UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

FORM 10-K

OR

For the transition period from     to

Commission file number: 333-64180

PSF Group Holdings, Inc.

Registrant’s telephone number, including area code: (816) 472-7675

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to 12(g) of the Act: None

     Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [   ]

     Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]

     Indicate by check mark whether the Registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes [   ] No [X]

     There is currently no established public trading market for the common equity of the Registrant held by non-affiliates. As of April 30, 2004, there were 100,000 shares of the Registrant’s Class A Common Stock outstanding and 113,301 shares of the Registrant’s Class B Common Stock outstanding.

EXPLANATORY NOTES

     In this report on Form 10-K, the terms “we,” “us” and “our” refer collectively to PSF Group Holdings, Inc., Premium Standard Farms, Inc. and their subsidiaries. Premium Standard Farms, Inc. is a wholly-owned subsidiary of PSF Group Holdings, Inc.

Market and Industry Data and Forecasts

     Market data and certain industry forecasts used throughout this report on Form 10-K were obtained from internal surveys, market research, consultant surveys, publicly available information and industry publications and surveys. Reports prepared or published by Sparks Companies, Inc., the National Pork Producers Council, Agrimetrics Associates Inc. and the United States Department of Agriculture (USDA) were the primary sources for third-party industry data and forecasts. Industry surveys, publications, consultant surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but that the accuracy and completeness of such information is not guaranteed. We have not independently verified any of the data from third-party sources nor have we ascertained the underlying economic assumptions relied upon therein. Similarly, internal surveys, industry forecasts and market research, which we believe to be reliable based upon our management’s knowledge of the industry, have not been independently verified. Forecasts are particularly likely to be inaccurate, especially over long periods of time. In addition, we do not know what assumptions regarding general economic growth were used in preparing the forecasts we cite. We do not make any representation as to the accuracy of information described in this paragraph.

TABLE OF CONTENTS

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PART I

Item 1. Business

Overview

     We are a leading vertically integrated provider of pork products to the wholesale and retail, food service and institutional markets in the United States. By combining modern, efficient production and processing facilities, sophisticated genetics, and strict control over the variables of health, diet and environment, we produce value-added premium pork products. We are the second largest owner of sows in North America, controlling over 255,000 sows, of which approximately 212,000 are owned, producing approximately 4.5 million hogs per year in production operations located on over 100,000 acres in Missouri, Texas and North Carolina. We are also the sixth largest pork processor in the United States, with two plants capable of processing approximately 4.5 million hogs per year.

Competitive Strengths

     We believe the following competitive strengths position us to enhance our growth and profitability:

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Vertically Integrated Production and Processing. We have achieved a substantial degree of vertical integration of our hog production and processing operations. We measure our level of vertical integration in terms of the percentage of hogs processed at our plants that are owned by us and raised according to our controlled programs. In fiscal 2004, 99% of the hogs used by our Milan, Missouri processing plant were sourced from our Missouri hog production operation. During the same period, approximately 73% of hogs used by our Clinton, North Carolina processing plant were supplied by our North Carolina hog production operations, with the remaining 27% supplied through contracts with independent producers. Vertical integration gives us strict control over our process, from a hog’s initial genetic makeup to the pork product ultimately produced and shipped. This is in contrast to non-integrated or less integrated processors who acquire hogs from a large number of suppliers with varying production standards and therefore find it difficult to ensure a consistent and high quality product. This is a powerful advantage for competing effectively in the rapidly consolidating pork industry because it allows us to:

•		Produce Premium and Specialty Products. By regulating the variables of genetics, environment, health and diet, we can produce a controlled supply of high quality, consistent pork products along with specialty products, such as antibiotic free pork and Premium 97 pork (certified as 97% fat-free by the American Heart Association), as well as KenKo-Ton “healthy” pork and Mugi Buta “barley-fed” pork for the Japanese market. Our products typically command higher prices than commodity pork products.
•		Target Premium Customers. We are able to tailor our production process to meet the exacting specifications of discriminating customers in our target markets. These customers are willing to pay premium prices for higher quality products and for the assurance that their standards are met throughout a traceable production process. Vertical integration provides the product consistency necessary to satisfy these customers.
•		Reduce Our Production Costs and Maximize Value. Vertical integration allows us to significantly reduce our hog procurement costs and to streamline our logistics, transportation and production schedules, thus optimizing asset utilization and reducing our cost structure. We are also able to capture more of the value of our hogs through our own processing rather than passing this value on to other processors.

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Strong Market Position with Large Scale Operations. Our large-scale integrated operations, geographic dispersal and strong market position allow us to serve a broad range of customers in our target market, while maintaining economies of scale and marketing leverage.

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•		Efficient, Modern Facilities and Operations. Our Missouri and North Carolina processing plants are two of the most modern and technically advanced facilities of their kind. Our hog production operations, most of which were built in the past fifteen years, incorporate advanced breeding, farrowing and finishing methods.
•		Experienced Management Team. Most of our senior and operational management personnel have been involved in farm production and/or the fresh meat industry for most of their business careers. Senior and operational management members, on average, have over fifteen years of experience in those areas.

Business Strategy

     We are pursuing a strategy designed to increase our sales margins and returns on invested capital. Key elements of our strategy include:

