer demand for pork products. The Company has developed and is marketing a
line of extremely lean, premium fresh pork products under the Smithfield Lean
Generation trademark to selected retail chains and institutional foodservice
customers.

BUSINESS STRATEGY

This combination set the stage for a series of acquisitions of smaller
regional processors with widely-recognized brands. In fiscal 1985, the Company
acquired Patrick Cudahy, which added a prominent line of dry sausage products to
the Company's existing line of processed meats. In fiscal 1986, the Company
acquired Esskay, Inc., a firm with a broad line of delicatessen products having
substantial brand loyalty in the Baltimore-Washington, D.C. metropolitan area.
In fiscal 1991, the Company acquired the Mash's brand name and a ham processing
plant in Landover, Maryland. In fiscal 1993, the Company acquired the Valleydale
brand name and a bacon processing plant in Salem, Virginia.

On December 20, 1995, the Company acquired John Morrell & Co., a major
Midwestern pork processor with primary markets in the Midwest, Northeast and
Western United States. This acquisition changed the Company's character from a
large multi-regional pork processor to one with national distribution. It also
doubled the Company's sales and slaughter capacity, added several popular lines
of branded processed meat products along with four efficient processing
facilities and more than doubled the Company's international sales. The Company
believes that John Morrell's strength in smoked sausage, hot dogs, luncheon
meats, bacon and smoked hams complements the strong smoked meats, hot dog and
bacon business of the Company's Eastern operations. In addition, by pooling the
operational skills and expertise of management personnel, the combined Company
has already improved operating performance at a number of its plants.
Furthermore, the combination presents substantial opportunities for cost savings
in the areas of processing, marketing, purchasing and distribution.

The Company's business is based around four strategic initiatives: (i)
capitalizing on the Company's new status as a major national pork processor;
(ii) use of the leanest genetics commercially available to enable the Company to
market highly differentiated pork products; (iii) vertical integration into
state-of-the-art hog production through Company-owned hog production operations
and long-term partnerships and alliances with large and efficient hog producers;
and (iv) continued growth through selective acquisition of regional pork
processors and brands.

As a complement to the Company's hog processing operations, the Company has
vertically integrated into state-of-the-art hog production through Brown's and
Smithfield-Carroll's. In addition, the Company is supplementing the hogs it
obtains from these hog production operations with market-indexed, multi-year
agreements with several of the nation's largest suppliers of high quality hogs,
strategically located in North Carolina, including Carroll's Foods, Inc.,
Maxwell Foods, Inc., Murphy Family Farms, Inc., and Prestage Farms, Inc.

In May 1991, Smithfield-Carroll's acquired from National Pig Development
Company ("NPD"), a British firm, the exclusive United States franchise rights
for genetic lines of specialized breeding stock. The NPD hogs produced by these
superior genetic lines are significantly leaner than almost any other animals
available in commercial volume in the United States. Management believes that
the leanness and increased meat yields of these hogs will, over time, improve
the Company's profitability with respect to both fresh pork and processed meat
products and provide a competitive advantage over other domestic pork
processors. In fiscal 1996, the Company processed 847,000 NPD hogs.

REVENUES BY SOURCE

The Company's sales are in one industry segment, meat processing. The
following table shows for the fiscal periods indicated the percentages of the
Company's revenues derived from fresh pork, processed meats, and other products
(including John Morrell from December 20, 1995).

1996 1995 1994 1993 1992

Fresh Pork 59% 51% 48% 41% 39%
Processed Meats 37% 45% 49% 55% 57%
Other Products 4% 4% 3% 4% 4%
100% 100% 100% 100% 100%

The increase in percentage of revenues derived from fresh pork since fiscal
1992 resulted principally from an increase in the number of hogs slaughtered at
the Bladen County plant. The Company expects this percentage to increase again
in fiscal 1997. The meat industry is generally characterized by narrow margins;
however, profit margins on processed meats are greater than profit margins on
fresh pork and on other products.

FRESH PORK PRODUCTS

The Company is one of the two largest fresh pork processors in the United
States. The Company slaughters hogs at five of its plants (three in the
Southeast and two in the Midwest), with an aggregate slaughter capacity of
72,300 per day. The Company currently slaughters approximately 70,000 hogs
daily. The Company plans to add an additional 8,000 hogs per day of capacity by
the end of fiscal 1997, which will lead to an additional increase in fresh pork
output. A substantial portion of the Company's fresh pork is sold to retail
customers as unprocessed, trimmed cuts such as loins (including roasts and
chops), butts, picnics and ribs. The Company also sells hams, bellies and
trimmings to other further processors. The Company is putting greater emphasis
on the sale of value-added, higher margin fresh pork products, such as boneless
loins, hams, butts and picnics. In addition, the Company provides its own
processing operations with raw material of much higher quality and freshness
than that generally available through market purchases.

The Company is marketing an extensive product line of NPD fresh pork cuts
(including boneless loins, shoulder cuts, chops, ribs and processed and cubed
pork) under the Smithfield Lean Generation Pork trademark to selected retail
chains and institutional foodservice customers. Smithfield Packing has also
developed a case-ready pork program designed to supply supermarket chains with
pre-packaged, weighed, labeled and priced fresh pork, ready for immediate sale
to the consumer. Management believes that these initiatives, over time, should
result in greater brand identification and higher margins for the Company's
fresh pork products.

PROCESSED MEAT PRODUCTS

The Company manufactures a wide variety of processed meats, including
smoked and boiled hams, bacon, sausage, hot dogs (pork, beef and chicken), deli
and luncheon meats and specialty products such as pepperoni and dry salami. The
Company markets its processed meat products under labels that include, among
others, Smithfield, Gwaltney, Patrick Cudahy and John Morrell, as well as Dinner
Bell, Esskay, Great, Hamilton's, Jamestown, Kretschmar, Luter's, Peyton's,
Tobin's First Prize and Valleydale. The Company also sells a substantial
quantity of processed meats as private label products. The Company believes it
is one of the largest producers of smoked hams and picnics in the United States.

In response to growing consumer preference for more nutritious and
healthful meats, the Company has for several years emphasized production of more
closely-trimmed, leaner and lower salt processed meats, such as 40
percent-lower-fat bacon. As a follow-up to the fiscal 1996 introduction of a
lower-fat line of value-priced luncheon meats, smoked sausage and hot dogs, the
Company is introducing in fiscal 1997 such items as fat-free hot dogs and
fat-free deli ham.

RAW MATERIALS

The Company's primary raw material is live hogs. Historically, hog prices
have been subject to substantial fluctuations. In addition, hog prices tend to
rise seasonally as hog supplies decrease during the hot summer months and tend
to decline as supplies increase during the fall. This is due to lower farrowing
performance during the winter months and slower animal growth rates during the
hot summer months. Hog supplies, and consequently prices, are also affected by
factors such as corn and soybean prices, weather and interest rates.

The Company produces its own hogs through Brown's and Smithfield-Carroll's
and purchases hogs from several of the nation's largest hog producers
strategically located in North Carolina, such as Carroll's Foods, Inc., Maxwell
Foods, Inc., Murphy Family Farms, Inc. and Prestage Farms, Inc. as well as from
other independent hog producers and dealers located in

the East, Southeast and Midwest. The Company obtained 11.3% of the hogs it
processed in fiscal 1996 from Brown's and Smithfield-Carroll's. The Company's
raw material costs fall when hog production at Brown's and Smithfield-Carroll's
is profitable and conversely rise when such production is unprofitable. The
profitability of hog production is directly related to the market price of live
hogs and the cost of corn. Hog producers such as Brown's and
Smithfield-Carroll's generate higher profits when hog prices are high and corn
prices are low, and lower profits (or losses) when hog prices are low and corn
prices are high. Management believes that hog production at Brown's and
Smithfield-Carroll's furthers the Company's strategic initiative to become
vertically integrated and reduces exposure to the fluctuations of profitability
historically experienced by the pork processing industry. The Company has also
established multi-year agreements with Carroll's Foods, Maxwell Foods, Murphy
Family Farms and Prestage Farms which provide the Company with a stable supply
of high-quality hogs at market-indexed prices. These producers supplied 50.0% of
the hogs processed by the Company in fiscal 1996.

The Company purchases its hogs on a daily basis at its Southeastern and
Midwestern slaughter plants; at Company-owned buying stations in three
Southeastern and five Midwestern states; from certain Canadian sources; and
through certain exclusive dealer-operated buying stations in the Midwest. The
Company also purchases fresh pork from other meat processors to supplement its
processing requirements, and raw beef, poultry and other meat products to add to
its sausage, hot dogs and luncheon meats. Such meat products and other materials
and supplies, including seasonings, smoking and curing agents, sausage casings
and packaging materials are readily available from numerous sources at
competitive prices.

CUSTOMERS AND MARKETING

The Company has dominant market shares in the Mid-Atlantic and Southeast
and strong market positions in the Northeast, South, Midwest, Southwest and
Western United States. The Company's fundamental marketing strategy is to sell
large quantities of value-priced processed meat products as well as fresh pork
to national and regional supermarket chains, wholesale distributors and the
foodservice industry (fast food, restaurant and hotel chains, hospitals and
other institutional customers) and export markets. Management believes that this
marketing approach reaches the largest number of value-conscious consumers
without requiring large advertising and promotional campaigns. The Company uses
both in-house salesmen as well as independent commission brokers to sell its
products. In fiscal 1996, the Company sold its products to more than 3,500
customers, none of whom accounted for as much as 10% of the Company's revenues.
The Company has no significant or seasonally variable backlog because most
customers prefer to order products shortly before shipment, and therefore, do
not enter into formal long-term contracts. Management believes that its
registered trademarks have been important to the success of its branded
processed meat products.

The Company in recent years has placed major emphasis on growing and
expanding its international sales, which currently comprise approximately 7% of
its total dollar sales. The Company provides the Japanese market with a line of
unique branded, as well as other chilled and frozen unbranded, fresh pork
products. Export sales to Japan increased significantly in fiscal 1996,
reflecting increased volume through a distributorship arrangement with Sumitomo
Corporation of America. The Company also had export sales to Russia and Mexico
in fiscal 1996, and export sales in varying amounts to other foreign markets.
The Company expects continued growth in its international sales for the
foreseeable future. The Company is targeting Europe and attractive Pacific Rim
markets such as Korea, Taiwan, Hong Kong and Singapore for international sales
expansion. International sales are subject to factors beyond the Company's
control, such as tariffs, exchange rate fluctuations and changes in governmental
policies. The Company conducts all of its export sales in dollars and therefore
bears no currency translation risk.

The Company's processed meats business is somewhat seasonal in that,
traditionally, the heavier periods of sales for hams are the holiday seasons
such as Thanksgiving, Christmas and Easter, and the heavier periods of sales of
smoked sausage, hot dogs and luncheon meats are the summer months. The Company
typically builds substantial inventories of hams in anticipation of its holiday
seasons' business.

DISTRIBUTION

The Company uses a private fleet of leased tractors and trailers, as well
as independent common carriers, to distribute both fresh pork and processed
meats to its customers, as well as to move raw material between plants for
further processing. The Company coordinates deliveries and employs backhauling
to reduce overall transportation costs. The Company distributes its products
directly from certain of its plants and from leased distribution centers located
in Connecticut, Indiana,

Missouri, Kansas, Texas and California. During fiscal 1997, the Company expects
to complete a distribution center adjacent to its plant in Sioux Falls, South
Dakota.

COMPETITION

The protein industry generally, and the pork processing industry in
particular, are highly competitive. The Company's products compete with a large
number of other protein sources, including beef, chicken, turkey and seafood,
but the Company's principal competition comes from other pork processors.

Management believes that the principal competitive factors in the pork
processing industry are price, quality, product distribution and brand loyalty.
Some of the Company's competitors are larger, have correspondingly greater
financial and other resources and enjoy wider recognition for their branded
products. Some of these competitors are also more diverse than the Company. To
the extent that their other operations generate profits, such companies may be
able to subsidize their pork processing operations for a time.

REGULATION

Like other participants in the meat processing industry, the Company is
subject to various laws and regulations administered by federal, state and other
government entities, including the Environmental Protection Agency ("EPA") and
corresponding state agencies such as the Virginia State Water Control Board
("SWCB"), the North Carolina Division of Environmental Management, the Iowa
Department of Natural Resources, the South Dakota Department of Environment and
Natural Resources, the United States Department of Agriculture and the
Occupational Safety and Health Administration. Management believes that the
Company complies with all such laws and regulations in all material respects,
except as set forth immediately below, and that continued compliance with these
standards will not have a material adverse effect on the Company's financial
position or results of operations.

The wastewater discharge permit for Smithfield Packing's and Gwaltney's
plants in Smithfield, Virginia imposes more stringent phosphorus and ammonia
effluent limitations than the plants can currently meet. To achieve compliance,
the Company agreed to discontinue its wastewater discharges to the Pagan River
and connect its wastewater treatment plants to the regional sewage collection
and treatment system operated by the Hampton Roads Sanitation District ("HRSD").
The Company has received a directive to connect its Gwaltney wastewater system
to the HRSD system by June 25, 1996, and expects to receive before the end of
calendar year 1996 a similar directive with respect to its Smithfield Packing
wastewater system. The Company expects to incur approximately $2.7 million in
capital costs (of which $1.3 million has been expended through the end of fiscal
1996) to upgrade its existing treatment systems and make these connections.
After such connections have been made the Company will incur sewer use charges
(approximately $1.7 million annually) imposed by HRSD in addition to the
Company's existing costs of pretreating its wastewater before discharge to the
HRSD system. These HRSD sewer use costs will be accounted for as current period
charges in the years in which such costs are incurred.

Pending connection to the HRSD system, the plants are being operated under
an administrative consent order entered into with the SWCB. During the period
May 1994 through January 1995, the Company's plants had a number of violations
of its permit and the consent order, which led the SWCB to place these Company
plants on its "significant noncompliance" list. Placement on that list is
required by the SWCB's practices when any one of several circumstances occur,
including a single violation of an administrative consent order provision. The
Company has corrected the conditions which caused these violations, and has
experienced only three isolated daily permit violations during the past year.
These two plants are presently in compliance with the effluent limitations in
the SWCB administrative order and those effluent limitations in its permit
except phosphorus and ammonia limitations. The SWCB's staff has given the
Company written notice of its intention to recommend that the SWCB refer these
and other permit violations, including the recordkeeping violations discussed
below, to the Virginia Attorney General for appropriate legal action. The nature
and extent of any action that may be taken by the SWCB or the Virginia Attorney
General or of any sanctions or other requirements which may be imposed upon the
Company are not known.

of Justice, EPA and Federal Bureau of Investigation are engaged in an
investigation of possible criminal charges of false reporting and destruction of
records. In April, 1996, an attorney with the Department of Justice advised the
Company that the Company was not then a target of the investigation, and that
the investigation was focused on the former employee responsible for supervision
of the tests and maintenance of the records. The Company has heard nothing
further from the Department of Justice. The nature and extent of any action that
may be taken by one or more governmental agencies or of any sanctions or other
requirements which may be imposed upon the Company are not known.

