Pork products are the largest source of meat protein in the world and the third largest source in the United States. According to the United States Department of Agriculture, or USDA, pork processors in the United States processed approximately 103.4 million hogs in 2004, representing approximately 20.5 billion pounds of pork. US exports of pork products have grown substantially in recent years. From 1995 through 2004, exports increased at an 11% compound annual growth rate, with total exports increasing from 1.3 billion pounds to 2.2 billion pounds. The USDA estimates that pork exports increased by 27% in 2004, a substantially higher growth rate, primarily as a result of increased levels of foreign demand due to a ban by certain foreign countries on the import of U.S. beef related to Bovine Spongiform Encephalopathy (“BSE,” or mad cow disease), the breakout of avian influenza affecting the poultry industry, favorable exchange rates and the continuing development of export markets for U.S. pork. Countries showing substantial increases include Mexico, China, Russia and South Korea.

Historically, the United States pork industry has been divided into two segments: pork processing and hog production. The U.S. pork processing industry is highly concentrated, with the top ten processors representing over 90% of total federally inspected industry capacity as of March 2005, and the industry is highly competitive. Although customers in the retail, wholesale, foodservice, further processor and export markets have different product specifications and service requirements, processors generally compete on the basis of the price and quality of their product. The processing industry is geographically concentrated in the hog producing regions of the U.S., particularly the Midwest and portions of the Southeast. The hog production industry, although consolidating, remains substantially fragmented and can be characterized by large variations in costs of production and quality of hogs produced. As a result, a large portion of the industry is generally characterized by fewer hogs per sow per year, higher feed-to-gain conversion ratios, higher costs of production, lower quality and less consistent hogs brought to market. Breeding and farrowing are more efficient in the Spring and Fall, resulting in fluctuating seasonal production and prices. According to the USDA, the number of U.S. hog producers has declined by more than 85% over the last 20 years while the average size of production facilities has increased dramatically.

The Company is increasingly emphasizing value-added products, such as boneless products, marinated pork, moisture-enhanced pork, sliced bacon, microwave cooked bacon, smoked hams, sausage and other processed meats. Its vertical integration and control also allow the Company to produce specialty products. These include “Fresh and Tender” moisture-enhanced pork, KenKo-Ton “healthy pork” for the Japanese market and “Natural Excellence” antibiotic-free pork.

The Company’s North Carolina plant includes further-processing facilities that produce smoked hams, sliced and microwave cooked bacon, and sausage. The Company continues to focus on increasing its activities in the processed meat area.

The Company sells to domestic customers directly and through regional distributors. In marketing to the retail channel, the Company targets independent regional supermarkets seeking to differentiate themselves with “meat-case destination” premium quality pork. The Company’s target market for further processors includes companies with established food brands that demand consistent, high quality, differentiated product.

The Company is increasingly targeting foodservice customers that demand consistent, high-quality product and are attracted to the traceability, food safety and animal welfare associated with the “Process Verified” certification of its product. The Company believes that the foodservice industry represents a growth opportunity.

The Company also sells excess hogs from its production facilities to other pork processors. In this respect, the Company has long-term contracts with two major pork processors, who purchase substantially all of the hogs produced at its Texas facilities.

The Company’s processing and production operations are organized as three separate pods located in Missouri, Texas and North Carolina. The Company’s Missouri and North Carolina pods each combine processing plants and hog production facilities. The Company’s Texas pod has only hog production operations.

Gross profit increased by $73.7 million, or 252.4%, to $102.9 million in the first three quarters of fiscal year 2005 from $29.2 million in the first three quarters of fiscal year 2004.

Selling, general and administrative expenses increased by $2.7 million, or 21.9%, to $15.4 million in the first three quarters of fiscal year 2005 from $12.7 million in the first three quarters of fiscal year 2004.

Operating income increased by $71.3 million, or 419.4%, to $88.3 million in the first three quarters of fiscal year 2005 from $17.0 million in the first three quarters of fiscal year 2004.

Interest expense, net, decreased by $3.0 million, or 15.7%, to $15.8 million in the first three quarters of fiscal year 2005 from $18.8 million in the first three quarters of fiscal year 2004.