Edgar Filing: SMITHFIELD FOODS INC

Form 11-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 11-K

ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

x	ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2005

¨	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
*Report of Independent Registered Public Accounting Firm*		3

*Financial Statements*

Statements of Net Assets Available for Benefits as of December 31, 2005 and 2004		4

Statement of Changes in Net Assets Available for Benefits for the Year Ended December 31, 2005		5

Notes to Financial Statements		6 -9

*Supplemental Schedules*

Schedule of Delinquent Contributions		10

Schedule of Assets (Held at End of Year)		11

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, 2005 and 2004, and the related statement of changes in net assets available for benefits for the year ended December 31, 2005. 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, 2005 and 2004, and the changes in net assets available for benefits for the year ended December 31, 2005 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

May 3, 2006

Smithfield Foods, Inc. Bargaining 401(k) Plan

Statements of Net Assets Available for Benefits


December 31,	2005		2004
Investments	$	46,933,632	$	9,131,630


Receivables
Participant Contributions		70,812		43,752
Employer Contributions		353,246		28,365

Total Receivables		424,058		72,117

Net assets available for benefits	$	47,357,690	$	9,203,747

The accompanying notes are an integral part of these financial statements.

Smithfield Foods, Inc. Bargaining 401(k) Plan

Statement of Changes in Net Assets Available for Benefits


Year Ended December 31, 2005
Additions to net assets attributed to
Investment Income
Net appreciation in fair value of investments	$	946,676
Interest and dividends		1,261,415

		2,208,091

Contributions
Participant		4,030,089
Employer		2,039,282
Rollover		85,613
Total additions		6,154,984

		8,363,075

Deductions from net assets attributed to
Benefits paid to participants		1,978,102
Administrative fees		17,520

Total deductions		1,995,622

Transfers between retirement plans, net		31,786,490

Net change		38,153,943
Net assets available for benefits
Beginning of year		9,203,747

End of year	$	47,357,690

The accompanying notes are an integral part of these financial statements.

Smithfield Foods, Inc. Bargaining 401(k) Plan

Notes to Financial Statements

December 31, 2005 and 2004

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, the 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 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 5 percent to 10.5 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, 2005 forfeited nonvested accounts totaled $24,111. 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.

3.	Investments

The following presents investments that represent 5 percent or more of the Plan’s net assets.


	December 31,
	2005		2004
Calamos Growth Fund – Class A, 14,869 shares	$	*	$	787,757
MFS Value Fund, 26,702 shares		*		617,882
Strong Advisor Small Cap Value Fund, 33,495 shares		*		984,760
Strong Large Company Growth Fund, 33,101 shares		*		519,683
Wells Fargo Advantage Small Cap Value Z Fund, 167,038 shares		5,039,534		*
Strong Government Securities Fund, 185,417 shares		*		1,991,380
Wells Fargo Coll/Bgi S&P 500 Index, 90,376 shares		4,787,209		*
Wells Fargo Advantage Government Securities Fund, 294,319 shares		3,078,581		*
Pimco Total Return Fund, 271,410 shares		2,849,803		*
Templeton Foreign Large Value Fund, 37,596 shares		*		462,432
Wells Fargo Stable Value Fund, 1,746,707 shares		17,857,286		*
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 2005, 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	$	541,380
Common collective trusts		380,306
Common stock		24,990

	$	946,676

4.	Related Party Transactions

The Plan invests in certain funds managed by and participant directed brokerage accounts held by Wells Fargo, N.A. Wells Fargo is also the trustee of the plan. The Plan also invests in Smithfield Foods, Inc. common stock. At December 31, 2005 and 2004, the Plan held 18,707 and 4,697 shares, respectively, of Smithfield Foods, Inc. common stock.