Based on its knowledge, as summarized above, of the facts and circumstances
surrounding the violations and investigations discussed above, the Company
believes that the ultimate resolution of these matters will not have a material
adverse effect on its financial position or annual results of operations.

On February 7, 1996, John Morrell executed a Plea Agreement with the
Department of Justice in connection with water pollution violations that
allegedly occurred at its Sioux Falls, South Dakota plant from 1985 through
1992, several years prior to the Company's acquisition of John Morrell. On May
28, 1996, the Agreement was executed by the government and entered by the court,
and John Morrell pled guilty to six counts of violating the Clean Water Act due
to numerous discharge exceedances, failure to report the exceedances, and
submitting false reports. John Morrell paid a $3 million penalty. Under two
related civil consent decrees, John Morrell also will pay a $250,000 civil
penalty, make certain improvements at the Sioux Falls plant, and carry out
pollution-prevention and compliance-management audits. In view of these
improvements and commitments, and especially due to efforts by both John Morrell
and the Company to improve John Morrell's environmental compliance programs, on
May 28, 1996, the EPA formally agreed not to debar John Morrell from contracting
with the government. EPA determined that John Morrell and the Company had fully
corrected the conditions giving rise to the violations.

EMPLOYEES

The Company has approximately 16,300 employees, approximately 9,700 of whom
are covered by collective bargaining agreements expiring between February 5,
1997 and May 19, 2000. The Company believes that its relationship with its
employees is good.

PROPERTIES

The following table summarizes information concerning the principal plants
and other materially important physical properties of the Company:

APPROXIMATE
LAND AREA FLOOR SPACE
LOCATION OPERATION (ACRES) (SQ. FT.)

Smithfield Packing Plant No. 1* Slaughtering and cutting hogs; production of 25.5 457,000
501 North Church Street bacon, smoked meats, dry salt meats, hams and
Smithfield, Virginia picnics

Smithfield Packing Plant No. 2* Production of bone-in and boneless cooked and 20.0 218,000
2501 West Vernon Avenue smoked hams and other smoked meat products
Kinston, North Carolina

Smithfield Packing Plant No. 3* Production of bone-in smoked hams and other 7.8 136,000
5801 Columbia Park Drive smoked meat products
Landover, Maryland

Smithfield Packing Plant No. 4* Slaughtering and cutting hogs; production of 860.0 966,000
Carolina Food Processors boneless hams and loins
Division (Bladen County)
Route #87
Tar Heel, North Carolina

Gwaltney Plant No. 1* Slaughtering and cutting hogs; production of 56.4 556,000
601 North Church Street boneless loins, bacon, sausage, bone-in and
Smithfield, Virginia boneless cooked and smoked hams and picnics

Gwaltney Plant No. 2* Production of hot dogs, luncheon meats and 13.1 200,000
3515 Airline Boulevard sausage products
Portsmouth, Virginia

*Pledged as collateral under various loan agreements.

APPROXIMATE
LAND AREA FLOOR SPACE
LOCATION OPERATION (ACRES) (SQ. FT.)

Gwaltney Plant No. 3 Production of bacon, smoked sausage and boneless 11.0 152,000
1013 Iowa Street cooked hams
Salem, Virginia

John Morrell Plant No. 1 Slaughtering and cutting hogs and lambs; 88.0 2,350,000
1400 N. Weber Avenue production of boneless loins, bacon, hot dogs,
Sioux Falls, South Dakota luncheon meats, smoked and canned hams, and
packaged lard

John Morrell Plant No. 2 Slaughter and cutting hogs; production of 22.0 243,000
1200 Bluff Road boneless hams, loins, butts and picnics
Sioux City, Iowa

John Morrell Plant No. 3 Production of hot dogs, luncheon meats, smoked 21.0 177,000
801 East Kemper Road sausage and smoked hams
Springdale, Ohio

John Morrell Plant No. 4 Production of bacon and smoked hams 60.0 150,000
South 281 Highway
Great Bend, Kansas

Patrick Cudahy Plant Production of bacon, dry sausage, boneless cooked 60.0 1,090,000
3500 E. Barnard Avenue ham and refinery products
Cudahy, Wisconsin

*Pledged as collateral under various loan agreements.

The Company, through Brown's, owns and leases hog production facilities in
North Carolina and South Carolina, and through Smithfield-Carroll's, owns hog
production facilities in North Carolina and Virginia.

The Company operates hog buying stations in North Carolina, South Carolina
and Virginia which have facilities for purchasing and loading hogs for shipment
to the Company's plants in Smithfield, Virginia and Bladen County, North
Carolina, and hog buying stations in Iowa, Kansas, Minnesota, Nebraska and South
Dakota, which have facilities for purchasing and loading hogs for shipment to
the Company's plants in Sioux City, Iowa and Sioux Falls, South Dakota.

LEGAL PROCEEDINGS

Smithfield Foods and its subsidiaries and affiliates are parties in various
lawsuits arising in the ordinary course of business, excluding certain matters
discussed under "Business -- Regulation" above. In the opinion of management,
any ultimate liability with respect to these matters will not have a material
adverse effect on the Company's financial position or results of operations. For
a discussion of certain other regulatory and environmental matters, see
"Business -- Regulation" above.

OTHER INFORMATION

With the exception of the franchise agreement between Smithfield-Carroll's
and NPD (referred to above), the Company has no patents, licenses, franchises or
concessions which it considers material to its business.

The Company owns and uses numerous marks, which are registered trademarks
of the Company or are otherwise subject to protection under applicable
intellectual property laws. Such registrations may be kept in force in
perpetuity through continued use of the marks and timely renewal. The Company
considers these marks and the accompanying goodwill and customer recognition
valuable and material to its business.

DESCRIPTION OF CAPITAL STOCK

The following brief description of the Company's capital stock does not
purport to be complete and is subject in all respects to applicable Delaware law
and to the provisions of the Company's Composite Certificate of Incorporation,
as amended, and By-Laws, copies of which have been filed with the Commission.

The authorized capital stock of the Company consists of 25,000,000 shares
of Common Stock, par value $.50 per share, and 1,000,000 shares of Preferred
Stock, par value $1.00 per share.

COMMON STOCK

Holders of the Common Stock are entitled to one vote per share on all
matters to be voted upon by the stockholders. Holders of Common Stock do not
have cumulative voting rights, and therefore holders of a majority of the shares
voting for the election of directors can elect all of the directors. In such
event, the holders of the remaining shares will not be able to elect any
directors.

Holders of the Common Stock are entitled to receive such dividends as may
be declared from time to time by the board of directors out of funds legally
available therefor, after payment of dividends required to be paid on
outstanding Preferred Stock, if any. See "Dividend Policy" above and " --
Preferred Stock" below. In the event of the liquidation, dissolution or winding
up of the Company, the holders of Common Stock are entitled to share ratably in
all assets remaining after payment of liabilities, subject to prior distribution
rights of Preferred Stock then outstanding, if any.

The Common Stock has no preemptive or conversion rights and is not subject
to further calls or assessments by the Company. The Shares of Common Stock
currently outstanding, including the Shares to be offered and sold by the
Selling Stockholder in connection with the offering made hereby, are validly
issued, fully paid and nonassessable.

The Transfer Agent and Registrar for the Common Stock is First Union
National Bank of North Carolina, Charlotte, North Carolina.

PREFERRED STOCK

The board of directors has the authority, without any vote or action by the
stockholders, to issue Preferred Stock in one or more series and to fix the
designations, preferences, rights, qualifications, limitations and restrictions
thereof, including the voting rights, dividends rights, dividend rate,
conversion rights, terms of redemption (including sinking fund provisions),
redemption price or prices, liquidation preferences and the number of shares
constituting any series. In addition, the issuance of Preferred Stock by the
board of directors could be utilized, under certain circumstances, as a method
of preventing a takeover of the Company. There are no shares of Preferred Stock
outstanding other than the Series C 6 3/4% Cumulative Convertible Preferred
Stock summarized below, and there are no agreements or understandings for the
designation of any other series of Preferred Stock or the issuance of shares
thereunder, except pursuant to the preferred shares purchase rights plan
summarized below.

In an October 1995 private transaction, the Company issued and sold to
Sumitomo Corporation for $20,000,000 cash 2,000 shares of Series C 6-3/4%
Cumulative Convertible Preferred Stock, par value $1.00 per share (the "Series C
Preferred Shares"), being all of the authorized shares of such series. Sumitomo
Corporation of America continues to hold all the Series C Preferred Shares. The
holders from time to time of the Series C Preferred Shares are entitled to
receive, if, when and as declared by the board of directors of the Company, and
when not prohibited by law, cash dividends at the annual rate of $675.00 per
share, payable quarterly in January, April, July and October.

Except for the voting rights expressly conferred by the Certificate of
Designations for the Series C Preferred Shares and except to the extent provided
by law, the holders of Series C Preferred Shares are not entitled to vote on any
matter or to receive notice of, or to participate in, any meeting of
stockholders of the Corporation at which the holders of Series C Preferred
Shares are not entitled to vote. The approval of a majority of the outstanding
shares of the Series C Preferred Shares, voting as a separate voting group, is
required for (i) the adoption of any amendment to the Composite Certificate of
Incorporation, as amended that materially adversely affects the powers,
preferences, limitations and rights of the Series C Preferred Shares, or (ii)
for the issuance of any shares of capital stock other than stock junior to the
Series C Preferred Shares. Except for cases covered by the preceding sentence of
this paragraph, whenever the holders of the Series C Preferred Shares are
entitled under the Delaware General Corporation Law to vote as a separate voting
group on an amendment of the Composite Certificate of Incorporation, as amended,
a plan of merger, or a plan of share exchange, the vote required for the
approval of such amendment shall be a majority of all votes cast on the
amendment, plan of merger or plan of share exchange

by the holders of the Series C Preferred Shares at a meeting at which the
holders of a majority of the outstanding shares of Series C Preferred Shares are
represented in person or by proxy. The holders of the outstanding shares of
Series C Preferred Shares also have the right, voting as a separate voting
group, to elect two members of the Board of Directors of the Company at any time
when four or more quarterly dividends on any Series C Preferred Shares shall be
in arrears and unpaid, in whole or in part, whether or not declared and whether
or not any funds shall be or have been legally available for payment thereof.

Upon any liquidation, dissolution or winding up of the Company, no
distribution shall be made (1) to the holders of shares of junior stock unless,
prior thereto, the holders of Series C Preferred Shares shall have received
$10,000 per share, plus an amount equal to dividends accumulated and
distributions thereon, whether or not declared, to the date of such payment, or
(2) to the holders of shares of parity stock except distributions made ratably
on the Series C Preferred Shares and all such parity stock in proportion to the
total amounts to which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up.

The Company may, at its option, redeem Series C Preferred Shares, in whole
or in part, at any time and from time to time at a redemption price of $10,000
per share, plus in each case a premium of (i) prior to October 25, 1998, $1,000
per share, (ii) from October 25, 1998 through October 24, 2001, $600.00 per
share and (iii) from October 25, 2001 through October 24, 2005, $400.00 per
share, in each case with any dividends accumulated to the date fixed for
redemption.

On October 25, 2005, (or, if such date is not a business day, the business
day immediately following such anniversary), the Company shall redeem all then
outstanding Series C Preferred Shares, at a redemption price of $10,000 per
share, plus an amount equal to dividends accumulated thereon.

The holders of the Series C Preferred Shares have conversion rights as
follows. Each Series C Preferred Share is convertible at the option of the
holder thereof at any time, and each share may be converted into such number of
fully paid and nonassessable shares of Common Stock as is determined by dividing
$10,000 by the conversion price in effect at the time of the conversion
(initially and currently, $30.00 per share of Common Stock, subject to customary
antidilution adjustments in the future, if any).

PREFERRED SHARE PURCHASE RIGHTS PLAN

In 1991 the board of directors declared a dividend distribution of one
preferred share purchase right (a "Right") on each outstanding share of Common
Stock pursuant to a preferred share purchase rights plan and a related Rights
Agreement between the Company and the Rights Agent, currently First Union
National Bank of North Carolina (the "Plan"). In general the number of Rights
outstanding will equal the number of shares of Common Stock outstanding from
time to time. The Rights will expire on May 31, 2001 unless previously exercised
or redeemed at the option of the board of directors for $.005 per Right. Each
share of Common Stock sold hereby has one Right attached.

Generally, under the terms of the Plan, the Rights will be exercisable only
if a person or group acquires 20% or more of the Common Stock or announces a
tender offer the consummation of which would result in ownership by a person or
group of 20% or more of the Common Stock. With respect to any person or group
which at the time of adoption of the Plan beneficially owned 20% or more of the
Common Stock, the applicable percentage is .001% greater than such person's or
group's then-current ownership, declining (but not below 20%) to the extent that
such person's or group's ownership percentage decreases. Each Right will entitle
its holder to buy five ten-thousandths of a share of Series A Junior
Participating Preferred Stock, par value $1.00 per share (the "Series A
Preferred Stock"), at an exercise price of $75, subject to further adjustment.
Each share of Series A Preferred Stock will entitle its holder to 1,000 votes
and will have an aggregate dividend rate of 1,000 times the amount, if any, paid
to holders of Common Stock. Currently 25,000 shares of Series A Preferred Stock
have been reserved.

Under the terms of the Plan, if the Company is acquired in a merger or
other business combination transaction, each Right will entitle its holder to
purchase, at the Right's then-current exercise price, a number of the acquiring
company's common shares having a market value of twice such price. In addition,
if a person or group acquires 20% (or other applicable percentage, as summarized
above) or more of the outstanding Common Stock, each Right will entitle its
holder (other than such person or members of such group) to purchase, at the
Right's then-current exercise price, a number of shares of Common Stock having a
market value of twice such price.

SELLING STOCKHOLDER

The Selling Stockholder is Chiquita Brands International, Inc., a New
Jersey corporation (the "Selling Stockholder" or "Chiquita"). Chiquita is a
leading international marketer, producer and distributor of bananas and other
quality fresh and processed food products sold under the Chiquita and other
brand names.

The Shares were originally issued to the Selling Stockholder in a private
transaction on December 20, 1995, and are being registered hereby for resale
from time to time by the Selling Stockholder. On that date, the Company acquired
from the Selling Stockholder all of the outstanding capital stock of its then
subsidiary, John Morrell, for a total purchase price of $58 million, consisting
of $25 million in cash and the issuance of the Shares. In addition, Smithfield
Foods assumed all of John Morrell's liabilities. Prior to December 20, 1995,
Chiquita was the sole shareholder of John Morrell. In connection with the sale,
Chiquita received the Shares, together with certain demand and piggyback
registration rights, as well as the contractual right, for as long as Chiquita
owns at least 5% of the issued and outstanding Common Stock of the Company, to
request (and upon such request the Company has the obligation to take all
reasonable good faith efforts as may be available to cause) a representative
nominated by Chiquita to be elected to the Company's board of directors.
Chiquita has made no such request. The parties determined the terms of such
acquisition and share issuance pursuant to arms length negotiations, there
having been no prior relationships between them.

The 1,094,273 Shares presently held by the Selling Stockholder represent
approximately 6.1% of the outstanding Common Stock. Because the Selling
Stockholder may offer some or all of the Shares pursuant to the offering
contemplated by this Prospectus, and because the offering of the Shares is not
being made on an underwritten basis, no estimate can be made as to the number of
Shares, if any, which the Selling Stockholder will hold after the completion of
this offering. Assuming the Selling Stockholder sells all of the Shares offered
hereby, upon completion of the offering, the Selling Stockholder will hold no
Shares. See "Plan of Distribution". Pursuant to a December 20, 1995 registration
rights agreement between the Selling Stockholder and the Company, the Selling
Stockholder has demanded the registration effected hereby, and the Selling
Stockholder (or, under certain conditions, its transferee) retains the right to
make one further such demand, subject to the customary terms and conditions of
such agreement.

PLAN OF DISTRIBUTION

Any of or all of the Shares may be sold from time to time to one or more
purchasers directly by the Selling Stockholder. Alternatively, the Selling
Stockholder may from time to time offer some or all of the Shares through
dealers or agents, who may receive compensation in the form of discounts,
concessions or commissions from the Selling Stockholder and/or the purchasers of
Shares for whom any of them may act. The Selling Stockholder has advised the
Company that no underwriter will be engaged to act with respect to the offering
made hereby. The Selling Stockholder and any such dealers or agents that
participate in the distribution of Shares may be deemed to be underwriters under
the Securities Act of 1933 (the "Securities Act"), and any profit on the sale of
any of the Shares by them and any discounts, commissions or concessions received
by them may be deemed to be underwriting discounts and commissions under the
Securities Act.

Sales by means of this Prospectus may be made from time to time in one or
more transactions by the Selling Stockholder acting as principal, at a fixed
offering price, which may be changed, or at varying prices determined at the
time or times of sale, or at negotiated prices, through transactions on the
NASDAQ National Market or otherwise. Dealers and agents, if any, participating
in such transactions may act as agent or as principal and may receive
commissions from one or more purchasers and/or from the Selling Stockholder. All
expenses relating to the registration of the Shares, other than fees and
expenses of counsel, accountants and other consultants to the Selling
Stockholder, will be paid directly or indirectly by the Company. The Company has
agreed to indemnify the Selling Stockholder and certain other persons against
certain liabilities, including liabilities under the Securities Act.

The Company has agreed with the Selling Stockholder, subject to customary
conditions, that the Company will maintain the effectiveness of the Registration
Statement of which this Prospectus is a part for such period as shall be
necessary to complete the offer and sale of the Shares, but for no longer than
three months following the date of this Prospectus.

The Shares were originally issued to the Selling Stockholder in a private
transaction on December 20, 1995. See "The Selling Stockholder".

VALIDITY OF THE SHARES

The validity of the Shares will be passed upon for the Company by McGuire,
Woods, Battle & Boothe, L.L.P., Richmond, Virginia.

EXPERTS

The Company's audited financial statements included in this Prospectus have
been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their report with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in giving said report.

The financial statements of John Morrell & Co. audited by Ernst & Young LLP
have been included in reliance on their report given on their authority as
experts in accounting and auditing.

INDEX TO FINANCIAL STATEMENTS

(A) CONSOLIDATED FINANCIAL STATEMENTS OF SMITHFIELD FOODS, INC. AND SUBSIDIARIES

Report of Independent Public Accountants......................................................................... F- 2
Consolidated Statements of Income for the Years Ended April 28, 1996, April 30, 1995 and May 1, 1994............. F- 3
Consolidated Balance Sheets at April 28, 1996 and April 30, 1995................................................. F- 4
Consolidated Statements of Cash Flows for the Years Ended April 28, 1996, April 30, 1995 and
May 1, 1994.................................................................................................... F- 5
Consolidated Statements of Stockholders' Equity for the Years Ended April 28, 1996, April 30, 1995 and May 1,
1994........................................................................................................... F- 6
Notes to Consolidated Financial Statements....................................................................... F- 7

(B) FINANCIAL STATEMENTS OF JOHN MORRELL & CO.

Report of Independent Auditors................................................................................... F-21
Statement of Income for the Period Ended December 20, 1995 and Years Ended December 31, 1994 and January 1,
1994........................................................................................................... F-22
Balance Sheet at December 20, 1995 and December 31, 1995......................................................... F-23
Statement of Cash Flow for the Period Ended December 20, 1995 and the Years Ended December 31, 1994 and January
1, 1994........................................................................................................ F-24
Statement of Shareholder's Equity for the Period Ending December 20, 1995 and the Years Ended December 31, 1994
and January 1, 1994............................................................................................ F-25
Notes to Financial Statements.................................................................................... F-26

F-1

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

TO THE STOCKHOLDERS OF SMITHFIELD FOODS, INC.:

We have audited the accompanying consolidated balance sheets of Smithfield
Foods, Inc. (a Delaware corporation) and subsidiaries as of April 28, 1996 and
April 30, 1995, and the related consolidated statements of income, cash flows
and stockholders' equity for each of the three years in the period ended April
28, 1996. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Smithfield Foods, Inc. and
subsidiaries as of April 28, 1996 and April 30, 1995, and the results of their
operations and their cash flows for each of the three years in the period ended
April 28, 1996, in conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP
Richmond, Virginia,
June 11, 1996.

F-2

SMITHFIELD FOODS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

52 WEEKS 52 WEEKS 52 WEEKS
ENDED ENDED ENDED
APRIL 28, 1996 APRIL 30, 1995 MAY 1, 1994

(IN THOUSANDS, EXCEPT PER SHARE DATA)

Sales............................................................................ $2,383,893 $1,526,518 $ 1,403,485
Cost of sales.................................................................... 2,203,626 1,380,586 1,287,880
Gross profit................................................................... 180,267 145,932 115,605

Selling, general and administrative expenses..................................... 103,095 61,723 50,738
Depreciation expense............................................................. 25,979 19,717 21,327
Interest expense................................................................. 20,942 14,054 11,605
Income from continuing operations before income taxes............................ 30,251 50,438 31,935
Income taxes..................................................................... 10,465 18,523 12,616
Income from continuing operations................................................ 19,786 31,915 19,319
Income (loss) from discontinued operations, net of tax........................... (3,900) (4,075) 383
Net income....................................................................... $ 15,886 $ 27,840 $ 19,702
Net income available to common stockholders...................................... $ 14,734 $ 27,165 $ 19,027
Income (loss) per common share:
Continuing operations.......................................................... $ 1.06 $ 1.83 $ 1.11
Discontinued operations........................................................ (.22) (.24) .02
Net Income..................................................................... $ .84 $ 1.59 $ 1.13

The accompanying notes are an integral part of these statements.

F-3

SMITHFIELD FOODS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

APRIL 28, APRIL 30,
1996 1995

(IN THOUSANDS, EXCEPT
SHARE DATA)
ASSETS
Current assets:
Cash.............................................................................................. $ 28,529 $ 14,790
Accounts receivable less allowances of $1,084 and $540............................................ 144,956 66,727
Inventories....................................................................................... 210,759 120,986
Advances to joint hog production arrangements..................................................... 7,578 14,042
Prepaid expenses and other current assets......................................................... 28,585 16,748
Total current assets........................................................................... 420,407 233,293
Property, plant and equipment:
Land.............................................................................................. 12,453 9,747
Buildings and improvements........................................................................ 146,545 116,637
Machinery and equipment........................................................................... 303,384 220,750
Construction in progress.......................................................................... 74,207 68,705
536,589 415,839
Less accumulated depreciation..................................................................... (163,866) (141,533)
Net property, plant and equipment.............................................................. 372,723 274,306
Other assets:
Investments in partnerships....................................................................... 29,662 27,209
Deferred income taxes............................................................................. 10,235 -
Other............................................................................................. 24,592 15,417
Total other assets............................................................................. 64,489 42,626
$ 857,619 $ 550,225
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable..................................................................................... $ 110,563 $ 69,695
Current portion of long-term debt and capital lease obligations................................... 13,392 9,961
Accounts payable.................................................................................. 113,344 55,371
Accrued expenses and other current liabilities.................................................... 95,082 37,355
Total current liabilities...................................................................... 332,381 172,382

Long-term debt and capital lease obligations........................................................ 188,618 155,047
Other noncurrent liabilities:
Pension and post-retirement benefits.............................................................. 59,128 4,733
Deferred income taxes............................................................................. - 18,404
Other............................................................................................. 14,975 5,644
Total other noncurrent liabilities............................................................. 74,103 28,781
Commitments and contingencies

Redeemable preferred stock.......................................................................... 20,000 10,000
Stockholders' equity:
Preferred stock, $1.00 par value, authorized 1,000,000 shares..................................... - -
Common stock, $.50 par value, authorized 25,000,000 shares; issued 18,453,015 and 16,834,026
shares......................................................................................... 9,227 8,417
Additional paid-in capital........................................................................ 92,762 49,804
Retained earnings................................................................................. 148,171 133,437
Treasury stock, at cost, 437,000 shares........................................................... (7,643) (7,643)
Total stockholders' equity..................................................................... 242,517 184,015
$ 857,619 $ 550,225

The accompanying notes are an integral part of these balance sheets.

F-4

SMITHFIELD FOODS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

52 WEEKS 52 WEEKS 52 WEEKS
ENDED ENDED ENDED
APRIL 28, 1996 APRIL 30, 1995 MAY 1, 1994

(IN THOUSANDS)
Cash flows from operating activities:
Net income...................................................................... $ 15,886 $ 27,840 $19,702
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization.............................................. 28,299 22,127 23,010
Increase in accounts receivable............................................ (9,251) (6,141) (9,763)
Increase in inventories.................................................... (41,316) (1,717) (24,447)
(Increase) decrease in prepaid expenses and other current assets........... 1,535 (2,802) (4,529)
(Increase) decrease in other assets........................................ 22,682 (8,121) (1,398)
Increase in accounts payable, accrued expenses and other liabilities....... 19,166 8,272 25,608
Increase (decrease) in deferred income taxes............................... (27,059) 6,637 6,177
Loss on sale of property, plant and equipment.............................. 2,168 1,130 1,088
Net cash provided by operating activities......................................... 12,110 47,225 35,448
Cash flows from investing activities:
Capital expenditures............................................................ (74,888) (90,550) (25,241)
Payment of cash portion for acquisition of John Morrell & Co.,
net of cash acquired......................................................... (14,079) - -
Investments in partnerships..................................................... (2,486) (16,537) (2,257)
Advances to joint hog production arrangements................................... (4,636) (18,130) (20,178)
Reductions of advances to joint hog production arrangements..................... 11,100 24,266 19,830
Proceeds from sale of property, plant and equipment............................. 82 969 444
Net cash used in investing activities............................................. (84,907) (99,982) (27,402)
Cash flows from financing activities:
Net borrowings on notes payable................................................. 33,592 17,560 4,322
Proceeds from issuance of long-term debt and capital lease obligations.......... 50,000 50,000 5,341
Principal payments on long-term debt and capital lease obligations.............. (16,672) (13,588) (7,916)
Proceeds from issuance of preferred stock....................................... 20,000 - -
Exercise of common stock options................................................ 768 1,900 153
Dividends on preferred stock.................................................... (1,152) (675) (675)
Net cash provided by financing activities......................................... 86,536 55,197 1,225
Net increase in cash.............................................................. 13,739 2,440 9,271
Cash at beginning of year......................................................... 14,790 12,350 3,079
Cash at end of year............................................................... $ 28,529 $ 14,790 $12,350
Supplemental disclosures of cash flow information:
Cash payments during the year for:
Interest, net of amount capitalized.......................................... $ 20,684 $ 14,630 $12,379
Income taxes................................................................. $ 1,685 $ 16,254 $ 5,574

The accompanying notes are an integral part of these statements.

F-5

SMITHFIELD FOODS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

ADDITIONAL
COMMON PAID-IN RETAINED TREASURY
STOCK CAPITAL EARNINGS STOCK

(IN THOUSANDS)

Balance, May 2, 1993............................................................ $8,350 $ 47,818 $ 87,245 $ (7,643)
Net income.................................................................... - - 19,702 -
Exercise of stock options..................................................... 7 146 - -
Dividends on preferred stock.................................................. - - (675) -
Balance, May 1, 1994............................................................ 8,357 47,964 106,272 (7,643)
Net income.................................................................... - - 27,840 -
Exercise of stock options..................................................... 60 1,840 - -
Dividends on preferred stock.................................................. - - (675) -
Balance April 30, 1995.......................................................... 8,417 49,804 133,437 (7,643)
Net income.................................................................... - - 15,886 -
Common stock issued for acquisition of John Morrell & Co...................... 547 32,453 - -
Conversion of preferred stock................................................. 233 9,767 - -
Exercise of stock options..................................................... 30 738 - -
Dividends on preferred stock.................................................. - - (1,152) -
Balance, April 28, 1996......................................................... $9,227 $ 92,762 $148,171 $ (7,643)

The accompanying notes are an integral part of these statements.

F-6

SMITHFIELD FOODS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The accompanying consolidated financial statements include the accounts of
Smithfield Foods, Inc., and subsidiaries (the "Company"). The Company's
principal subsidiaries include Brown's of Carolina, Inc. ("Brown's"), Esskay,
Inc. ("Esskay"), Gwaltney of Smithfield, Ltd. ("Gwaltney"), John Morrell & Co.
("John Morrell"), Patrick Cudahy Incorporated ("Patrick Cudahy"), Smithfield
International, Inc. ("International") and The Smithfield Packing Company,
Incorporated ("Smithfield Packing"). The accounts of Ed Kelly, Inc. ("Kelly")
are reflected as discontinued operations (see Note 3) and are reported
separately on the consolidated statements of income. All material intercompany
balances and transactions have been eliminated.

FISCAL YEAR

The Company's fiscal year is the 52 or 53 week period which ends on the
Sunday nearest April 30.

INVENTORIES

The Company's inventories are valued at the lower of first-in, first-out
(FIFO) cost or market. Inventories consist of the following:

APRIL APRIL
28, 30,
1996 1995

(IN THOUSANDS)
Fresh and processed meats..................................................... $154,110 $ 82,957
Livestock and manufacturing supplies.......................................... 51,145 28,596
Other......................................................................... 5,504 9,433
$210,759 $120,986

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment is stated at cost and depreciated over the
estimated useful lives of the assets. Buildings and improvements are depreciated
over periods from 10 to 40 years. Machinery and equipment is depreciated over
periods from 3 to 25 years. Repair and maintenance charges are expensed as
incurred. Improvements and betterments that materially extend the life of the
asset are capitalized. Gains and losses from dispositions or retirements of
property, plant and equipment are recognized currently.

In fiscal 1994, the Company revised the estimated useful lives of certain
assets to more accurately reflect their economic useful lives and to better
align them with those generally used in the meat processing industry. This
change was made to assets acquired after April 1990 and has been reflected on a
prospective basis since November 1993. The lives of the affected buildings and
improvements were revised from 10 to 40 years to 20 to 40 years. The lives of
the affected machinery and equipment were revised from 3 to 12 years to 10 to 25
years.

Interest on capital projects is capitalized during the construction period.
Total interest capitalized was $2,021,000 in fiscal 1996, $842,000 in fiscal
1995 and $612,000 in fiscal 1994. Repair and maintenance expenses totaled
$59,951,000, $50,975,000 and $40,713,000 in fiscal 1996, 1995 and 1994,
respectively.

OTHER ASSETS

Cost in excess of net assets acquired is amortized over 40 years.
Organization costs are amortized over a five-year period. Deferred debt issuance
costs are amortized over the terms of the related loan agreements. Start-up
costs associated with hog production are amortized over a three-year period.

ENVIRONMENTAL EXPENDITURES

Environmental expenditures that relate to current or future operations are
expensed or capitalized as appropriate. Expenditures that relate to an existing
condition caused by past operations and do not contribute to current or future
revenue generation are expensed. Liabilities are recorded when environmental
assessments and/or cleanups are probable and the cost

F-7

SMITHFIELD FOODS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- Continued
can be reasonably estimated. Other than for assessments, the timing of these
accruals coincides with the Company's commitment to a formal plan of action.

SELF-INSURANCE PROGRAMS

The Company is self-insured for certain levels of general and vehicle
liability, workers' compensation and health care coverage. The cost of these
self-insurance programs is accrued based upon estimated settlements for known
and anticipated claims. Any resulting adjustments to previously recorded
reserves are reflected in current operating results.

PRICE RISK MANAGEMENT AND HEDGING

The Company uses recognized price risk management and hedging techniques to
enhance sales and to reduce the effect of adverse price changes on the Company's
profitability. The Company's price risk management and hedging activities
currently are utilized in the areas of forward sales, hog production margin
management, procurement of raw materials (ham and bacon) for seasonal demand
peaks and inventory hedging. Contracts related to sales or purchase commitments
are accounted for as hedges. Gains and losses on these contracts are deferred
and recorded to cost of sales when the sales or purchase commitments are
fulfilled. As of April 28, 1996 and April 30, 1995, the Company had deferred
unrealized hedging gains of $2,160,000 and $222,000, respectively, on
outstanding futures contracts. All contracts mature within one year.

INCOME PER COMMON SHARE

Income per common share is computed using the weighted average shares of
common stock and dilutive common stock equivalents (options and convertible
preferred stock) outstanding during the respective periods. Net income available
to common stockholders is net income less dividends on preferred stock. The
number of weighted average shares used in calculating income per common share
was 17,530,000 in fiscal 1996, 17,059,000 in fiscal 1995 and 16,768,000 in
fiscal 1994.

USE OF ESTIMATES

Financial statements prepared in conformity with generally accepted
accounting principles require management to make estimates and assumptions that
affect amounts reported therein. Actual results could differ from those
estimates.

RECLASSIFICATIONS

Certain prior year balances have been reclassified to conform to fiscal
1996 presentations including warehousing and distribution costs which have been
reclassified from selling, general and administrative expenses to cost of sales.

NOTE 2 -- ACQUISITION

On December 20, 1995, the Company acquired all of the capital stock of John
Morrell from Chiquita Brands International, Inc. ("Chiquita") for $58,000,000,
consisting of $25,000,000 in cash and $33,000,000 of the Company's common stock
(1,094,273 shares), plus the assumption of all of John Morrell's liabilities.
The Company accounted for the acquisition using the purchase method of
accounting and, accordingly, the results of operations of John Morrell from
December 20, 1995 are included in the accompanying consolidated financial
statements.

F-8

SMITHFIELD FOODS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 2 -- ACQUISITION -- Continued
The following unaudited pro forma information combines the operating
results of the Company and John Morrell assuming the acquisition had been made
as of the beginning of the fiscal year ended April 30, 1995.

52 WEEKS 52 WEEKS
ENDED ENDED
APRIL 28, 1996 APRIL 30, 1995

(IN THOUSANDS, EXCEPT
PER SHARE DATA)
Sales............................................................................... $3,414,561 $2,949,426
Income from continuing operations................................................... 25,094 49,257
Net income.......................................................................... 21,194 45,182
Income per common share:
Continuing operations............................................................. 1.31 2.68
Net income........................................................................ 1.10 2.45

NOTE 3 -- DISCONTINUED OPERATIONS

In fiscal 1996, the Company completed the disposition of the assets and
business of Kelly, its former retail electronics subsidiary, which is reported
separately as discontinued operations in the consolidated statements of income.
The delay in the final disposition of the assets and business led to an
unanticipated deterioration of Kelly's estimated realization value, resulting in
an additional loss from discontinued operations of $3.9 million in fiscal 1996.
Fiscal 1995 reflected a loss from discontinued operations related to Kelly of
$4.1 million.

NOTE 4 -- JOINT HOG PRODUCTION ARRANGEMENTS

SMITHFIELD-CARROLL'S

The Company has an arrangement with affiliates of Carroll's Foods, Inc.
("CFI") to produce hogs for the Company's meat processing plants in North
Carolina and Virginia. The arrangement involves: (1) Smithfield-Carroll's Farms,
a partnership owned jointly by the Company and Carroll's Farms of Virginia, Inc.
("CFAV"), which owns the hog raising facilities, and (2) a long-term purchase
contract between the Company and Carroll's Foods of Virginia, Inc. ("CFOV"),
which leases and operates the facilities, that obligates the Company to purchase
all the hogs produced by CFOV at prices which are equivalent to market at the
time of delivery. A director of the Company is the president and a director of
CFI, CFAV and CFOV. In addition, the Company has a long-term agreement to
purchase hogs from CFI at prices which, in the opinion of management, are
equivalent to market.

As of April 28, 1996 and April 30, 1995, the Company had investments of
$20,252,000 and $20,231,000, respectively, in the partnership which are
accounted for using the equity method. Profits and losses are shared equally
under the arrangement. During fiscal 1995, the Company converted $12,500,000 of
advances to partners' equity, which is included in the investments above. In
addition, as of April 28, 1996, the Company had $2,200,000 of working capital
loans outstanding to the partnership. These demand loans are expected to be
repaid in the next fiscal year.

Substantially all revenues of the partnership consist of lease payments
from CFOV which cover debt service, depreciation charges and other operating
expenses. For the fiscal years 1996, 1995 and 1994, revenues were $8,912,000,
$9,479,000 and $9,706,000, respectively.

Pursuant to the long-term purchase contract, the Company purchased
$70,540,000, $54,081,000 and $62,348,000 of live hogs from CFOV in fiscal years
1996, 1995 and 1994, respectively. The contract resulted in decreased raw
material costs (as compared to market costs) of $2,617,000 and $2,223,000 in
fiscal 1996 and 1994, respectively, and increased raw material costs of
$2,615,000 in fiscal 1995. In fiscal 1996, the Company made $2,800,000 of
working capital loans to CFOV and received payments of $4,700,000. Demand loans
of $6,905,000 are outstanding as of April 28, 1996 and are expected to be repaid
in the next fiscal year.

F-9

SMITHFIELD FOODS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 4 -- JOINT HOG PRODUCTION ARRANGEMENTS -- Continued
Pursuant to the agreement with CFI, the Company purchased $201,878,000,
$134,937,000 and $127,849,000 of hogs in fiscal 1996, 1995 and 1994,
respectively.

CIRCLE FOUR

The Company has an arrangement with three of its principal hog suppliers to
produce hogs in the state of Utah for sale to an unrelated party. The chief
executive officers of two of the suppliers and the president of another serve as
directors of the Company. As of April 28, 1996, the Company had a 33% interest
in the arrangement, which is accounted for using the equity method. As of April
28, 1996 and April 30, 1995, the Company had investments of $7,083,000 and
$5,050,000, respectively, in the arrangement.

B&G

Brown's has an arrangement with a company owned by the daughter and
son-in-law of the chairman and chief executive officer of the Company. The
arrangement, B&G Farms LLC ("B&G"), involves the leasing of hog production
facilities to Brown's and the production of hogs by Brown's on a contractual
basis. In addition, the Company has a contract to purchase all of the hogs
produced by B&G at prices, which in the opinion of management, are equivalent to
market. Profits and losses are shared equally under the arrangement. As of April
28, 1996 and April 30, 1995, B&G had advanced $1,527,000 and $1,723,000,
respectively, to Brown's for working capital. As of April 28, 1996 and April 30,
1995, the Company had investments of $1,260,000 and $1,157,000, respectively, in
the partnership.

B&G's revenues consist of lease payments from Brown's, which cover debt
service and depreciation charges, and the profits or losses on the sale of hogs.
Pursuant to the contract, the Company purchased $7,990,000 and $3,048,000 of
hogs in fiscal 1996 and 1995, respectively.

The summarized unaudited financial information which follows represents an
aggregation of the Company's unconsolidated hog production operations of
Smithfield-Carroll's, Circle Four and B&G.

APRIL 28, APRIL 30,
1996 1995

(IN THOUSANDS)

Current assets.......................................................... $ 6,532 $ 4,108
Property and equipment.................................................. 107,996 84,255
Other assets............................................................ 6,094 2,296
$120,622 $ 90,659

Current liabilities..................................................... $ 11,785 $ 16,029
Long-term debt.......................................................... 54,926 28,310
Equity.................................................................. 53,911 46,321
$120,622 $ 90,660

F-10

SMITHFIELD FOODS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 5 -- DEBT

Long-term debt consists of the following:

APRIL 28, APRIL 30,
1996 1995

(IN THOUSANDS)
Notes payable to institutional lenders:
8.41% notes, payable through February 2013.................................. $ 25,000 $ 25,000
9.85% notes, payable through November 2006.................................. 14,333 15,667
10.75% notes, payable through August 2005................................... 9,500 10,500
9.80% notes, payable through August 2003.................................... 9,187 9,938
6.24% notes, payable through November 1998.................................. 3,108 4,237
7.15% notes, payable through October 1997................................... 3,044 4,899
7.00% notes, payable through September 1998................................. 1,429 2,017

Notes payable to banks:
Notes, payable October 1997................................................. 45,000 45,000
Line of credit, expiring July 1997.......................................... 43,750 -
6.48% notes, payable through September 1998................................. 20,700 22,600
7.10% notes, payable through September 1997................................. 2,290 2,760

Other notes payable........................................................... 407 200
177,748 142,818
Less current portion.......................................................... (11,810) (9,030)
$ 165,938 $ 133,788

F-11

SMITHFIELD FOODS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 5 -- DEBT -- Continued
Scheduled maturities of long-term debt are as follows:

(IN THOUSANDS)

Fiscal year
1997....................................................................... $ 11,810
1998....................................................................... 101,655
1999....................................................................... 19,924
2000....................................................................... 4,554
2001....................................................................... 4,554
Thereafter................................................................. 35,251
$177,748

As of April 28, 1996, the fair value of long-term debt, based on the market
value of debt with similar maturities and covenants, approximates recorded
values.

Notes payable and lines of credit to institutional lenders and banks are
collateralized with all of the Company's inventories and accounts receivable,
and certain of the Company's property, plant and equipment.

As of April 28, 1996, the Company had aggregate lines of credit of
$265,000,000, including a $75,000,000 line assumed in connection with the
acquisition of John Morrell. Subsequent to year-end, the Company consolidated
its lines of credit into a single line by increasing a previously existing
$200,000,000 line of credit to $255,000,000. This line consists of a 364-day,
$205,000,000 revolving credit facility and a two-year, $50,000,000 revolving
credit facility. The short-term facility is being used for seasonal inventory
and receivable needs and the long-term facility is being used for working
capital and capital expenditures. The increased line expires in July 1996 and is
expected to be extended for an additional year in the first quarter of fiscal
1997. The line of credit has no compensating balance requirements, but requires
commitment fees based on the unused portion. The Company terminated the
$75,000,000 John Morrell line of credit on April 30, 1996.

Weighted average borrowings under the lines were $133,400,000 in fiscal
1996, $69,900,000 in fiscal 1995 and $66,600,000 in fiscal 1994 at weighted
average interest rates of approximately 7%, 6% and 4%, respectively. Maximum
borrowings were $179,800,000 in fiscal 1996, $117,000,000 in fiscal 1995 and
$105,100,000 in fiscal 1994. The outstanding balances under these lines totaled
$151,300,000 and $67,200,000 as of April 28, 1996 and April 30, 1995,
respectively, at a weighted average interest rate of 7% for both years.

The Company's various debt agreements contain covenants regarding current
ratio, fixed charges coverage, net worth, and, among other restrictions, limit
additional borrowings, the acquisition, disposition and leasing of assets and
payments of dividends to stockholders. Additionally, existing loan covenants
contain provisions which substantially limit the amount of funds available for
transfer from its subsidiaries to Smithfield Foods, Inc. without the consent of
certain lenders.

NOTE 6 -- INCOME TAXES

Total income tax expense (benefit) was allocated as follows:

APRIL 28, APRIL 30, MAY 1,
1996 1995 1994

(IN THOUSANDS)

Income from continuing operations........................... $ 10,465 $ 18,523 $12,616
Discontinued operations..................................... (2,600) (2,716) 305
$ 7,865 $ 15,807 $12,921

F-12

SMITHFIELD FOODS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 6 -- INCOME TAXES -- Continued
Income tax expense attributable to income from continuing operations
consists of the following:

APRIL 28, APRIL 30, MAY 1,
1996 1995 1994

(IN THOUSANDS)
Current tax expense:
Federal................................................... $ 8,850 $ 10,373 $ 7,235
State..................................................... 1,530 1,835 1,675
10,380 12,208 8,910
Deferred tax expense (benefit):
Federal................................................... (129) 5,301 3,108
State..................................................... 214 1,014 598
85 6,315 3,706
$ 10,465 $ 18,523 $12,616

A reconciliation of taxes computed at the federal statutory rate to the
provision for income taxes is as follows:

APRIL 28, APRIL 30, MAY 1,
1996 1995 1994

Federal income taxes at statutory rate.................................. 35.0% 35.0% 35.0%
State income taxes, net of federal tax benefit.......................... 3.9 3.6 4.6
Other................................................................... (4.3) (1.9) (0.1)
34.6% 36.7% 39.5%

The tax effects of temporary differences consist of the following:

APRIL 28, APRIL 30,
1996 1995

(IN THOUSANDS)
Deferred tax assets:
Employee benefits..................................................... $ 35,925 $ 6,019
Alternative minimum tax credit........................................ 5,607 2,680
Tax credits, carryforwards and net operating losses................... 12,523 2,709
Inventories........................................................... 1,297 1,155
Other assets.......................................................... 317 968
Accrued expenses...................................................... 12,004 1,041
$ 67,673 $ 14,572
Deferred tax liabilities:
Property, plant and equipment......................................... $ 33,643 $ 21,853
Investment in subsidiary.............................................. 574 574
Start-up costs........................................................ 1,805 1,303
$ 36,022 $ 23,730

As of April 28, 1996 and April 30, 1995, the Company had $21,416,000 and
$9,246,000, respectively, of net current deferred tax assets included in prepaid
expenses and other current assets. The Company had no valuation allowance
related to income tax assets as of April 28, 1996 or April 30, 1995, and there
was no change in the valuation allowance during fiscal 1996 and 1995.

As of April 28, 1996 and April 30, 1995, the Company had $12,241,000 and
$1,836,000 of deferred tax assets relating to net operating losses and tax
credits, respectively, which expire from fiscal 1998 to 2001. In addition,
deferred tax assets include alternative minimum tax credits of $5,607,000 which
do not expire.

F-13

SMITHFIELD FOODS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 7 -- ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consist of the following:

APRIL 28, APRIL 30,
1996 1995

(IN THOUSANDS)

Payroll and related benefits............................................ $ 42,737 $ 15,531
Self-insurance reserves................................................. 18,914 12,357
Other................................................................... 33,431 9,467
$ 95,082 $ 37,355

NOTE 8 -- STOCKHOLDERS' EQUITY AND PREFERRED STOCK

ISSUANCE OF COMMON STOCK

In fiscal 1996, the Company issued 1,094,273 shares of its common stock to
Chiquita as part of the acquisition of John Morrell (See Note 2).

PREFERRED STOCK

The Company has 1,000,000 shares of $1.00 par value preferred stock
authorized, of which 998,000 shares are unissued. The board of directors is
authorized to issue preferred stock in series and to fix by resolution the
designation, dividend rate, redemption provisions, liquidation rights, sinking
fund provisions, conversion rights and voting rights of each series of preferred
stock.

In fiscal 1996, all of the Series B 6.75% cumulative convertible redeemable
preferred stock totaling $10,000,000 was converted into 465,116 shares of the
Company's common stock at $21.50 per share.

In fiscal 1996, the Company authorized and issued 2,000 shares of Series C
6.75% cumulative convertible redeemable preferred stock in a private transaction
for $20,000,000. These shares are convertible into 666,666 shares of the
Company's common stock at $30.00 per share. The shares are mandatorily
redeemable in fiscal 2006 at $10,000 per share, plus accumulated and unpaid
dividends and have an equivalent liquidation preference.

Redeemable preferred stock consists of the following:

APRIL 28, APRIL 30,
1996 1995

(IN THOUSANDS)
Series B 6.75% cumulative convertible redeemable preferred stock,
$1.00 par value, 1,000 shares authorized, issued and outstanding.............................. $ - $ 10,000
Series C 6.75% cumulative convertible redeemable preferred stock,
$1.00 par value, 2,000 shares authorized, issued and outstanding.............................. 20,000 -
$ 20,000 $ 10,000

STOCK OPTIONS

Under the Company's 1984 Stock Option Plan ("1984 Plan"), which expired in
fiscal 1995, officers and certain key employees were granted incentive and
nonstatutory stock options to purchase shares of the Company's common stock for
periods not exceeding 10 years at prices that were not less than the fair market
value of the common stock on the date of grant. Stock appreciation rights which
are exercisable upon a change in control of the Company are attached to the
options granted pursuant to the 1984 Plan. The Company granted options for
1,400,000 shares of common stock under the 1984 Plan.

Under the Company's 1992 Stock Incentive Plan ("1992 Plan"), management and
other key employees may be granted nonstatutory stock options to purchase shares
of the Company's common stock exercisable five years after grant for periods not
exceeding 10 years. The exercise price for options granted prior to August 31,
1994 was not less than 150% of the fair market value of the common stock on the
date of grant. On August 31, 1994, the Company amended and restated the 1992

F-14

SMITHFIELD FOODS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 8 -- STOCKHOLDERS' EQUITY AND PREFERRED STOCK -- Continued
Plan, changing the exercise price of options granted on or after that date to
not less than the fair market value of the common stock on the date of grant.
The Company has reserved 1,250,000 shares of common stock under the 1992 Plan.
As of April 28, 1996, there were 164,500 options available for grant under the
1992 Plan.

The following is a summary of transactions for the 1984 Plan and 1992 Plan
during fiscal 1995 and 1996.

NUMBER OF SHARES PER SHARE RANGE

Outstanding options at May 1, 1994................................ 1,652,000 $ 5.50-23.06
Granted......................................................... 60,000 30.63
Exercised....................................................... (120,900) 5.50- 8.13
Cancelled....................................................... (25,000) 23.06
Outstanding options at April 30, 1995............................. 1,566,100 5.50-30.63
Granted......................................................... 345,000 21.50-27.25
Exercised....................................................... (59,600) 5.50- 8.13
Cancelled....................................................... (50,000) 23.06
Outstanding options at April 28, 1996............................. 1,801,500 $ 5.50-30.63
Options exercisable at April 28, 1996............................. 716,000 $ 5.50- 8.13

In October 1995, the Financial Accounting Standards Board issued Statement
No. 123, "Accounting for Stock-Based Compensation," ("SFAS No. 123") which is
effective for fiscal 1997. The Company has not completed all of the analyses
required to estimate the impact of the statement. The Company intends to
continue to apply the accounting provisions of APB Opinion No. 25, "Accounting
for Stock Issued to Employees;" and will comply with the disclosure requirements
of SFAS No. 123.

PREFERRED SHARE PURCHASE RIGHTS

In fiscal 1992, the Company adopted a preferred share purchase rights plan
(the "Rights Plan") and declared a dividend of one preferred share purchase
right (a "Right") on each outstanding share of common stock. Under the terms of
the Rights Plan, if the Company is acquired in a merger or other business
combination transaction, each Right will entitle its holder to purchase, at the
Right's then current exercise price, a number of the acquiring company's common
shares having a market value of twice such price. In addition, if a person or
group acquires 20% (or other applicable percentage, as summarized in the Rights
Plan) or more of the outstanding common stock, each Right will entitle its
holder (other than such person or members of such group) to purchase, at the
Right's then current exercise price, a number of shares of common stock having a
market value of twice such price.

Each Right will entitle its holder to buy five ten-thousandths of a share
of Series A junior participating preferred stock, par value $1.00 per share, at
an exercise price of $75 subject to adjustment. Each share of Series A junior
participating preferred stock will entitle its holder to 1,000 votes and will
have an aggregate dividend rate of 1,000 times the amount, if any, paid to
holders of common stock. Currently, 25,000 shares of Series A junior
participating preferred stock have been reserved. The Rights will expire in
fiscal 2002 unless previously exercised or redeemed at the option of the board
of directors for $.005 per Right. Generally, each share of common stock issued
after May 31, 1991 will have one Right attached.

NOTE 9 -- PENSION AND OTHER RETIREMENT PLANS

The Company and its subsidiaries sponsor several defined benefit pension
plans covering substantially all employees. Pension expense for fiscal 1996,
1995 and 1994 was $3,303,000, $2,306,000 and $2,078,000, respectively. It is the
Company's policy to fund the plans based on the minimum contribution required
under ERISA. The plans' assets consist of listed corporate stocks, corporate and
government bonds, insurance contracts and cash and cash equivalents.

In connection with the John Morrell acquisition, the Company assumed the
obligations under two non-contributory, defined benefit pension plans for
substantially all full-time salaried and hourly employees. Benefit accrual for
substantially

F-15

SMITHFIELD FOODS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 9 -- PENSION AND OTHER RETIREMENT PLANS -- Continued
all hourly employees under the defined benefit pension plan ceased as of March
1991. Current benefits for these employees are provided by a defined
contribution plan covering both salaried and hourly employees.

The status of the Company's plans and the components of pension expense are
as follows:

APRIL 28, 1996 APRIL 30, 1995
OVERFUNDED UNDERFUNDED OVERFUNDED UNDERFUNDED
PLANS PLANS PLANS PLANS

(IN THOUSANDS)

Accumulated benefit obligation................................ $ 29,548 $ 175,103 $ 23,705 $ 16,398
Vested benefit obligation..................................... $ 25,591 $ 169,468 $ 21,274 $ 15,819
Plan assets at fair value..................................... $ 39,127 $ 116,542 $ 30,625 $ 11,946
Projected benefit obligation.................................. (36,434) (181,306) (29,782) (16,397)
Excess (deficiency) of plan assets over projected benefit
obligation.................................................. 2,693 (64,764) 843 (4,451)
Items not recorded on consolidated balance sheets:
Unrecognized net transition gain............................ (181) - (271) -
Unrecognized net loss (gain) from experience differences.... (3,356) (8,710) 825 283
Unrecognized prior service cost (benefit)................... 1,188 175 (462) 946
Prepaid (accrued) pension costs.......................... $ 344 $ (73,299) $ 935 $ (3,222)

Net pension expense included the following: 1996 1995 1994
Service costs for benefits earned........................... $2,662 $2,079 $1,690
Interest accrued on projected benefit obligation............ 7,532 3,089 2,890
Actual return on plan assets................................ (6,691) (2,558) (3,185)
Net amortization and deferral............................... (200) (304) 683
Net pension expense......................................... $3,303 $2,306 $2,078

In determining the projected benefit obligation in fiscal 1996 and 1995,
the weighted average assumed discount rate was 7.75% and 7.5%, respectively,
while the assumed rate of increase in future compensation was 5% to 6% in fiscal
1996 and 6% in fiscal 1995. The weighted average expected long-term rate of
return on plan assets was 9% and 8% in fiscal 1996 and 1995, respectively.

The Company provides health care and life insurance benefits for certain
retired employees at Esskay, John Morrell and Patrick Cudahy. The total cost to
provide retiree benefits was $673,000, $406,000 and $994,000 in fiscal 1996,
1995 and 1994, respectively.

NOTE 10 -- LEASE AND SERVICE OBLIGATIONS

The Company leases transportation equipment under operating leases ranging
from 1 to 10 years with options to cancel at earlier dates. In addition, the
Company has a long-term maintenance agreement related to this equipment.
Maintenance fees are based upon fixed monthly charges for each vehicle, as well
as the maintenance facility itself and contingent fees based upon transportation
equipment usage. The amounts shown below as minimum rental commitments do not
include contingent maintenance fees.

The Company has agreements, expiring in fiscal 2004 and 2008, to use two
cold storage warehouses owned by a partnership, 50% of which is owned by the
Company. The Company has agreed to pay prevailing competitive rates for use of
the facilities, subject to aggregate guaranteed minimum annual fees of
$3,600,000. In fiscal 1996, 1995 and 1994, the Company paid $4,641,000,
$5,986,000 and $5,284,000, respectively, in fees for use of the facilities. As
of April 28, 1996 and April 30,

F-16

SMITHFIELD FOODS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 10 -- LEASE AND SERVICE OBLIGATIONS -- Continued
1995, the Company had investments of $1,067,000 and $744,000, respectively, in
the partnership which are accounted for using the equity method.

Minimum rental commitments under all noncancelable operating leases and
maintenance agreements are as follows:

(IN THOUSANDS)

Fiscal year
1997....................................................................... $ 20,850
1998....................................................................... 17,400
1999....................................................................... 14,441
2000....................................................................... 12,938
2001....................................................................... 10,939
Thereafter................................................................. 32,772
$109,340

Rental expense was $17,664,000 in fiscal 1996, $15,025,000 in fiscal 1995
and $12,159,000 in fiscal 1994. Rental expense in fiscal 1996, 1995 and 1994
included $3,389,000, $2,681,000 and $2,137,000 of contingent maintenance fees,
respectively.

The Company has entered into a sale and leaseback arrangement for certain
hog production facilities at Brown's. The arrangement provides for an early
termination at predetermined amounts after 10 years.

Property, plant and equipment under capital leases as of April 28, 1996
consist of land of $2,659,000, buildings and improvements of $7,017,000 and
machinery and equipment of $6,701,000, less accumulated amortization of
$3,707,000.

Future minimum lease payments for assets under capital leases and the
present value of the net minimum lease payments are as follows:

(IN THOUSANDS)

Fiscal year
1997....................................................................... $ 3,798
1998....................................................................... 3,876
1999....................................................................... 3,991
2000....................................................................... 4,046
2001....................................................................... 3,675
Thereafter................................................................. 15,982
35,368
Less amounts representing interest......................................... (11,106)
Present value of net minimum obligations................................... 24,262
Less current portion....................................................... (1,582)
Long-term capital lease obligations........................................ $ 22,680

NOTE 11 -- RELATED PARTY TRANSACTIONS

The Company's chairman and chief executive officer is an officer and the
majority owner of the capital stock of a company to which the Company made sales
of fresh pork and processed meat products totaling $299,000, $328,000 and
$321,000 in fiscal 1996, 1995 and 1994, respectively. In fiscal 1996, 1995 and
1994, the Company purchased raw materials totaling $10,069,000, $7,535,000 and
$8,159,000, respectively, from a company which is 48% owned by the chairman's
children.

F-17

SMITHFIELD FOODS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 11 -- RELATED PARTY TRANSACTIONS -- Continued
A director of the Company is the chairman and chief executive officer and a
director of Murphy Family Farms, Inc. ("MFF"). The Company has a long-term
agreement to purchase hogs from MFF at prices, which in the opinion of
management, are equivalent to market. Pursuant to this agreement with MFF, the
Company purchased $330,033,000, $232,130,000 and $237,889,000 of hogs in fiscal
1996, 1995 and 1994, respectively.

A director of the Company is the chairman and chief executive officer and a
director of Prestage Farms Inc., ("PFI"). The Company has a long-term agreement
to purchase hogs from PFI at prices, which in the opinion of management, are
equivalent to market. Pursuant to this agreement with PFI, the Company purchased
$129,577,000, $79,292,000 and $70,258,000 of hogs in fiscal 1996, 1995 and 1994,
respectively.

A director of the Company is the chairman of the board of a company from
which the Company made purchases of automotive parts and equipment, as well as
maintenance and leasing services, totaling $556,000, $489,000 and $515,000 in
fiscal 1996, 1995 and 1994, respectively. In addition, the Company leases
substantially all of its automobiles under three-year leases arranged by this
company. As of April 28, 1996, the Company was obligated to make a total of
$1,265,000 in future lease payments under these leases.

The Company paid a director of the Company, who was formerly president and
chief operating officer of a subsidiary, $250,000 and $221,000 for consulting
services during fiscal 1996 and 1995, respectively.

The Company is a 50% partner in a partnership which owns two cold storage
warehouses (see Note 10). In fiscal 1995, the partnership purchased the capital
stock of a company which previously owned one of the warehouses, 18% of the
capital stock of which was owned by a group of the Company's officers and
directors. The purchase price approximated the net book value of the company as
of December 31, 1994, the effective purchase date.

The Company is engaged in hog production arrangements with several related
parties. See Note 4 for additional information regarding these arrangements.

NOTE 12 -- COMMITMENTS AND CONTINGENCIES

As of April 28, 1996, the Company had outstanding commitments for
construction of hog production facilities and plant expansion projects of
approximately $37,845,000.

The Company and its subsidiaries are defendants in various lawsuits and
claims arising in the ordinary course of business. In the opinion of management,
any ultimate liability with respect to these matters will not have a material
effect on the Company's consolidated financial position or results of
operations.

The wastewater discharge permit for Smithfield Packing's and Gwaltney's
plants in Smithfield, Virginia imposes more stringent phosphorus and ammonia
effluent limitations than the plants can currently meet. To achieve compliance,
the Company agreed to discontinue its wastewater discharges to the Pagan River
and connect its wastewater treatment plants to the regional sewage collection
and treatment system operated by the Hampton Roads Sanitation District ("HRSD").
The Company has received a directive to connect its Gwaltney wastewater system
to the HRSD system by June 25, 1996, and expects to receive before the end of
calendar year 1996 a similar directive with respect to its Smithfield Packing
wastewater system. The Company expects to incur approximately $2,664,000 capital
costs (of which $1,292,000 has been expended through the end of fiscal 1996) to
upgrade its existing treatment systems and make these connections. After such
connections have been made the Company will incur sewer use charges
(approximately $1,700,000 annually) imposed by HRSD in addition to its

F-18

SMITHFIELD FOODS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 12 -- COMMITMENTS AND CONTINGENCIES -- Continued
existing costs of pretreating its wastewater before discharge to the HRSD
system. These HRSD sewer use costs will be accounted for as current period
charges in the years in which such costs are incurred.

Pending connection to the HRSD system, the plants are being operated under
an administrative consent order entered into with the SWCB. During the period
May 1994 through April 1995, the Company's plants had a number of violations of
its permit and the consent order, which led the SWCB to place these Company
plants on its "significant noncompliance" list. Placement on that list is
required by the SWCB's practices when any one of several circumstances occur,
including a single violation of an administrative consent order provision. The
Company has corrected the conditions which caused these violations, and has
experienced only two isolated daily permit violations during the past year.
These two plants are presently in compliance with the effluent limitations in
the SWCB administrative order and those effluent limitations in its permit
except phosphorus and ammonia limitations. The SWCB's staff has given the
Company written notice of its intention to recommend that the SWCB refer these
and other permit violations, including the recordkeeping violations discussed
below, to the Virginia Attorney General for appropriate legal action. The nature
and extent of any action that may be taken by the SWCB or the Virginia Attorney
General or of any sanctions or other requirements which may be imposed upon the
Company are not known.

The Company regularly conducts tests of its wastewater discharges to assure
compliance with the provisions of its wastewater discharge permits. Federal and
state laws require that records of tests be maintained for three years. Failure
to maintain these records may result in the imposition of civil penalties.
Criminal sanctions may be imposed in the event of false reporting or destruction
of records. In the course of a SWCB inspection of its Smithfield, Virginia
plants in May, 1994, it was discovered that records of certain tests conducted
by the Company from 1992 through early 1994 could not be located. The employee
responsible for the supervision of the tests and maintenance of the test records
was replaced. No judicial proceedings have yet been instituted against the
Company as a result of its inability to locate the records for the period noted
and, other than the written notice referred to above, no administrative
proceeding has yet been initiated. The U.S. Department of Justice, EPA and
Federal Bureau of Investigation are engaged in an investigation of possible
criminal charges of false reporting and destruction of records. In April, 1996,
an attorney with the Department of Justice advised the Company that the Company
was not then a target of the investigation, and that the investigation was
focused on the former employee responsible for supervision of the tests and
maintenance of the records. The Company has heard nothing further from the
Department of Justice. The nature and extent of any action that may be taken by
one or more governmental agencies or of any sanctions or other requirements
which may be imposed upon the Company are not known.

On February 7, 1996, John Morrell executed a Plea Agreement with the
Department of Justice in connection with water pollution violations that
allegedly occurred at its Sioux Falls, South Dakota plant from 1985 through
1992, several years prior to the Company's acquisition of John Morrell. On May
28, 1996, the Agreement was executed by the government and entered by the court,
and John Morrell pled guilty to six counts of violating the Clean Water Act due
to numerous discharge exceedances, failure to report the exceedances, and
submitting false reports. John Morrell paid a $3,000,000 penalty. Under two
related civil consent decrees, John Morrell also will pay a $250,000 civil
penalty, make certain improvements at the Sioux Falls plant, and carry out
pollution-prevention and compliance-management audits. In view of these
improvements and commitments, and especially due to efforts by both John Morrell
and the Company to improve John Morrell's environmental compliance programs, on
May 28, 1996, the EPA formally agreed not to debar John Morrell from contracting
with the government. EPA determined that John Morrell and the Company had fully
corrected the conditions giving rise to the violations.

F-19

SMITHFIELD FOODS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 13 -- QUARTERLY RESULTS OF OPERATIONS (Unaudited)

FIRST SECOND THIRD FOURTH

(IN THOUSANDS, EXCEPT PER SHARE DATA)
1996
Sales........................................................................ $367,328 $455,799 $687,000 $873,766
Gross profit................................................................. 21,023 35,412 56,319 67,513
Income (loss) from continuing operations..................................... (2,594) 4,615 10,787 6,978
Discontinued operations...................................................... (1,800) - (2,100) -
Net income (loss)............................................................ (4,394) 4,615 8,687 6,978

Income (loss) per common share:
Continuing operations........................................................ (.16) .26 .58 .35
Discontinued operations...................................................... (.11) - (.12) -
Net income (loss)............................................................ (.27) .26 .46 .35

1995
Sales........................................................................ $331,761 $373,839 $439,353 $381,565
Gross profit................................................................. 24,641 36,182 55,190 29,919
Income from continuing operations............................................ 2,547 8,080 18,048 3,240
Discontinued operations...................................................... (177) (278) (718) (2,902)
Net income................................................................... 2,370 7,802 17,330 338

Income (loss) per common share:
Continuing operations........................................................ .14 .47 1.04 .18
Discontinued operations...................................................... (.01) (.02) (.04) (.17)
Net income................................................................... .13 .45 1.00 .01

F-20

REPORT OF INDEPENDENT AUDITORS

THE BOARD OF DIRECTORS
JOHN MORRELL & CO.

We have audited the accompanying balance sheets of John Morrell & Co. as of
December 20, 1995 and December 31, 1994, and the related statements of income,
shareholder's equity, and cash flow for the period from January 1, 1995 to
December 20, 1995 and for the fiscal years ended December 31, 1994 and January
1, 1994, respectively. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of John Morrell & Co. at
December 20, 1995 and December 31, 1994, and the results of its operations and
its cash flow for the period from January 1, 1995 to December 20, 1995 and for
the fiscal years ended December 31, 1994 and January 1, 1994, respectively, in
conformity with generally accepted accounting principles.

As discussed in Note 3 to the financial statements, the Company changed its
method of accounting for postretirement benefits other than pensions in 1993.

ERNST & YOUNG LLP

Cincinnati, Ohio
March 4, 1996

F-21

JOHN MORRELL & CO.

STATEMENT OF INCOME

1995 1994 1993

(DOLLARS IN THOUSANDS,
EXCEPT PER SHARE AMOUNTS)

Net sales........................................................................... $1,460,608 1,455,894 1,549,712
Operating costs and expenses:
Cost of sales..................................................................... 1,337,430 1,308,313 1,418,082
Selling, general and administrative............................................... 98,475 111,283 116,751
Depreciation...................................................................... 8,492 8,852 9,007
Gain on sale of Speciality Meat Group............................................... - (10,156) -
1,444,397 1,418,292 1,543,840
Operating income.................................................................... 16,211 37,602 5,872
Net interest expense................................................................ (2,446) (2,488) (5,322)
Net earnings before income taxes.................................................. 13,765 35,114 550
Provision (benefit) for income taxes:
Current........................................................................... 2,452 (306) (45)
Deferred.......................................................................... (13,750) - -
(11,298) (306) (45)
Net income.......................................................................... $ 25,063 35,420 595

See Notes to Financial Statements

F-22

JOHN MORRELL & CO.

BALANCE SHEET

FISCAL YEAR-END
DECEMBER
1995 1994

(DOLLARS IN
THOUSANDS)
ASSETS
CURRENT ASSETS:
Cash and equivalents................................................................................ $ 10,921 13,332
Accounts receivable, principally trade (less allowances of $832 and $1,090, respectively)........... 65,643 57,765
Inventories:
Product.......................................................................................... 39,801 35,165
Supplies......................................................................................... 8,656 8,016
Prepaid expenses.................................................................................... 394 1,598
Total current assets........................................................................... 125,415 115,876
PROPERTY, PLANT AND EQUIPMENT, AT COST:
Land................................................................................................ 1,430 755
Buildings........................................................................................... 43,194 39,802
Machinery and equipment............................................................................. 136,459 127,507
Construction in progress............................................................................ 2,481 4,266
183,564 172,330
Less accumulated depreciation....................................................................... (131,820) (125,604)
51,744 46,726
INTANGIBLE AND PREPAID PENSION ASSETS................................................................. 783 7,736
DEFERRED TAXES........................................................................................ 18,234 2,514
OTHER ASSETS.......................................................................................... 7,095 6,121
$203,271 178,973
LIABILITIES AND SHAREHOLDER'S EQUITY
CURRENT LIABILITIES:
Notes payable....................................................................................... $ 7,276 123
Current maturities of long-term debt................................................................ 382 21
Accounts payable.................................................................................... 39,704 37,498
Accrued claims under self-insurance programs........................................................ 17,765 14,990
Accrued payroll expense............................................................................. 9,009 9,052
Current portion accrued pension liability........................................................... 5,202 2,517
Accrued other retiree benefits...................................................................... 3,552 8,689
Other accrued expenses.............................................................................. 8,771 7,036
Total current liabilities...................................................................... 91,661 79,926
LONG-TERM LIABILITIES:
Long-term debt...................................................................................... 3,291 1,041
Accrued pension liability, noncurrent............................................................... 59,264 45,470
Other liabilities................................................................................... 5,123 3,859
Total liabilities.............................................................................. 159,339 130,296
SHAREHOLDER'S EQUITY:
Preferred stock, $1 par value; 1,000 shares authorized and unissued................................. - -
Common stock, no par value; 1,000 shares authorized and outstanding................................. 12,649 12,649
Additional paid-in capital.......................................................................... 48,380 48,380
Accumulated earnings................................................................................ 27,835 2,772
Minimum pension liability adjustment................................................................ (44,932) (15,124)
Total shareholder's equity..................................................................... 43,932 48,677
$203,271 178,973

See Notes to Financial Statements

F-23

JOHN MORRELL & CO.

STATEMENT OF CASH FLOW

1995 1994 1993

(DOLLARS IN THOUSANDS)
CASH PROVIDED (USED) BY:
OPERATIONS
Net income............................................................................ $ 25,063 35,420 595
Deferred tax benefit.................................................................. (13,750) - -
Depreciation and amortization...................................................... 9,186 9,880 9,473
Gain on sale of Specialty Meat Group............................................... - (10,156) -
Changes in current assets and liabilities:
Accounts receivable.............................................................. (9,837) (960) (4,970)
Inventories...................................................................... (5,247) (8,869) (5,025)
Accounts payable and accrued expenses............................................ 3,052 (238) 3,238
Prepaid expenses................................................................. (464) (685) 535
Other.............................................................................. (7,775) (8,070) (4,339)
CASH FLOW FROM OPERATIONS........................................................ 228 16,322 (493)
INVESTING
Capital expenditures.................................................................. (11,587) (11,853) (8,826)
Proceeds from sale or disposal of property, plant and equipment:
Specialty Meat Division.......................................................... - 52,700 -
Other, net....................................................................... 203 540 350
CASH FLOW FROM INVESTING......................................................... (11,384) 41,387 (8,476)
FINANCING
Change in amount due to/from Parent................................................... 2,210 (1,904) 2,217
Capital contributions................................................................. - - 900
Change in notes payable............................................................... 7,153 (26,006) 8,429
Redemption of preferred stock......................................................... - (12,500) -
Repayments of long-term debt.......................................................... (618) (3,217) (4,527)
Cash dividends on preferred stock..................................................... - (750) -
CASH FLOW FROM FINANCING......................................................... 8,745 (44,377) 7,019
Increase (decrease) in cash and equivalents............................................. (2,411) 13,332 (1,950)
Balance at beginning of year............................................................ 13,332 - 1,950
Balance at end of year.................................................................. $ 10,921 13,332 -

See Notes to Financial Statements

F-24

JOHN MORRELL & CO.

STATEMENT OF SHAREHOLDER'S EQUITY

MINIMUM
COMMON STOCK ADDITIONAL ACCUMULATED PENSION
PREFERRED STATED PAID-IN EARNINGS LIABILITY
STOCK SHARES VALUE CAPITAL (DEFICIT) ADJUSTMENT

(DOLLARS IN THOUSANDS)

Balance Fiscal
Year-End 1992.................... $ - 1,000 $12,649 $ 47,351 $ (29,446) $ (6,925)
Net income....................... - - - - 595 -
Change in minimum pension
liability adjustment.......... - - - - - (11,004)
Capital contribution from
Parent........................ - - - 900 - -

Balance Fiscal
Year-End 1993.................... - 1,000 12,649 48,251 (28,851) (17,929)
Preferred stock issued in
exchange for debt............. 12,500 - - - - -
Shares redeemed.................. (12,500) - - - - -
Cash dividends on preferred
stock......................... - - - - (750) -
Dividend on common stock of
property, plant and
equipment..................... - - - - (3,047) -
Net income....................... - - - - 35,420 -
Change in minimum pension
liability adjustment.......... - - - - - 2,805
Tax benefit realized by Parent on
exercise of stock options by
Morrell employees............. - - - 129 - -

Balance Fiscal
Year-End 1994.................... - 1,000 12,649 48,380 2,772 (15,124)
Net income....................... - - - - 25,063 -
Change in minimum pension
liability adjustment.......... - - - - - (29,808)

Balance Fiscal
Year-End 1995.................... $ - 1,000 $12,649 $ 48,380 $ 27,835 $ (44,932)

TOTAL
SHAREHOLDER'S
EQUITY

Balance Fiscal
Year-End 1992.................... $ 23,629
Net income....................... 595
Change in minimum pension
liability adjustment.......... (11,004)
Capital contribution from
Parent........................ 900
Balance Fiscal
Year-End 1993.................... 14,120
Preferred stock issued in
exchange for debt............. 12,500
Shares redeemed.................. (12,500)
Cash dividends on preferred
stock......................... (750)
Dividend on common stock of
property, plant and
equipment..................... (3,047)
Net income....................... 35,420
Change in minimum pension
liability adjustment.......... 2,805
Tax benefit realized by Parent on
exercise of stock options by
Morrell employees............. 129
Balance Fiscal
Year-End 1994.................... 48,677
Net income....................... 25,063
Change in minimum pension
liability adjustment.......... (29,808)
Balance Fiscal
Year-End 1995.................... $ 43,932

See Notes to Financial Statements

F-25

JOHN MORRELL & CO.

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION

John Morrell & Co. ("Morrell") is one of the leading full-line meat
processors in the United States. Operations include hog kills at two major
Midwest facilities located at Sioux Falls, South Dakota and Sioux City, Iowa. In
addition, Morrell produces full lines of processed meats including sausage
(wieners and lunch meats), bacon, smoked meats (hams) and canned meats at its
Sioux Falls facility as well as two other locations.

PROCUREMENT OF RAW MATERIALS --

Morrell does not raise hogs or maintain any significant inventories of live
animals. Daily requirements are purchased primarily at prevailing market prices
through Morrell's network of hog buying stations located throughout the Midwest
hog producing states.

LABOR CONTRACTS --

Morrell employs a union labor force at its plants which operate under
separate contracts for each location. The current contracts are scheduled for
renewal at various dates through 1999.

CONCENTRATIONS OF ASSETS --

Morrell has a large customer base which are geographically dispersed
limiting any significant concentrations of customer relationships or credit
risk.

USE OF ESTIMATES --

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from estimates.

2. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES

The accompanying financial statements include the accounts of Morrell. For
the periods included herein, Morrell was a wholly-owned subsidiary of Chiquita
Brands International, Inc. ("Chiquita"). On December 20, 1995, Smithfield Foods,
Inc. ("Smithfield") purchased all the outstanding common stock of Morrell from
Chiquita. The accompanying financial statements present the accounts of Morrell
at their historical cost up to the date of sale and do not reflect any
adjustments to the carrying value of assets or liabilities resulting from the
change in ownership.

RECLASSIFICATION --

Certain amounts have been reclassified from prior reports to conform to the
1995 presentation.

CASH EQUIVALENTS --

Cash equivalents consist of highly liquid investments with a maturity when
purchased of three months or less.

INVENTORIES --

Livestock inventories are valued at lower of cost or market; meat product
inventories are valued at market. Supplies inventories are valued at average
cost. Certain livestock inventories and meat product inventories held for future
sale are hedged to reduce the effect of price fluctuations. Gains and losses on
hedging transactions are deferred as part of the inventory cost and included in
income as the related inventory is sold.

PROPERTY, PLANT AND EQUIPMENT --

Depreciation is based on the straight-line method over the estimated useful
lives of depreciable assets.

FISCAL YEARS --

Morrell uses a standard financial reporting schedule that is based on
weekly periods rather than calendar dates. Except for fiscal 1995, Morrell ends
its fiscal year with the week that ends on the Saturday closest to December 31.
For fiscal 1995,

F-26

JOHN MORRELL & CO.

NOTES TO FINANCIAL STATEMENTS -- CONTINUED

the accompanying financial statements reflect the results of operations for the
period from January 1, 1995 to December 20, 1995, the date Chiquita sold its
Morrell stock to Smithfield.

The 1995 period was a shortened year (approximately 50-1/2 weeks). The
fiscal years ended December 31, 1994 (fiscal 1994) and January 1, 1994 (fiscal
1993) were both 52 week periods. Unless otherwise noted, references to years
relate to fiscal years.

INTANGIBLE AND PREPAID PENSION ASSETS --

As disclosed in Note 3, the Company's defined benefit pension plans had
unfunded accumulated benefit obligations. As a result, the Company recognized an
additional minimum pension liability offset by the recognition of an intangible
asset, to the extent of any unrecognized prior service cost, with the excess
being reported as a separate component or reduction of shareholder's equity.
(See Note 9.) At December 20, 1995 and December 31, 1994, this intangible
pension asset was $783,000 and $824,000, respectively.

There was also at December 31, 1994 a $6.9 million prepaid pension asset
balance relating to the salaried plan, reflecting the overfunding in that plan
as of that date. (See Note 3.)

FEDERAL INCOME TAXES --

Morrell's income is included in Chiquita's consolidated Federal income tax
return through the date of sale. In accordance with tax-sharing agreement with
Chiquita, Morrell pays or receives an amount equal to the Federal income taxes
it would generally pay or receive if it filed a separate income tax return.
Historically, no interest is charged or credited as it relates to the timing of
settlement of taxes between Morrell and Chiquita.

The Company provides deferred income taxes to be recognized for temporary
differences between the financial reporting basis and income tax basis of assets
and liabilities using prevailing income tax rates. Provisions are made for all
currently payable federal, state and local income taxes. A valuation allowance
has been provided for deferred tax assets to the extent it is more likely than
not that such assets will not be recovered through operations in the foreseeable
future.

NEW ACCOUNTING PRONOUNCEMENT --

In 1995 the Financial Accounting Standards Board (FASB) issued Statement
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of" which is effective for 1996. The Statement requires
impairment losses to be recorded on long-lived assets used in operations when
indicators of impairment are present and the discounted cash flows estimated to
be generated by those assets are less than the assets' carrying amount. The
effect of this pronouncement on Morrell is not expected to be material.

3. PENSION AND OTHER BENEFITS PLANS

Pension and retirement benefits are provided by Morrell under two
noncontributory, trustee administered, defined benefit plans for substantially
all full-time salaried employees and also hourly employees at certain plant
locations. These pensions are funded in accordance with the requirements of the
Employee Retirement Income Security Act. The salaried pension plan generally
provides for benefits based on years of service, earnings and Social Security
benefits. The hourly plan provides benefits of stated amounts for each year of
service. Most hourly plan employees have stopped accruing additional pension
benefits as the defined benefit plan has been replaced by a defined contribution
plan.

F-27

JOHN MORRELL & CO.

NOTES TO FINANCIAL STATEMENTS -- CONTINUED

Net periodic pension cost for the defined benefit plans included the
following components (in thousands):

1995 1994 1993

Service cost-benefits earned during the year................................................ $ 921 1,254 1,095
Interest cost on projected benefit obligation............................................... 12,772 12,428 12,504
Actual return on plan assets................................................................ (12,319) 1,047 (7,961)
Net amortization and deferral............................................................... 305 (12,003) (3,501)
Net periodic pension cost................................................................... $ 1,679 2,726 2,137

Assumptions used in accounting for defined benefit plans were:

1995 1994 1993

Weighted average discount rate........................................................................ 7% 9% 7.75%
Expected return on assets............................................................................. 10% 10% 10%
Increase in compensation levels (active plan)......................................................... 5% 5% 5%

The following table sets forth the defined benefit plans' funded status at
the end of each fiscal year (in thousands):

ASSETS EXCEED
ACCUMULATED BENEFITS ACCUMULATED
EXCEED ASSETS BENEFITS
1995 1994 1995 1994

Plan assets at fair market value, consisting primarily of bonds and other fixed
income securities.................................................................. $ 109,442 44,058 - 58,564
Present value of benefit obligations:
Vested............................................................................. 167,999 89,633 - 48,773
Nonvested.......................................................................... 5,909 2,412 - 2,525
Accumulated benefit obligation....................................................... $ 173,908 92,045 - 51,298
Projected benefit obligation......................................................... $ 181,216 92,045 - 57,624
Projected benefit obligation (in excess of) less than plan assets.................... $ (71,774) (47,987) - 940
Unrecognized net loss................................................................ 55,884 15,124 - 10,340
Adjustment required to recognize minimum pension liability........................... (45,715) (15,948) - -
Unrecognized net (asset) obligation at transition, net of amortization............... (2,861) 824 - (4,368)
(Pension liability) prepaid pension asset recognized on the balance sheet............ $ (64,466) (47,987) - 6,912

In 1995 the accumulated benefit obligations of both pension plans exceeded
the plan assets. In 1994, the accumulated benefit obligation of the hourly plan
exceeded its plan assets while the plan assets exceeded the accumulated benefit
obligation for the salaried plan resulting in the prepaid pension asset. The
increase in the accumulated and projected benefit obligation is due primarily to
the lowering of the weighted average discount rate assumed in calculating the
actuarial liability in 1995. The change in assumption is in response to changes
in market rates of interest, at which such obligations could be settled, between
years.

Chiquita securities comprised less than 5% of the fair market value of plan
assets at the end of 1995.

The adjustment required to recognize the minimum pension liability is based
on the excess of the accumulated benefit obligation over the fair market value
of assets of the plans.

Morrell offers a defined contribution plan to all full-time salaried
employees and full-time hourly employees at certain plant locations. Company
contributions are based on a percentage of the amount contributed by the
employee up to a specified maximum amount. Morrell's contributions and
administrative costs were $1.4 million for 1995, $1.7 million for 1994 and $1.5
million for 1993.

F-28

JOHN MORRELL & CO.

NOTES TO FINANCIAL STATEMENTS -- CONTINUED

Hourly employees covered by collective bargaining agreements which provide
for Company contributions to union sponsored pension plans are excluded from the
defined benefit trusteed plans. Contributions to these union sponsored plans
were $700,000 for 1995, $1.8 million 1994 and $815,000 for 1993.

Morrell has provided health care and life insurance benefits to certain
retired employees. (Such benefits are commonly referred to as Other
Postretirement Employment Benefits, or "OPEB's".) Morrell funded the cost of
OPEB's as incurred and there are no separate trust accounts or assets maintained
for paying these benefits. The level of benefit and the amount of retiree
contribution depended on several factors including the date when the employee
retired or became eligible to retire and whether the employee worked under a
collective bargaining agreement. Most of these benefits related to hourly
employees. OPEB obligations related to salaried personnel are not material.

Effective at the beginning of 1993, Morrell adopted Statement of Financial
Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits
Other Than Pensions" (FAS 106) and began accruing postretirement benefits. Prior
to this change, costs were charged to expense as incurred. For recognizing the
transition obligation (actuarially calculated at $106.2 million), Morrell
elected to use the prospective recognition method and amortize the transition
obligation over 20 years using the straight-line method. At the beginning of
1994, the accumulated postretirement benefit obligation (APBO) increased from
$110.2 million to $119.3 million. The increase in the APBO from the prior year
was due primarily to a lowering of the assumed discount rate which gave rise to
an unrecorded net loss of $11.1 million at the end of fiscal 1993.

Morrell continued to accrue OPEB expenses under FAS 106 through 1994. OPEB
expense was $12.2 million and $15.3 million in 1994 and 1993, respectively.

In 1992, Morrell filed a declaratory judgement action in the U.S. District
Court for the District of South Dakota seeking confirmation of its right to
unilaterally reduce or eliminate medical benefits of retired hourly employees.
In 1993, the District Court ruled in favor of Morrell. In 1994, this ruling was
upheld by the U.S. Court of Appeals for the Eight Circuit. Morrell continued to
provide such benefits while the legal issues were being litigated and appealed.
In December 1994, the plan's governing committee approved terminating the
retiree medical benefits and, except for a transition program, hourly retiree
medical and death plan benefits were discontinued. Benefits under the transition
plan are being provided through February 1996 and claims incurred during this
period can be filed through February 1997. The accrual for other retiree
benefits at December 20, 1995 is adequate to provide for the estimated remaining
cost of the transition program. Accordingly, there is no material continuing
cost anticipated for OPEB's.

The actuarial assumptions used in the development of periodic OPEB expense
as well as the sensitivity analysis of changes in actuarial assumptions have not
been presented since the only significant plan has been eliminated; therefore,
disclosures would not be meaningful.

4. LONG-TERM DEBT AND CREDIT FACILITY

Long-term debt at the end of each fiscal year primarily consists of the
following:

1995 1994

(IN THOUSANDS)

12.5% secured note and capital lease obligation due in installments to 2000................................. $2,965 -
Economic development loan forgivable over three years if certain employment levels are maintained, otherwise
due January 1997.......................................................................................... 667 1,000
Promissory notes, interest rate of 6.625% due in varying monthly installments to 1997....................... 41 62
3,673 1,062
Less: Current maturities.................................................................................... (382) (21)
$3,291 1,041

Effective July 1, 1995, Morrell terminated a contract plant agreement
thereby acquiring directly the residual property rights for its Cincinnati plant
site. In addition, Morrell assumed the related secured note and capital lease
obligation of $3.2 million which Morrell had previously guaranteed. The assets
were recorded at the amount of the obligations assumed, including $2.1 million
of assets under capital lease.

F-29

JOHN MORRELL & CO.

NOTES TO FINANCIAL STATEMENTS -- CONTINUED

In April 1993, Chiquita purchased the $16.7 million outstanding principal
amount of 9.375% Senior Secured notes. The notes were secured by property, plant
and equipment with an aggregate book value of $38.3 million at the end of fiscal
1993. In April 1994, Morrell issued 125 shares of new preferred stock to
Chiquita in order to retire $12.5 million of the Senior Secured notes. The
preferred stock paid annual dividends of $9,000 per share and had a liquidation
preference of $100,000 per share. No gain or loss was recorded on the exchange.
On December 30, 1994, the preferred stock was redeemed at its liquidation value
for cash and the balance outstanding on the Senior Secured notes was paid off.

At December 20, 1995, Morrell had a $75 million revolving credit facility
available through October 1997. Borrowings under this credit facility bear
interest based on the lending institution's prime rate plus 1% (9.75% at fiscal
year-end 1995). Borrowings under the facility are limited to an amount
determined with reference to and secured by, receivables and inventories that
are available to pledge as collateral. An annual service fee of 1/2 of 1% is
assessed on the unused portion of the facility. The weighted average interest
rates on borrowings were 14.2% and 12.7% for fiscal years 1995 and 1994,
respectively. At December 20, 1995, there were standby letters of credit or
guarantees of approximately $16 million outstanding under the facility and $7.3
million of cash borrowings. There was at such time sufficient collateral
capacity for Morrell to have borrowed up to the full amount of the facility.

Under the terms of the credit facility, Morrell is required to comply with
certain covenants including the maintenance of net worth and certain financial
ratios. The facility also restricts making certain investments and transactions
that are not in the ordinary course of business.

Cash payments for interest were $2.8 million in 1995, $3.0 million in 1994
and $5.6 million in 1993.

5. COMMITMENTS AND CONTINGENCIES

Rental expense was $6.2 million in 1995, $6.9 million in 1994 and $9.1
million in 1993.

At December 20, 1995, future minimum payments required under operating
leases that have initial or remaining noncancellable lease terms in excess of
one year, principally related to equipment and vehicles, are as follows (in
thousands):

1996..................................................... $4,778
1997..................................................... 3,234
1998..................................................... 1,746
1999..................................................... 1,215
2000..................................................... 145
Thereafter............................................... 179

In order to ensure a steady supply of hogs and to keep the cost of products
stable, Morrell has entered into contracts with producers for the purchase of
hogs at formula based prices over periods of up to 7 years. Under these
contracts, Morrell is committed at December 20, 1995 to purchase hogs, assuming
current price levels, as follows (in thousands):

1996................................................... $18,330
1997................................................... 25,850
1998................................................... 35,250
1999................................................... 42,300
2000................................................... 23,500
Thereafter............................................. 35,250

6. LEGAL MATTERS

In March 1993, Morrell brought to the attention of the United States
Environmental Protection Agency ("USEPA") certain deficiencies relating to the
wastewater treatment facility at its Sioux Falls plant. In January 1996, Morrell
executed a partial consent decree with the United States Department of Justice
("DOJ") and the USEPA relating to the EPA permit for the Sioux Falls facility,
which was lodged with the United States District Court for the District of South
Dakota. The partial consent decree did not address the matter of civil penalties
for past violations or misconduct. On February 7, 1996, Morrell reached a
tentative agreement with the DOJ relating to the pending criminal and civil
investigation of the Sioux Falls facility

F-30

JOHN MORRELL & CO.

NOTES TO FINANCIAL STATEMENTS -- CONTINUED

and agreed to pay total fines of $3.25 million, part of which is to be used to
establish an environmental fund. These amounts have been fully accrued at
December 20, 1995.

Morrell is subject to other legal proceedings and claims which arise in the
ordinary course of business. However, based on evaluation of facts which have
been ascertained, and on opinions of counsel, management does not believe such
litigation or claims will, individually or in the aggregate, have a material
adverse effect on the financial condition or results of operations of Morrell.

7. DIVESTITURES

On February 28, 1994, Morrell completed the sale of its Specialty Meat
Group to a newly formed company employing the then current managers of the
division, the former president and chief executive officer of Morrell, and a
private investment group. The sale included the brands "Mosey's", "Liguria",
"Scott Petersen" and "Nathan's". The production facilities located in
Bloomfield, Connecticut, Humboldt, Iowa and Chicago, Illinois were included in
the sale. Morrell received $52.7 million in cash proceeds and recorded a pretax
gain of $10.2 million.

8. SIGNIFICANT TRANSACTIONS WITH CHIQUITA

Included in accounts payable at December 20, 1995 was a payable to Chiquita
of $252,000; in accounts receivable at December 31, 1994 is a receivable from
Chiquita of approximately $2.0 million.

Morrell incurred interest charges of $497,000 and $1.0 million to Chiquita
in 1994 and 1993, respectively, related to the interest bearing notes which were
retired in 1994.

Chiquita provides data processing services and certain other management
services to Morrell, and Morrell charges Chiquita for its use of a technical
center. Net charges from Chiquita for the services and facilities were $2.3
million in 1995, $3.0 million in 1994 and $4.5 million in 1993. Chiquita billed
Morrell $1.9 million in 1995, $2.3 million in 1994 and $4.8 million in 1993 for
transportation services.

Prior to the acquisition of Morrell by Smithfield on December 20, 1995,
Chiquita had issued performance bonds or standby letters of credit of
approximately $22 million that were being used primarily to secure Morrell
self-insurance programs and regulatory responsibilities. With the exception of
approximately $6 million in bonds assumed by Smithfield at the time of sale,
these obligations are now issued under Morrell's credit facility (see Note 4).

Morrell received capital contributions from Chiquita of $900,000 in 1993.
In 1994, Morrell dividended to Chiquita a former plant facility at its net
carrying value of $3.1 million.

9. INCOME TAXES

Income tax expense differs from income taxes computed at the U.S. Federal
statutory rate for the following reasons (in thousands):

1995 1994 1993

Income tax expense computed at the U.S. Federal statutory rate................................ $ 4,818 12,290 187
State income taxes, net of Federal benefit.................................................... 279 (197) (29)
Change in valuation allowance................................................................. (16,039) - -
Net operating loss carryforward utilized...................................................... - (12,005) (274)
Other......................................................................................... (356) (394) 71
Income tax benefit.......................................................................... $ (11,298) (306) (45)

F-31

JOHN MORRELL & CO.

NOTES TO FINANCIAL STATEMENTS -- CONTINUED

The components of net deferred income tax assets and liabilities included
on the balance sheet at the end of the year are as follows (in thousands):

1995 1994

Deferred tax assets:
Employee benefits................................................................................ $ 29,979 19,683
Plant closing reserves........................................................................... 471 852
Other............................................................................................ 3,481 3,334
Total deferred tax assets before valuation allowance............................................. 33,931 23,869
Valuation allowance.............................................................................. (15,697) (21,355)
Total deferred tax assets........................................................................ $ 18,234 2,514
Deferred tax liabilities -- Depreciation and amortization........................................... $ 4,484 2,514

Deferred tax liabilities are included in other liabilities on the balance
sheet.

Certain employees of Morrell exercised stock options for Chiquita common
stock in 1994. The $129,000 effect of the tax deduction Chiquita received
related to the exercise of these options has been recorded by Morrell as a
contribution to capital.

Cash payments, net of refunds, for income taxes were $2.3 million in 1995,
$1.2 million 1994 and $200,000 in 1993, respectively.

In conjunction with the adoption of Financial Accounting Standards
Statement No. 109 in 1992, Morrell provided a valuation allowance against its
net deferred tax assets due primarily to recent losses it had incurred as of
that date and the uncertainty of future operations. However, through 1995,
Morrell has completed three profitable years and concluded that a portion of the
valuation allowance would no longer be required.

Based on the foregoing, the net change of $5.6 million in the valuation
allowance in the current period is the result of the reversal of valuation
allowance relating to net deferred tax assets of $16.0 million, which are now in
management's judgement expected to be realized, offset by the additional
valuation allowance of $10.4 million established against the tax benefits
related to the current year's increase in the minimum pension liability
adjustment to shareholder's equity. A valuation allowance has been established
against all the deferred tax benefits related to the minimum pension liability
adjustment to shareholder's equity, due to the uncertainty as to the timing and
extent to which these tax benefits would be realized.

F-32

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES
DESCRIBED IN THIS PROSPECTUS OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER
TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION
IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION
CONTAINED HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF
SUCH INFORMATION.

TABLE OF CONTENTS

PAGE

Available Information................................ 2
Incorporation of Certain Documents
by Reference....................................... 2
Prospectus Summary................................... 3
The Company.......................................... 5
Use of Proceeds...................................... 5
Price Range of Common Stock.......................... 5
Dividend Policy...................................... 5
Pro Forma Consolidated Statement of Income........... 6
Selected Consolidated Financial Data................. 8
Management's Discussion and Analysis of Financial
Condition and Results of Operations................ 9
Business............................................. 12
Description of Capital Stock......................... 18
Selling Stockholder.................................. 20
Plan of Distribution................................. 20
Validity of the Shares............................... 21
Experts.............................................. 21
Index to Financial Statements........................ F-1

1,094,273 SHARES

SMITHFIELD FOODS, INC.

COMMON STOCK

PROSPECTUS

PART II INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The table below sets forth the expenses to be incurred by the registrant in
connection with the issuance and distribution of the securities registered for
offer and column sale hereby, other than underwriting discounts and commissions,
if any. All amounts shown represent estimates except the Securities and Exchange
Commission registration fee.

Filing fee with the Commission............................................................ $ 9,628
Accountant's fees and expenses............................................................ 20,000
Blue Sky and Legal Investment fees and expenses........................................... 5,000
Other legal fees and expenses............................................................. 25,000
Printing and engraving fees............................................................... 15,000
Miscellaneous............................................................................. 25,000
Total................................................................................ $ 99,628

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

As permitted by Section 145 of the Delaware General Corporation Law (the
"DGCL"), Article 6 of Smithfield Foods, Inc.'s By-Laws provides as follows:

Section 6. INDEMNIFICATION AND ADVANCEMENT OF EXPENSES. The corporation
shall indemnify, and shall make advance payment of litigation expenses to, in
each case to the fullest extent permitted by law, any person made, or threatened
to be made, a party to any pending, threatened or completed action, suit or
proceeding (whether civil, criminal, administrative, arbitrative or
investigative) by reason of the fact that he, his testator, or intestate is or
was a director, officer or employee of the corporation.

As permitted by Section 102(b)(7) of the DGCL, Section Eleventh of
Smithfield Foods, Inc.'s Composite Certificate of Incorporation, as amended,
provides as follows:

Section Eleventh. LIMITATION ON DIRECTOR LIABILITY. No director of the
Corporation shall be personally liable to the Corporation or its
shareholders for monetary damages for any breach of fiduciary duty by such
director as a director, except for liability (i) for any breach of the
director's duty of loyalty to the Corporation or its shareholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (iii) under Section 174 of the General
Corporation Law of Delaware for approval of an unlawful dividend or an
unlawful stock purchase or redemption, or (iv) for any transaction from
which the director derived an improper personal benefit. Any repeal or
modification of this paragraph by the shareholders of the Corporation shall
be prospective only, and shall not adversely affect any limitation on the
personal liability of a director of the Corporation for acts or omissions
occurring prior to the effective date of such repeal or modification.

In addition, Section 5 of Smithfield Foods, Inc.'s By-Laws provides as
follows:

Section 5. LIABILITY. No person shall be liable to the corporation for
loss or damage suffered by it on account of any action taken or omitted to
be taken by him in good faith as an officer of the corporation, or of any
other corporation which he serves as an officer at the request of the
corporation, if such person (a) exercised and used the same degree of care
and skill as a prudent man would have exercised or used under the
circumstances in the conduct of his own affairs, or (b) took or omitted to
take such action in reliance upon advice of counsel for the corporation or
upon statements made or information furnished by officers or employees of
the corporation which he had reasonable grounds to believe. The liabilities
of directors of the corporation for actions taken or omitted to be taken by
them in their capacity as such shall be governed by the relevant provisions
of the Certificate of Incorporation of the corporation, and to the extent
consistent therewith, by these By-Laws. The foregoing shall not be
exclusive of other rights and defenses to which he may be entitled as a
matter of law.

II-1

ITEM 16. EXHIBITS.

5.1 Opinion of McGuire, Woods, Battle & Boothe, L.L.P. as to the validity of the offered securities
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Ernst & Young LLP
23.3 Consent of McGuire, Woods, Battle & Boothe, L.L.P. (included in their opinion filed as Exhibit 5.1)
24 Powers of attorney (included on Page II-3 of the initial registration statement)
27 Financial Data Schedule

ITEM 17. UNDERTAKINGS.

The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by such registrant of expenses incurred
or paid by a director, officer or controlling person of such registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether the such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.

II-2

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Norfolk, Commonwealth of Virginia, on June 18, 1996.

SMITHFIELD FOODS, INC.

By: /S/ AARON D. TRUB

AARON D. TRUB, VICE PRESIDENT,
SECRETARY AND TREASURER, AND DIRECTOR

KNOW ALL MEN BY THESE PRESENTS that each individual whose signature appears
below constitutes and appoints Joseph W. Luter, III, John O. Nielson and Aaron
D. Trub, and each of them, his true and lawful attorney-in-fact and agent with
full power of substitution, for him and in his name, place and stead, in any and
all capacities, to sign any and all amendments (including post-effective
amendments) to this registration statement, and to file the same, with all
exhibits thereto, and all documents in connection therewith, with the Securities
and Exchange Commission, granting unto said attorneys-in-fact and agents, and
each of them, full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully to
all intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or either of them, or
their or his substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on June 18, 1996.

NAME TITLE

/s/ JOSEPH W. LUTER, III Chairman of the Board and Chief Executive Officer,
JOSEPH W. LUTER, III and Director (Principal Executive Officer)

/s/ JOHN O. NIELSON President and Chief Operating Officer, and
JOHN O. NIELSON Director

/s/ ROBERT W. MANLY, IV Executive Vice President and Director
ROBERT W. MANLY, IV

/s/ AARON D. TRUB Vice President, Secretary, Treasurer, and Director
AARON D. TRUB (Principal Financial Officer)

/s/ C. LARRY POPE Vice President and Controller (Principal
C. LARRY POPE Accounting Officer)

/s/ F. J. FAISON, JR. Director
F. J. FAISON, JR.

/s/ JOEL W. GREENBERG Director
JOEL W. GREENBERG

II-3

NAME TITLE
/s/ CECIL W. GWALTNEY Director
CECIL W. GWALTNEY

/s/ GEORGE E. HAMILTON, JR. Director
GEORGE E. HAMILTON, JR.

/s/ RICHARD J. HOLLAND Director
RICHARD J. HOLLAND

/s/ ROGER R. KAPELLA Director
ROGER R. KAPELLA

/s/ LEWIS R. LITTLE Director
LEWIS R. LITTLE

/s/ WENDELL H. MURPHY Director
WENDELL H. MURPHY

/s/ WILLIAM H. PRESTAGE Director
WILLIAM H. PRESTAGE

II-4