•		Further Develop Vertical Integration. We believe our integrated model will be the proven approach to competing effectively in the rapidly consolidating pork industry. We have achieved nearly 100% integration of our Missouri hog production and processing operations and have achieved substantial integration in our North Carolina operations. In North Carolina, we have renovated our processing plant, upgraded the genetics of our breed stock, rationalized feed manufacturing, increased supervision of contract growers and achieved a USDA Process Verified program similar to the program that is in place for our Missouri operations.
•		Focus on High Quality and Value-Added Products. Our value-added objectives are to move more of our products up the value chain to improve sales margins, develop a stronger brand, form stronger relationships with key customers, and drive new product development. We intend to continue to focus on producing high quality and value-added products for discriminating customers in the retail, food service, export and further processing markets, and to further differentiate ourselves from commodity-oriented competitors. As part of these efforts, we are marketing premium products from our North Carolina plant similar to those produced by our Missouri plant, as well as smoked and processed pork products.
•		Expand Production and Processing Capacity. In fiscal 2002, we completed construction of a new 10,000 sow and wean-to-finish operation in Texas. Our Texas production facilities are located on approximately 54,000 acres with adequate space and all environmental and land use permits required for further expansion in a manner that could replicate our Missouri hog production facilities. Due to the difficulty in obtaining such permits in the current regulatory environment, we believe our existing permits in Texas could provide us a competitive advantage if we expand these operations. In fiscal 2003, through modernization and efficiency efforts, we completed expansion of processing capacity at our North Carolina plant from 6,500 hogs per day to up to 10,000 hogs per day on a ten-hour shift on a seasonal basis.
•		Acquisition Strategies. As an important part of our growth strategy, we evaluate on an ongoing basis potential industry-related acquisitions and joint ventures. We will continue to evaluate those opportunities that fit strategically with our objective of producing high quality, value added products.
•		Maintain Position as a Low Cost Producer. We strive to produce high-quality pork products at low cost by combining state-of-the-art hog production with modern and efficient pork processing. We measure our production and processing activities continually in an effort to increase our hog production efficiencies, lower our break-even costs, improve our processing yields and develop new value-added products.
•		Continue Expansion into International Markets. We believe that international markets offer significant growth opportunities and intend to continue our efforts to develop sales outside the United States. Over the past eight years, we have established relationships with trading partners in Japan, China, South Korea, Canada, Mexico, Russia and Taiwan, and have exported product over that time

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		period to more than twenty countries. We also believe that our presence in these markets allows us to achieve higher prices for certain pork products than could be obtained domestically. In particular, we intend to increase our export volumes to Japan, as this market ascribes significant value to premium, process-controlled, traceable products. We also intend to actively expand sales in other Asian and Mexican markets.
•		Manage Market Risks. We will continue to draw upon the strength of our risk management team, which collectively has over twenty years experience in the area. We will continue to monitor daily opportunities to lock in favorable margins and manage market risk by hedging both feed and energy costs as well as fresh meat sales.
•		Environmental Stewardship. We will continue to be a leader in the pork industry in researching, developing and implementing new waste handling and environmental technologies and solutions. Those technologies and solutions include source reduction, risk reduction, improved manure treatment, beneficial reuse of waste products (creating value-added products), energy generation and water reuse.

Our History

     The hog production business of Premium Standard Farms was originally founded in 1988. In 1994, we completed construction of our Missouri processing plant. Due primarily to start-up costs and the low level of initial production at that plant, as well as the rapid expansion of our Missouri and Texas operations, the corporation that previously ran our Missouri and Texas operations filed Chapter 11 bankruptcy on July 2, 1996. In September 1996, the reorganization became effective and our business emerged from Chapter 11. Premium Standard Farms in its current corporate form resulted from this restructuring.

     Since emerging from bankruptcy, we have expanded our business in two significant ways. On May 13, 1998, we expanded our Missouri operations in a series of transactions with ContiGroup Companies, Inc. (“ContiGroup,” formerly known as Continental Grain Company). In these transactions, ContiGroup purchased a 51.0% ownership interest in PSF Group Holdings for $182.3 million. In exchange, we purchased the North Missouri Farms hog production operations then owned by ContiGroup for $75.0 million. The financial data in this report relates to operations since the ContiGroup transaction in May, 1998.

     In fiscal 2001, we expanded our operations through two acquisitions in North Carolina. We acquired The Lundy Packing Company and its subsidiaries (“Lundy”), which consisted of hog production and pork processing operations, on August 25, 2000. On September 22, 2000, we acquired Premium Standard Farms of North Carolina (“PSFNC”) from ContiGroup. In the latter transaction, ContiGroup received cash and additional shares of PSF Group Holdings stock, bringing its overall ownership of PSF Group Holdings’ outstanding common stock to 53.1%.

     PSF Group Holdings is a Delaware company formed in 1998. Premium Standard Farms is a Delaware company formed in 1996. Our principal executive offices are located at 805 Pennsylvania Avenue, Suite 200, Kansas City, Missouri and our telephone number is (816) 472-7675.

Industry Overview

     Historically, the United States pork industry has been divided into two segments: pork processing and hog production. As a vertically integrated supplier of pork products, we operate in both industry segments.

Pork Processing

     The U.S. pork processing industry is highly concentrated, with the top ten processors representing approximately 89% of total federally inspected industry capacity, and the industry is highly competitive. Although customers in the retail, institutional, further processing 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. Due to the high degree of fragmentation of the hog

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production industry, processing operations are extremely large relative to the producers that supply them. As a result, non-integrated processors must acquire each day’s supply of hogs from a large number of suppliers, many of whom use varying genetics, feeding programs and growing environments. We believe that this dichotomy between the hog requirements of processors and the fragmentation and variation of hog production makes it relatively difficult for non-integrated pork processors to produce consistent, high quality products.

Hog Production

     The hog production industry, although consolidating, remains highly 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. In addition, the effects of temperature and climate on breeding and farrowing encourage hog producers to breed hogs in the spring and fall. This results in seasonal production, which may result in lower prices when these producers bring their hogs to market.

     According to the USDA, the number of U.S. hog producers has declined by more than 85% over the last twenty years. We believe that as the hog production industry moves to more sophisticated production techniques, the pressures on marginal producers will intensify. In the last several years, a number of operations have emerged which are based on large-scale, scientific and management-intensive production of hogs. These operations have grown rapidly. We expect that the hog production industry will see continued consolidation and integration in the future.

Products, Marketing and Customers

     We market our pork products to a variety of customers in wholesale, retail, food service and further processing in the U.S. and abroad. We focus on discriminating customers in these markets. We primarily market our products as chilled and frozen pork, sold:

•		To retailers, retail distributors and wholesalers in the form of chilled boxed bone-in and boneless loins, tenderloins, hams, picnics, butts, ribs, marinated, case-ready, bacon, smoked hams and sausage;
•		To further processors in the form of chilled bulk bone-in and boneless hams, picnics and butts, bellies, trimmings, variety meats and other products which are used by these customers to make processed pork products;
•		To food service customers in the form of chilled and frozen boxed bone-in and boneless loins, ribs, picnics, butts and further processed smoked meats; and
•		To export customers in the form of chilled boneless loins, tenderloins, frozen hams, shoulders, bellies, as well as frozen offal items.

     Our vertical integration and control also allows us to produce specialty products. These include our antibiotic free pork and Premium 97 pork (certified as 97% fat-free by the American Heart Association), as well as KenKo-Ton “healthy” pork and Mugi Buta “barley-fed” pork for the Japanese market.

     Our marketing strategy seeks to capitalize on the quality of the pork produced by our controlled supply of high-quality consistent hogs and modern processing operations allowing us to sell fresh and processed pork at prices that reflect a premium to those received by competitors selling lower quality products. Our pork processing facilities have been designed to enhance the realization of this quality by converting standard pork cuts to value-added products through boning, trimming and other further processing. Furthermore, we target specialty, export and ethnic markets, in which there is a higher demand for certain pork products. In order to take advantage of a differentiated product, we have been certified to use the USDA Process Verified seal in connection with our Missouri and North Carolina operations.

     Our international marketing efforts are directed toward a number of countries, but are predominantly focused on Japan, which ascribes significant value to our premium, process-controlled products. In fiscal 2004, our

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sales to Japanese customers represented about 5% of our total sales. We are using our success in Japan to explore other opportunities in the export markets in Asia, Europe, Mexico and Canada. Sales to international markets other than Japan accounted for approximately 3% of our total sales in fiscal 2004.

     Though our sales and marketing efforts are primarily focused on sales of pork products, we are to a lesser extent involved in the related markets for live hogs, processed meat products and pork by-products. The excess live hogs of our production facilities are sold to other pork processors. In this respect, we have long-term contracts with two major pork processors, who purchase substantially all of the hogs produced at our Texas facilities. The remainder of our excess hog production is sold in privately negotiated transactions. With respect to processed meats, our North Carolina plant includes further-processing facilities that produce products such as cured hams, bacon and sausage. Finally, all of our facilities sell the by-products of our processing activities to the variety meat, feed processing and pet food industries.

Production and Processing Operations

Overview

     Our production and processing operations are organized as three separate pods located in Missouri, Texas and North Carolina. Our Missouri and North Carolina pods each combine hog production farms and processing plants. Our Texas pod has only hog production operations. The geographic separation of our pods enhances biosecurity and puts us closer to our customers and feed grain suppliers, allowing us to minimize shipping costs. Shipping, via truck, is important in a number of aspects of hog production, particularly the delivery of feed to hog production units, the shipment of feeder pigs to finishing units, and the shipment of finished hogs to processing plants. To further reduce the risk of disease and maximize the scheduling and process coordination that our integrated approach provides, our pods incorporate transportation facilities served by our own truck fleet for hauling feed and hogs. Please read note 11 to our consolidated financial statements for financial information relating to our operating segments.

Hog Production

     Our sow production facilities house herds ranging from 1,100 to 3,300 sows per unit. On average, a staff of five people is required for 1,100 sows. A typical sow production unit consists of four connected buildings, each with a specialized function — breeding, gestation, farrowing and nursery.

     The production process begins in the breeding barn, where sows are artificially inseminated. Artificial insemination maximizes breeding efficiency and productivity and allows us to utilize genetic stock that maximizes our overall productivity and quality. After four weeks, conception is verified using ultrasound technology. From the breeding barn, sows are moved to the gestation barn where they are vaccinated and placed on a special diet. The gestation period is 114-days. During this period, the sows must receive adequate nutrition and careful attention to health and disease control in order to maximize the size and health of their litters. In our gestation buildings, sows are carefully monitored and individually fed according to body weight. A few days prior to delivery, sows are moved to the farrowing barn where they give birth to an average litter of approximately 10 offspring. Sows nurse their offspring for three weeks before they are returned to the breeding barn. At approximately 12 to 15 pounds, the offspring are moved to the nursery for a six-to-seven week period. This step requires high levels of nutrition, environmental control and minimization of disease and health risks. An increasing portion of our operations use the wean-to-finish production method where nursery pigs are transported directly to a modified grow/finish site, skipping the traditional time spent in a nursery.

     In the next phase of production, offspring are transferred from the nursery in our sanitized trailers to our grow/finish complexes or contract growers for growth from approximately 50 pounds to a target market weight of 260 pounds. Our grow/finish complexes are comprised of temperature-controlled barns, each housing 950 to 1,200 hogs. A manager in charge of the complex is responsible for monitoring hog welfare and health, as well as equipment. Efficiency in finishing operations is affected by the health and environment of the hogs and the formulation of the feed. These factors, as well as the genetics of the hog, can have a substantial impact on the feed-to-gain conversion ratio (the pounds of feed required to add a pound of weight) and the average daily gain. Specialized crews support the complex managers by assisting with loading and unloading hogs, health care, and

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sanitation. Hogs generally remain at the grow/finish complexes for 18 to 19 weeks, gaining an average of approximately 1.7 pounds per day, until they reach market weight and are transported to a processing facility.

     Because diet is a critical factor in the efficient production of hogs and affects the quality of the final products, where possible we have established our own feed mills. Our Missouri and Texas pods are located in areas with access to substantial corn and other feed grain production in excess of local demand. As a result, we can typically access feed grains on a cost-effective basis and manufacture and deliver feed to our facilities at a lower cost than we can buy it from commercial feed mills. In North Carolina, where we rely to some extent on commercial feed mills, we have established cost-effective toll milling arrangements with select mills. Due to excess milling capacity in North Carolina, we are generally able to purchase feed from these vendors on terms that help us remain a low cost producer. Our feed mills and toll milling arrangements allow us to optimize production of our customized diets to a greater degree than would typical arrangements with third-party feed mills, which operate on a cost plus basis and provide feeds for many types of customers and animals. We achieve this through “least cost” formulations based on available feed ingredients. For example, while corn is the primary ingredient in hog feed, a large number of other grains, proteins, fats and supplements may be added, and the content and mix of feed ingredients can be managed to improve nutrition, feed-to-gain ratios and meat quality. We have five company-owned feed mills in operation aggregating approximately 1.4 million tons of annual capacity.

Biosecurity

     We seek to reduce the risk of disease transmission through a number of methods, including geographic separation of, and restricted access to, production facilities, strict sanitation procedures, high health genetic stock and constant monitoring and response. All units are restricted access, “shower in/ shower out” facilities. If it is necessary for a manager or worker to enter a unit other than their designated unit, a mandatory 24 to 96-hour layover period is required. Feed purity and truck cleanliness are inspected and monitored. Operating procedures within the facilities are designed to stop the spread and lessen the viability of infection agents during all phases of the production process.

     The impact of disease is also controlled through the selection of healthy, disease-resistant sows and through breeding procedures that help pass along antibodies to the sow’s offspring. When disease is found, treatment is implemented to lessen its impact on the health-challenged hogs and to prevent its spread to other facilities.

Pork Processing

     We maintain pork processing facilities in Missouri and North Carolina. Ninety-nine percent of the hogs used in fiscal 2004 by our Missouri processing plant came from our Missouri and Texas hog production operations. During fiscal 2004, approximately 73% of hogs used by our North Carolina processing plant were supplied by our North Carolina hog production operations, with the remaining 27% supplied through contracts with independent producers. To ensure the safety and quality of our products, we use the USDA’s Hazard Analysis of Critical Control Points methodology to identify food safety hazards in our operations. This approach uses a team of technically trained individuals who are familiar with the processes to be evaluated. Each separate point in the process is identified and any hazards associated with them are assessed. Methods for monitoring the quality and safety of products as they move through these points are then developed and implemented.

     The quality management points listed below provide the basis for our Process Verified Program. In November of 1998, we became the first company in the pork industry to receive approval for this program from the USDA-Agricultural Marketing Service. This approval gave accreditation to the only program which extends from live animal production through processing. While other pork companies have since received approval of their own Process Verified programs, we believe ours is the most comprehensive, encompassing live animal production through processing.

     Process Verified is based on ISO-9000 requirements that are adapted for the livestock industry, and is administered by the USDA Agricultural Marketing Service, Livestock and Seed Division. We have designated six comprehensive process points throughout our process to represent our program. These quality management points are summarized as follows:

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•		Every order is traceable to source farms
•		Every phase of production is managed using a food safety based control system
•		Production and processing systems are designed to continuously assess the effect of farm and plant processes on meat quality traits, including extensive genetic research
•		Personnel are trained to handle all livestock according to proper animal handling guidelines
•		We are committed to environmental stewardship with the goal to protect the quality of the environment by evaluating and improving the waste management systems
•		All antibiotic free products are derived from market animals that have never received antibiotics through feed, water, or via injection

     Our automated processing operations have been designed to achieve the benefits of vertical integration that are not available to non-integrated hog producing or pork processing competitors. Some of these benefits are as follows:

•		We capture more value from our hogs through further processing rather than passing this value on to other processors
•		We streamline logistics, transportation and production schedules to enhance asset utilization and reduce our cost structure because of the proximity and integrated management of production and processing operations
•		We improve the realizable value of our hogs through our control over the key factors (genetics, nutrition and environment) that affect the leanness and meat quality of each hog
•		We believe we provide a higher level of quality and safety assurance to our customers because of our control of both production and processing

     We believe that by controlling our own high quality, consistent hog supply, we can be among the more efficient processors in the industry and produce a consistent high-quality product whose value will be recognized in the market.

     The design of our Missouri and North Carolina processing facilities reflect four key objectives:

•		Modern equipment and proven technology has been used to build two of the highest quality facilities in the industry
•		The facilities are designed to emphasize worker safety to ensure compliance with all regulations and to reduce worker injury and turnover
•		The facilities are designed to produce a product that is appealing to further processors and consumers and will be brandable. They employ identification and tracking technology to ensure quality control for the final pork product
•		The facilities are designed to reduce waste products and emissions and dispose of waste in accordance with applicable environmental standards

Missouri

     Our Missouri pod has both production and processing operations. The Missouri production operation, based at Princeton, employs approximately 1,200 people. An 111,000-sow herd produces approximately 2.1 million market hogs per year. Eighty-two sow units, five nursery units and ninety-one finishing units are located on farms

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in five counties in Northwest Missouri. We also have grower relationships with ContiGroup. See “Certain Relationships and Related Transactions.”

     The Missouri processing facility is located at Milan and employs approximately 1,000 people with the capacity to process 7,100 hogs daily (on an eight hour shift) or about 1.9 million hogs per year. To ensure the safety and quality of our products, the processing facility incorporates several innovative systems, including a carbon dioxide anesthetizing system, which we believe was the first carbon dioxide system of its kind in use in the United States. This facility also has a large hog holding area that provides at least four hours of rest to hogs upon arrival. The result is a less stressful environment for the hogs, which results in better meat quality.

North Carolina

     Our North Carolina pod has both production and processing operations. The North Carolina production operation, based at Clinton, employs approximately 300 people. A 68,000-sow herd produces approximately 1.3 million market hogs per year. Contractual arrangements for purchasing weaned pigs produce an additional 500,000 market hogs per year. There are nine sow units, three nursery units and four finishing units located on farms we own in various counties throughout the state. Most of the production operations in North Carolina are conducted on farms that are not owned by us. Instead, we have contract grower agreements with local farmers who provide the land, space and labor needed. These grower arrangements are managed by our hog production field supervisors. The hogs themselves are owned by us, are raised according to our specifications using our genetics, feed and supplies, and are delivered to our North Carolina processing facility. Since these arrangements allow us to control the process, from a hog’s initial genetic makeup to the pork product ultimately produced and shipped, we consider them to be a part of our integrated operations notwithstanding the fact that we do not own the farms themselves.

     The North Carolina processing facility is located at Clinton and employs approximately 1,200 people processing up to 10,000 hogs daily, depending on seasonality and market conditions, or up to 2.6 million hogs per year. Now that construction and renovation are complete at this facility, we believe the plant is one of the most advanced facilities of its kind. To obtain the estimated 700,000 hogs annually used by the facility that are not supplied by our production operations, we have established supply arrangements with several external hog suppliers who have agreed to follow our Process Verified requirements.

Texas

     Our Texas pod has only production operations. These operations are headquartered at Dalhart, Texas and employ approximately 300 people. A 33,000-sow herd is designed to produce approximately 600,000 market hogs per year. Twenty-three sow units, six nursery units and eight finishing units are located on farms in Dallam and Hartley counties. Substantially all the hogs produced are sold under two long-term contracts with major processors.

     In fiscal 2003, we completed the addition of a new 10,000 sow and wean-to-finish operation at our Texas facilities. Our Texas production facilities are located on approximately 54,000 acres with adequate space and all environmental and land use permits required for further expansion.

Research and Development

     We use an applied research strategy which allows rapid and early implementation of technologies in production, nutrition and processing. This effort is driven by our technical team, many of whom have advanced degrees in nutrition, meat science, and health assurance. This group also uses an extensive network of outside scientists and other contacts to enable us to use the latest technology.

     We constantly seek to improve the genetics of our production herds and to produce hogs that are the highest quality commercially available. Our female and male breeding stock are purchased from several of the world’s largest hog genetics firms, which employ extensive research efforts in molecular genetics, biosecurity, food safety and meat quality. We also have internal “multiplier” herds, which are continually improved through the purchase of enhanced genetics and provide an internal source of a majority of our sows at a substantially reduced cost, and with greater control.

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     We routinely evaluate alternate genotypes to validate and compare them to existing products. In addition, we conduct intense research trials to further develop existing genotypes to meet economic and customer demands for composition and quality. These arrangements enhance the quality of our genetics and diversify our genetic sources. We also incorporate careful computer-based monitoring of the breeding performance of all our breedstock to improve breeding patterns and remove sub-optimal parents from the herd. These operations are conducted at our Missouri, Texas and North Carolina genetic improvement facilities.

     We also have been a leader in the implementation of new technologies at our processing facilities. For example, we believe that we were the first U.S. company to introduce the use of European-designed carbon dioxide anesthesia systems in pork processing to reduce livestock agitation and increase meat quality. Today, both of our processing facilities employ this technology. Specially designed trucks and holding areas also enhance the welfare and handling of our hogs. In addition, we use extreme chilling technologies to improve product quality traits like color, texture and moisture retention.

     We also have spent approximately $13 million on improved technology to control wastewater, and to reduce air and odor emissions from our Missouri farms. We are committed to install improved wastewater, air and odor technology at all of our finisher farms in northern Missouri by 2010. Included in this commitment is the plan to build a fertilizer plant in northern Missouri that will convert solid waste into useable commercial grade fertilizer.

Competition

     The pork industry is highly competitive and we compete with many other pork processors and hog producers of varying sizes. Our products also compete with a large number of other protein sources, including beef, chicken, turkey and seafood. However, our principal competition comes from other large pork processors. We believe that the principal areas of competition in the pork industry are price, quality, product distribution and brand loyalty. Some of our competitors are larger, have correspondingly greater financial and other resources and enjoy wider recognition for their branded products.

Intellectual Property

     We hold several trademark and other intellectual property rights. For example, we have registered the names “Premium Farms,” “Natural Excellence,” “Premium Standard Farms,” “Premium Standard Certified,” “Fresh from the Farm Taste,” “Carolinian,” “Lundy’s,” “Tomahawk Farms,” “Signature Cuisine” and “Gold Banner” with the United States Patent and Trademark Office. We have also registered “Premium Standard Farms” in some of the foreign countries to which we sell our products. In addition to trademark protection, we attempt to protect our unregistered marks and other proprietary information under trade secret laws, employee and third-party non-disclosure agreements and other laws and methods of protection. We have been issued a patent with the United States Patent and Trademark Office for an animal waste management system designed for some of our production facilities.

Employees

     We have approximately 4,100 employees, of which approximately 2,100 are in processing, approximately 1,800 are in production and approximately 200 are in administration. None of our employees are subject to collective bargaining arrangements, although there can be no assurance that employees will not enter into such agreements in the future. We generally consider our employee relations to be good.

Regulation

     Various federal, state and local laws and regulations apply to our operations, particularly in the health and environmental areas administered by the Occupational Safety and Health Administration (OSHA), the USDA, the Food and Drug Administration (FDA), the federal Environmental Protection Agency (EPA) and corresponding state agencies such as the Missouri Department of Natural Resources (MDNR), the Texas Natural Resource Conservation Commission and the North Carolina Department of Environment and Natural Resources. We anticipate increased regulation by these agencies, including the USDA concerning food safety and the FDA regarding the use of medication in feed.

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     Current environmental regulations impose standards and limitations on, among other things, our waste treatment lagoons, water treatment facilities and new construction projects. Animal waste from our hog production facilities is anaerobically digested and the resulting fluids are then applied to surrounding farm land. This process uses lagoons in Missouri and North Carolina and a combination of digesters, lagoons, solid separators and aeration tanks in Texas.

     In North Carolina, the use of waste treatment lagoons and spray fields for the disposal of swine waste continues to be controversial. Certain areas of that state are prone to flooding, as well as exposed to hurricanes from time to time. Due in part to damage caused to waste lagoons by recent hurricanes, the state has extended a moratorium on construction of new hog lagoons and spray fields until 2007. It is anticipated that this moratorium will be extended until such time as more effective technologies are developed to protect the environment.

     On September 29, 2000, we voluntarily entered into an agreement with the Attorney General of North Carolina. Under this agreement, we committed to implement “Environmentally Superior Technologies” for the management of swine waste at our company-owned farms after an independent panel has determined that such technologies are both effective and economically feasible to construct and operate. “Environmentally Superior Technologies” are generally identified as waste treatment technologies that meet certain performance standards with respect to release of materials into the environment. In addition, under the agreement, we paid $2.5 million to a fund for the development of such technologies, for environmental enhancement activities and for the defrayal of costs incurred by the state related thereto. We have met all of our commitments to date under this agreement and continue to work closely with the state’s designated representative at North Carolina State University in the development of “Environmentally Superior Technologies.” See also “Legal Proceedings.”

     The Country of Origin Labeling (COOL) requirements became law pursuant to the Farm Security and Rural Investment Act of 2002, but implementation of the labeling requirements has been delayed. Due to our vertical integration, we do not anticipate any material compliance problems. The EPA has also issued its Concentrated Animal Feeding Operation (CAFO) effluent guideline rules in December 2002. Our facilities and related operating procedures meet or exceed most of the rules, and we do not anticipate any material problems complying with these rules.

     Based on information currently available, we believe that the cost of achieving and maintaining compliance with these health and environmental laws and regulations will not have a material adverse effect on our business or financial position. However, future events, such as changes in existing laws and regulations or enforcement policies, could give rise to additional compliance costs which could have a material adverse effect on our financial condition.

     In February 2002, the United States Senate initially passed a Farm Bill that included a provision (the “Johnson Amendment”) which would have prohibited meat packers, like us, from owning or controlling livestock intended for slaughter for more than fourteen days prior to slaughter. The United States House of Representatives passed a different version of the Farm Bill that did not contain any provision similar to the Johnson Amendment. A Conference Committee was convened for the Farm Bill, composed of members of both the House and the Senate. This Conference Committee rejected the Johnson Amendment and approved a uniform Farm Bill without that Amendment or any similar provision.

     If the Johnson Amendment had become law, it may have had a material adverse effect on our vertically integrated business. It may have caused us to consider a restructuring of our operations. We, along with industry groups, succeeded in educating lawmakers as to the adverse effects and unintended consequences of the Johnson Amendment, leading to its subsequent rejection by the Conference Committee. We and others in the industry will continue efforts to educate lawmakers, but the parties advocating passage of the Johnson Amendment continue to propose similar legislation. If a provision like the Johnson Amendment became law, it could have a material adverse effect on us.

     On December 23, 2003, a case of BSE (bovine spongiform encephalopathy) was confirmed in a dairy cow in the State of Washington. World markets reacted to this event and a number of nations banned the import of beef products from the U.S, pending further investigation and action by the U.S. beef industry. For the most part, these bans continue today and have caused a moderation of beef prices in the U.S. since the discovery. The U.S. Congress

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has reacted by considering potential legislation that includes banning “downer” livestock from the food chain, re-assessing country-of-origin labeling, mandatory animal identification and traceability requirements, and potential changes in the current practice of feeding animal by-products. It is uncertain what impact these events may have on the pork industry.

     Several states have enacted “corporate farming laws” that restrict the ability of corporations to engage in farming activities. Missouri is among these states, but Texas and North Carolina currently are not. Missouri’s corporate farming law in many cases bars corporations from owning agricultural land and engaging in farming activities. Our operations have been structured to comply with the Missouri corporate farming law and its existing exemptions. The Missouri laws, however, could be subject to challenge or amendment by Missouri governmental bodies in the future. Further, even with the exemptions, the corporate farming laws restrict our ability to expand beyond the counties in which we currently operate.

     At the time of ContiGroup’s acquisition of its interest in us in 1998, ContiGroup submitted the proposed ownership structure to the Office of the Attorney General of the State of Missouri for its review. At that time, the Office of the Attorney General indicated that it had no objection to our current structure under the corporate farming laws. There can be no assurance, however, that this position will be maintained in the future as our operations continue and develop.

Item 2. Properties

     (a) Hog Production.

     We have a combination of owned and leased hog production facilities which support approximately 212,000 sows and their respective offspring. As detailed below, there are three geographic areas where our pork production operations are located.

     The Missouri production operation has an 111,000-sow herd which produces approximately 2.1 million market hogs per year. The production facilities are located on approximately 45,000 acres and are supported by three owned feedmills with a combined annual capacity of 960,000 tons per year. Of these 45,000 acres, approximately 7,200 acres are owned by ContiGroup but the facilities located thereon are owned by us. See “Certain Relationships and Related Transactions.”

     The Texas production operation has a 33,000-sow herd which is designed to produce approximately 600,000 market hogs per year. The production facilities are located on approximately 54,000 acres and are supported by one owned feedmill with an annual capacity of 180,000 tons per year.

     The North Carolina production operation has a 68,000-sow herd which produces approximately 1.3 million market hogs per year. Most of the production operations in North Carolina are conducted on farms that are not owned by us. The hogs themselves, however, are owned by us. In addition, one nursing unit and one finishing unit involved in our North Carolina production operations are capital lease facilities. Our North Carolina production operations are supported by one owned feedmill with an annual capacity of 224,000 tons per year and through an arrangement with a large feedmill operator for the rest of our feed requirements.

     (b) Pork Processing.

     We own two pork processing facilities located in Missouri and North Carolina. Combined, these two facilities have the capacity to process approximately 4.5 million market hogs per year.

     The Missouri facility has a processing capacity of 7,100 market hogs per day and is one of the most modern and technically advanced facilities of its kind. Substantially all of the market hogs processed at this plant are produced by our Missouri pork production operation.

     In fiscal 2003, we completed a major renovation to our North Carolina processing facility which increased its processing capacity. The facility is now capable of processing up to 10,000 hogs daily, depending on seasonality and market conditions, and we believe it is now, along with our Missouri processing plant, one of the most advanced

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facilities of its kind in the United States. The majority of the market hogs processed at the facility are provided by our North Carolina pork production operations with the remainder being sourced from outside suppliers.

Item 3. Legal Proceedings

     In prior years we settled two citizens’ action suits which sought to enforce alleged violations of the Clean Air Act, Clean Water Act and CERCLA against us and ContiGroup Companies, Inc. (“ContiGroup”). The U.S. Environmental Protection Agency (the “E.P.A.”) had intervened in this action and filed a separate notice of violation against us under the Clean Air Act. This settlement, in the form of a consent decree (“EPA Consent Decree”), resolved all outstanding issues of ContiGroup and us with the citizens group and the E.P.A. In 1998, we engaged in a series of transactions with ContiGroup pursuant to which we purchased from ContiGroup its North Missouri Farms hog production operations and ContiGroup purchased a 51.0% ownership interest in us (the “1998 ContiGroup transaction”). To the extent that ContiGroup incurred any liability in this litigation, we assumed that liability pursuant to the terms of the 1998 ContiGroup transaction. The EPA Consent Decree, built upon the 1999 consent decree with the State of Missouri referenced below, requires us and ContiGroup to meet certain performance standards, such as a 50% reduction in nitrogen concentration of the effluent applied to area fields over a prescribed time period. The counsel for the citizen plaintiffs has submitted a petition for recovery of attorneys’ fees in connection with the lawsuits against both us and ContiGroup. On September 10, 2003, the Court issued an order denying the majority of fees sought by counsel for the citizen plaintiffs which order was appealed by plaintiff’s counsel in March, 2004. We have settled with the plaintiffs and have paid their counsel on the balance of the fees prior to March 27, 2004.

     In 1999, we settled a suit filed by the Attorney General of the State of Missouri against us and ContiGroup. As referenced above, we assumed ContiGroup’s liability in this action in connection with the 1998 ContiGroup transaction. The settlement required us and ContiGroup to enter into a consent judgment (“Missouri Consent Decree”) pursuant to which we were obligated to invest $25 million on or before May 19, 2004, for researching, installing and operating improved technology to control wastewater, air and odor emissions from our Missouri farms. All such investments were subject to the approval of a panel of independent university experts (“Expert Panel”). In June 2002, the State of Missouri filed a lawsuit against us seeking penalties and injunctive relief for additional alleged violations of air and water regulations. We settled in February, 2004 with the State, and paid an additional fine of $333,000 prior to March 27, 2004. The settlement also extends the implementation schedule under the Missouri Consent Decree from 2004 until 2010. In addition, and in lieu of the $25 million investment commitment and deadline referenced above, we have committed to install improved wastewater, air and odor technology at all of our finisher farms in northern Missouri, subject to the approval of the Expert Panel. We estimate we may spend approximately $31 million on this technology by the 2010 deadline.

     Two nuisance suits were filed against ContiGroup and us during the second quarter of fiscal year 2003 in the Circuit Court of Jackson County, Kansas City, Missouri (Steven Adwell, et al. vs. PSF, et al., and Michael Adwell, et al. vs. PSF, et al). Two additional nuisance lawsuits were filed in March of 2004 by the same attorney (Fred Torrey, et al. vs. PSF, et al., and, Doyle Bounds, et al. vs. PSF, et al). There are multiple plaintiffs in each suit, who claim to live near swine farms owned or under contract with us. Plaintiffs allege that odors from these farms interfered with the plaintiffs’ right to use and have quiet enjoyment of their respective properties. We have filed appropriate motions to strike in the Torrey case and will soon file an answer in the Bounds case. We believe we have good defenses to these actions and intend to vigorously defend these suits.

     On May 18, 2004 the same lawyer who filed the Adwell, Bounds and Torrey lawsuits has filed a class action lawsuit (Daniel Herrold, et al. and Others Similarly Situated v. ContiGroup Companies, Inc, Premium Standard Farms, Inc., and PSF Group Holdings, Inc.) in the Circuit Court of Jackson County, Kansas City, Missouri. The action seeks to create a class of plaintiffs living within 10 miles of our farms in Northern Missouri, including contract grower farms, who are alleged to have suffered interference with their right to use and have quiet enjoyment of their respective properties. On May 14, 2004 an action entitled Vernon Hanes et al. v. Premium Standard Farms, Inc. et al. was filed in Daviess County Circuit Court, Gallatin, Missouri, which contains several counts, but is primarily a nuisance action. We believe we have good defenses to these actions and intend to vigorously defend these suits.

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     In addition, we are involved from time to time in routine litigation incidental to our business. Although no assurance can be given as to the outcome or expense associated with any of these routine proceedings, we believe that none of such proceedings currently pending should, individually or in the aggregate, have a material adverse effect on our financial statements.

Item 4. Submission of Matters to a Vote of Security Holders

     No matter was submitted to a vote of security holders during the last quarter of the fiscal year covered by this report.

PART II

Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters

     (a) Market Information. There is no established public trading market for the common stock of PSF Group Holdings.

     (b) Holders. As of April 30, 2004, there were approximately 150 record holders of the Class A Common Stock of PSF Group Holdings and one record holder of the Class B Common Stock of PSF Group Holdings.

     (c) Dividends. PSF Group Holdings has not declared or paid any dividends on its common stock since its issuance. Our current credit facility and the Indenture related to our 9 1/4% Notes effectively limit our ability to declare and pay dividends to shareholders. For more detailed information on our current credit facility, the 9 1/4% Notes and the related Indenture, see “Management’s Discussion and Analysis of Financial Condition and Results of Operation – Liquidity and Capital Resources” and Notes to our Consolidated Financial Statements.

     (d) Securities Authorized for Issuance Under Equity Compensation Plans. The following table sets forth information regarding our equity compensation plans as of March 27, 2004:

For a description of our 1999 Equity Incentive Plan, see “Executive Compensation” below.

Item 6. Selected Financial Data

     The following table sets forth selected historical consolidated financial information for PSF Group Holdings for the fiscal years ended March 25, 2000, March 31, 2001, and March 30, 2002, which was derived from our consolidated financial statements, which have been audited by Arthur Andersen LLP, independent public accountants, which has ceased operations. The financial information presented for the fiscal years ended March 29, 2003 and March 27, 2004, was derived from our consolidated financial statements, which have been audited by Deloitte & Touche LLP, independent public accountants.