5.	Tax Status

The Internal Revenue Service has determined and informed the Company by 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.	Transfer of Assets

Transfer of assets between plans generally result from an employee, who participates in a Smithfield-sponsored retirement plan, changing employment status requiring a change in which Smithfield-sponsored plan the employee may participate. Transfer activity for the year ended December 31, 2005 is as follows:


Assets transferred to the Plan from Smithfield Foods, Inc. 401(k) Plan	$	195,867
Assets transferred from the Plan to John Morrell & Co., Salaried Employees Incentive Savings Plan		(237,245	)
Assets transferred to Smithfield Foods, Inc. 401(k) Plan from the Plan		(29,455	)

	$	(70,833	)

During 2005, the following plans merged into the Plan effective June 1, 2006. Assets were transferred from predecessor plans as follows:


John Morrell & Co. Hourly Employees Retirement Savings Plan	$	1,525,003
John Morrell Hourly Employees Incentive Savings Plan for Bargaining Unit Eligible Employees		30,332,320

	$	31,857,323

7.	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.

8.	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 amounts reported in the statements of net assets available for benefits.

* * * * *

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, 2005


			Total that constitute non-exempt prohibited transactions
Contributions 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
2004	$	7,114	$	—	$	7,114	$	—	$	—
2005	$	2,153	$	2,153	$	—	$	—	$	—

Late 2004 contributions were remitted by the plan sponsor in 2004 and early 2005. Lost earnings have been remitted into the plan in 2005.

Late contributions for 2005 were remitted by the plan sponsor in 2005. Lost earnings will be submitted into the plan in 2006.

See report of independent registered public accounting firm.

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, 2005


Identity of issue, borrower, lessor or similar party		Description of investment including maturity date, rate of interest, collateral, par, or maturity value		Current value
*	Wells Fargo	1,746,707	units of Smithfield Stable Value Fund		17,857,286
*	Wells Fargo	167,038	shares of Advantage Small Cap Value Z Fund		5,039,534
*	Wells Fargo	90,376	units of Coll/Bgi S&P 500 Index High Balance N Fund		4,787,209
*	Wells Fargo	294,319	shares of Advantage Government Securities Fund		3,078,581
	Pimco	271,410	shares of Pimco Total Return Fund		2,849,803
*	Wells Fargo	127,879	shares of Outlook 2020 Select		1,797,981
	Calamos	28,216	shares of Calamos Growth Fund - Class A		1,553,588
	Templeton	106,000	shares of Foreign Large Value Fund – Class A		1,344,076
*	Wells Fargo	85,610	shares of Outlook 2030 Select		1,261,891
	Lord Abbett	48,371	shares of Lord Abbett Mid-Cap Value Fund		1,083,998
*	Wells Fargo	69,912	shares of Outlook 2010 Select		893,481
*	Wells Fargo	51,578	shares of Advantage Capital Growth Fund		872,705
	MFS	32,866	shares of Value Fund		760,840
*	Smithfield Foods, Inc	18,707	shares of Smithfield Foods, Inc. common stock		572,437
*	Wells Fargo	22,056	shares of Outlook Today		227,622
*	Wells Fargo	13,836	shares of Outlook 2040 Select		225,807
*	Wells Fargo	18,080	shares of Advantage Large Company Core Fund		165,792
	American Funds	3,535	shares of AMCap Fund R4		67,336
	Dreyfus	1,208	shares of Dreyfus Appreciation Fund		48,028
	American Century	4,481	shares of American Century Govt Bond Fund		47,005
*	Participant loans		Maturing through December 2014, interest rate ranging from 5% to 10.50%, secured by participant accounts		2,398,632

				$	46,933,632

MFS - Massachusetts Financial Services

* - Identified as a party-in-interest

See report of independent registered public accounting firm.

SIGNATURES

The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefits 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, 2006	By:	/s/ Daniel G. Stevens
		Daniel G. Stevens
		Vice President and Chief Financial Officer

EXHIBIT INDEX


Exhibit Number		Description
23		Consent of Independent Registered Public Accounting Firm

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents