UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
| x | ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2004
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number 1-15321
| A. | Full title of the plan and the address of the plan, if different from that of the issuer named below: |
Smithfield Foods, Inc. Bargaining 401(k) Plan
| B. | Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: |
Smithfield Foods, Inc.
200 Commerce Street
Smithfield, VA 23430
Smithfield Foods, Inc. Bargaining 401(k) Plan
Contents
| Page | ||||
| 3 | ||||
| Financial Statements |
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| Statements of Net Assets Available for Benefits as of December 31, 2004 and 2003 |
4 | |||
| Statement of Changes in Net Assets Available for Benefits for the Year Ended December 31, 2004 |
5 | |||
| 6 - 9 | ||||
| Supplemental Schedules |
||||
| 10 | ||||
| 11 | ||||
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Report of Independent Registered Public Accounting Firm
Plan Administrator
Smithfield Foods, Inc. Bargaining 401(k) Plan
We have audited the accompanying statements of net assets available for benefits of Smithfield Foods, Inc. Bargaining 401(k) Plan as of December 31, 2004 and 2003, and the related statement of changes in net assets available for benefits for the year ended December 31, 2004. These financial statements and supplemental schedules are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards of the Public Company Accounting Oversight Board (United States). 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 net assets available for benefits of the Plan as of December 31, 2004 and 2003, and the changes in net assets available for benefits for the year ended December 31, 2004 in conformity with accounting principles generally accepted in the United States of America.
Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules of assets (held at end of year) and delinquent contributions are presented for the purpose of additional analysis and are not a required part of the basic financial statements but are supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. These supplemental schedules are the responsibility of the Plan’s management. The supplemental schedules have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole.
/s/ Goodman & Company, L.L.P.
Norfolk, Virginia
June 3, 2005
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Smithfield Foods, Inc. Bargaining 401(k) Plan
Statements of Net Assets Available for Benefits
| December 31, |
2004 |
2003 | ||||
| Investments |
$ | 9,131,630 | $ | 7,151,071 | ||
| Receivables |
||||||
| Participant contributions |
43,752 | 59,016 | ||||
| Employer contributions |
28,365 | 45,221 | ||||
| Total receivables |
72,117 | 104,237 | ||||
| Net assets available for benefits |
$ | 9,203,747 | $ | 7,255,308 | ||
The accompanying notes are an integral part of these financial statements.
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Smithfield Foods, Inc. Bargaining 401(k) Plan
Statement of Changes in Net Assets Available for Benefits
| Year Ended December 31, 2004 |
|||
| Additions to net assets attributed to |
|||
| Investment income |
|||
| Net appreciation in fair value of investments |
$ | 572,831 | |
| Interest and dividends |
308,912 | ||
| 881,743 | |||
| Contributions |
|||
| Participant |
1,106,962 | ||
| Employer |
674,478 | ||
| 1,781,440 | |||
| Total additions |
2,663,183 | ||
| Deductions from net assets attributed to |
|||
| Benefits paid to participants |
685,003 | ||
| Administrative fees |
29,741 | ||
| Total deductions |
714,744 | ||
| Net change |
1,948,439 | ||
| Net assets available for benefits |
|||
| Beginning of year |
7,255,308 | ||
| End of year |
$ | 9,203,747 | |
The accompanying notes are an integral part of these financial statements.
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Smithfield Foods, Inc. Bargaining 401(k) Plan
Notes to Financial Statements
December 31, 2004 and 2003
| 1. | Description of Plan |
The following description of the Smithfield Foods, Inc. Bargaining 401(k) Plan (Plan) provides only general information. Participants should refer to the Plan agreement for a more complete description of the Plan’s provisions
General
The Plan is a defined contribution plan established by Smithfield Foods, Inc. (Smithfield). The Plan is for the benefit of eligible bargained employees of Smithfield and affiliated employers that have adopted the Plan (collectively Company). Eligibility requirements for 401(k) and matching contributions are 90 days of service and attainment of age 18. Eligibility for discretionary profit sharing contributions varies based on the related bargaining agreement of the adopting affiliated employer. The Plan is subject to the provisions of the Employee Retirement Income Security Act (ERISA).
Contributions
Each year, participants may contribute 1 to 50 percent of pretax annual compensation, as defined in the Plan. The Company matching contribution varies based on the related bargaining agreement of the adopting affiliated employers. The Company may make a profit sharing contribution at the discretion of the board of directors. Participants direct the investment of all contributions into various investment options offered by the Plan. Contributions are subject to certain limitations.
Participant Accounts
Each participant’s account is credited with the participant’s contribution and allocations of (a) the Company’s contribution and (b) plan earnings. Allocations are based on participant earnings or account balances, as defined. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account.
Vesting
Participants are immediately vested in their contributions plus actual earnings thereon. Vesting in the Company contribution portion of their accounts is based on years of service, as defined, and may vary based on the collective bargaining agreement.
Participant Loans
Participants may borrow from their fund accounts a minimum of $1,000 up to a maximum equal to the
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lesser of $50,000 or 50 percent of their vested account balances. Loan terms extend to five years for general purpose loans and to ten years for the purchase of a home. The loans are secured by the balance in the participant’s account and bear interest at rates that range from 6 percent to 9.5 percent, which are commensurate with local prevailing rates as determined by the plan administrator. Principal and interest are paid ratably through payroll deductions.
Payment of Benefits
Generally, on termination of service a participant may elect to receive the value of the participant’s vested interest in his or her account as a lump sum distribution.
Forfeitures
As of December 31, 2004 forfeited nonvested accounts totaled $133,149. These accounts will be used to reduce employer contributions and pay plan expenses.
| 2. | Summary of Accounting Policies |
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 reported amounts of assets and liabilities, and changes therein, and disclosure of contingent assets and liabilities. Actual results could differ from those estimates.
Investment Valuation and Income Recognition
The Plan’s investments are primarily stated at fair value as determined by quoted market prices. Participant loans are valued at cost, which approximates fair value.
Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date.
Payment of Benefits
Benefits are recorded when paid.
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| 3. | Investments |
The following presents investments that represent 5 percent or more of the Plan’s net assets.
| December 31, | ||||||
| 2004 |
2003 | |||||
| Calamos Growth Fund – Class A, 14,869 and 14,081 shares, respectively |
$ | 787,757 | $ | 630,566 | ||
| MFS Value Fund, 26,702 and 23,642 shares, respectively |
617,882 | 480,881 | ||||
| Strong Advisor Small Cap Value Fund, 33,495 and 28,150 shares, respectively |
984,760 | 774,958 | ||||
| Strong Large Company Growth Fund, 33,101 and 29,889 shares, respectively |
519,683 | 399,321 | ||||
| Strong Stable Value Fund, 715, 264 units |
* | 715,264 | ||||
| Strong Government Securities Fund, 185,417 and 178,639 shares, respectively |
1,991,380 | 1,943,593 | ||||
| Barclays Lifepath 2020 Fund, 76,989 shares |
* | 1,087,857 | ||||
| Templeton Foreign Large Value Fund, 37,596 shares |
462,432 | * | ||||
| Wells Fargo Stable Return, 33,113 shares |
1,225,186 | * | ||||
| Wells Fargo Outlook 2020 Select, 98,873 shares |
1,350,602 | * | ||||
| * | Investment does not represent 5 percent of net assets available for benefits. |
During 2004, the Plan’s investments (including gains and losses on investments purchased and sold, as well as held during the year) appreciated in value as follows:
| Mutual funds |
$ | 543,838 | |
| Common stock |
28,993 | ||
| $ | 572,831 | ||
| 4. | Related Party Transactions |
The Plan invests in certain funds managed by and participant directed brokerage accounts held by Strong Investments, Inc. Strong Investments, Inc. is an affiliate of State Street Bank & Trust Company, the trustee. The Plan also invests in Smithfield Foods, Inc. common stock. At December 31, 2004 the Plan held 4,697 shares of Smithfield Foods, Inc.
At the end of 2004, Wells Fargo acquired Strong Investments, Inc. As a result of the acquisition, certain funds previously managed by Strong are currently managed by Wells Fargo.
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| 5. | Tax Status |
The Internal Revenue Service has determined and informed the prototype sponsor by a letter dated August 7, 2001, that the prototype plan and related trust are designed in accordance with applicable sections of the Internal Revenue Code (IRC). Although the prototype plan has been restated since receiving the opinion letter, the plan administrator and the Plan’s tax counsel believe that the Plan is designed and is currently being operated in compliance with the applicable requirements of the IRC.
| 6. | Plan Termination |
Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, participants would become 100 percent vested in their employer contributions.
| 7. | Risks and Uncertainties |
The Plan invests in various investment securities. Investment securities are exposed to various risks such as interest rate, market, and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect participants’ account balances and the amount reported in the statement of net assets available for benefits.
* * * * *
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Supplemental Schedule I
Smithfield Foods, Inc. Bargaining 401(k) Plan
Schedule of Delinquent Contributions
Schedule H, Line 4a
EIN 52-0845861 Plan 004
December 31, 2004
| Total that constitute non-exempt prohibited transactions |
|||||||||||||||
| Contribution for plan year |
Participant contributions transferred late to the plan for plan year |
Contributions not corrected |
Contributions corrected outside VFC program |
Contributions pending correction in VFC program |
Total fully corrected under VFC program and PTE 2002-51 | ||||||||||
| 2003 |
$ | 59,147 | $ | — | $ | 59,147 | $ | — | $ | — | |||||
| 2004 |
$ | 7,114 | $ | 7,114 | $ | — | $ | — | $ | — | |||||
Late 2004 contributions were remitted by the plan sponsor in 2004 and early 2005. Lost earnings
have been remitted into the plan in 2005.
See report of independent registered public accounting firm.
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Supplemental
Schedule II
Smithfield Foods, Inc. Bargaining 401(k) Plan
Schedule of Assets (Held at End of Year)
Schedule H, Line 4i
EIN 52-0845861 Plan 004
December 31, 2004
| Identity of issue, borrower, lessor or similar party |
Description of investment including maturity date, rate of interest, |
Current value | |||||
| American Century |
179 | shares of American Century Govt Bond Fund | 1,907 | ||||
| American Funds |
139 | shares of AMCap Fund R4 | 2,544 | ||||
| Barclays Global Investors |
13,332 | shares of Global Equity Index Fund | 148,253 | ||||
| Calamos |
14,869 | shares of Calamos Growth Fund - Class A | 787,757 | ||||
| Dreyfus |
63 | shares of Dreyfus Appreciation Fund | 2,442 | ||||
| Lord Abbett |
7,046 | shares of Lord Abbett Mid-Cap Value Fund | 159,456 | ||||
| MFS |
26,702 | shares of Value Fund | 617,882 | ||||
| * Pimco |
15,313 | shares of Pimco Total Return Fund | 163,390 | ||||
| * Smithfield Foods, Inc. |
4,697 | shares of Smithfield Foods, Inc. common stock | 138,992 | ||||
| * Strong Investments, Inc. |
6,177 | shares of Advisor Large Company Core Fund - Class K |
68,380 | ||||
| * Strong Investments, Inc. |
33,495 | shares of Advisor Small Cap Value Fund | 984,760 | ||||
| * Strong Investments, Inc. |
33,101 | shares of Large Company Growth Fund | 519,683 | ||||
| * Strong Investments, Inc. |
185,417 | shares of Government Securities Fund | 1,991,380 | ||||
| Templeton |
37,596 | shares of Foreign Large Value Fund- Class A | 462,432 | ||||
| * Wells Fargo |
33,113 | shares of Stable Return S | 1,225,186 | ||||
| * Wells Fargo |
797 | shares of Outlook 2010 Select | 10,086 | ||||
| * Wells Fargo |
98,873 | shares of Outlook 2020 Select | 1,350,602 | ||||
| * Wells Fargo |
7,152 | shares of Outlook 2030 Select | 102,839 | ||||
| * Wells Fargo |
3,205 | shares of Outlook 2040 Select | 49,781 | ||||
| * Wells Fargo |
5,462 | shares of Outlook Today Select | 57,025 | ||||
| * Participant loans |
Maturing through December 2008, interest rate ranging from 6% to 9.5%, secured by participant accounts |
286,853 | |||||
| $ | 9,131,630 | ||||||
MFS - Massachusetts Financial Services
* - Identified as a party-in-interest
See report of independent registered public accounting firm.
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SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
| SMITHFIELD FOODS, INC. BARGAINING 401(k) PLAN | ||||
| Smithfield Foods, Inc. (as Plan Administrator) | ||||
| Date: June 28, 2005 | By: | /s/ Daniel G. Stevens | ||
| Daniel G. Stevens | ||||
| Vice President and Chief Financial Officer | ||||
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Exhibit Index
| Exhibit Number |
Description | |
| 23 | Consent of Independent Registered Public Accounting Firm |
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