     The financial information presented for the years ended March 31, 2001, March 30, 2002, March 29, 2003, and March 27, 2004, reflect our acquisition of The Lundy Packing Company on August 25, 2000 and our acquisition of Premium Standard Farms of North Carolina, Inc. on September 22, 2000, both of which were accounted for in accordance with the purchase method of accounting. This data should be read in conjunction with “Management’s

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Discussion and Analysis of Financial Condition and Results of Operations” and the financial statements and the notes thereto.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

     The following discussion should be read in conjunction with the financial statements, including the notes thereto, and the other financial information appearing elsewhere in this report on Form 10-K.

Overview

     As a vertically integrated provider of pork products, we operate in both pork industry segments: hog production and pork processing. In fiscal 2001, we made two strategic acquisitions to strengthen our position in the food production industry. On August 25, 2000, we acquired The Lundy Packing Company (“Lundy”) and its affiliated companies, which owned a processing plant in North Carolina capable of processing 1.8 million hogs per year and owned approximately 41,000 sows. On September 22, 2000, we acquired, from ContiGroup, Premium Standard Farms of North Carolina (“PSFNC”), which owned approximately 24,000 sows. As a result of these acquisitions and further enhancements to our operations, we are the second largest owner of sows in North America, controlling over 255,000 sows, of which approximately 212,000 are owned, producing approximately 4.5 million hogs per year. We are also the sixth largest pork processor in the United States, with two plants capable of processing approximately 4.5 million hogs per year.

     In our fiscal year ending March 27, 2004, the USDA reported that the U.S. pork industry produced 20.2 billion pounds compared to 19.8 billion pounds for the same period the previous year. In spite of this increased supply, average lean hog prices were 24.5% higher for the period than in the comparable periods of the prior year. Also, the USDA pork cutout (the composite wholesale meat price of a market hog after processing) was 16.9% higher for the period as compared to the same period last year. Strong demand for pork products was the primary driver in these increased prices.

     Generally, our overall revenues follow market prices for wholesale pork and lean hog prices, while our costs are impacted by commodity grain prices, primarily corn and soybean meal. On March 26, 2004, the USDA issued a Hog and Pig report that indicated the likelihood of increased pork production in 2004. Despite this bearish report, continued strong demand has trended cash prices higher. Ongoing strength in hog prices is contingent on increased demand for pork products or a reduced supply of hogs in the future. In the April 21, 2004 cold storage report, the USDA reported that freezer stocks of pork were down 14% from the previous year, providing further

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evidence of strong demand for pork products in recent periods. On January 12, 2004, the USDA issued its Crop Production Annual Summary, downwardly revising the 2003/2004 crop carryout estimates for both corn and soybeans. This reduced supply estimate has resulted in an increase of the near-term prices of corn and soybean meal, the primary ingredients in our feed rations. Future prices on these ingredients will depend on adjusting demand for these products until the new crop harvest is available in the fall of 2004.

     We have been experiencing health issues in our Texas operations due to Porcine Reproductive and Respiratory Syndrome (PRRS), which is common in swine herds in the United States. PRRS has had a negative effect on reproduction in our Texas operations, which has decreased production volume and increased costs. We have had success in eliminating PRRS in some of our facilities through depopulation of the facility and repopulation with PRRS negative breeding stock, however, we implemented a depopulation/repopulation program in Texas in fiscal year 2004 without success. Our new plan is to operate a herd health program and production flow that stabilizes a PRRS positive herd and reduces the impact of PRRS in the system.

     On December 23, 2003, a case of BSE (bovine spongiform encephalopathy) was confirmed in a dairy cow in the State of Washington. It is uncertain what impact this may have on the U.S. pork industry.

     As an important part of our growth strategy, we evaluate on an ongoing basis potential industry-related acquisitions and joint ventures. Other than a joint venture in a small sow processing operation in early fiscal year 2004, we have not at the present time entered into any definitive agreements contemplating such acquisitions or joint ventures. Further, there can be no assurance as to whether or when any negotiations will ultimately culminate in definitive agreements or, if any definitive agreement is reached, whether any acquisition or joint venture will ultimately be consummated. To complete any acquisition or joint venture, we may use our revolving credit facility or other financing alternatives available at the time.

     Our fiscal year is the 52 or 53-week period, which ends on the last Saturday in March. Our financial statements include activity from the fiscal years ended March 27, 2004 (52 weeks), March 29, 2003 (52 weeks), and March 30, 2002 (52 weeks).

Net Sales

     Our net sales are generated from the sale of pork products to retailers, food service suppliers, further processors, export buyers, and to a lesser extent the sale of market hogs to other pork processors. In fiscal 2004, sales of pork products accounted for approximately 90% of our net sales, with the remaining 10% coming from sales of market hogs.

     Pork product sales are of primal cuts, such as hams, loins, bellies, butts, picnics and ribs, and to a lesser extent of other by-products. Primal products are also converted further into boneless items or, in our North Carolina operations, further processed into items such as smoked hams, cured hams, and sliced bacon. Our processing revenues are primarily driven by the operating rate of our facilities and the value that we extract from the hogs that we process. For our fiscal years ended March 27, 2004, March 29, 2003 and March 30, 2002, we processed 4.3 million, 4.1 million and 3.7 million hogs, respectively. Our Missouri processing plant is currently capable of processing 7,100 hogs per day and our North Carolina processing plant is currently capable of processing up to 10,000 hogs per day, depending on seasonality and market conditions. The value that we extract from hogs processed is primarily driven by pork prices, processing yields and to a lesser extent, by product mix, as premium products, boneless and further processed products generate higher prices and operating margins.

     Wholesale pork prices fluctuate seasonally and cyclically due to changes in supply and demand for pork. We believe that our vertical integration allows us to obtain higher prices for our products than our more commodity-driven competitors. See “Market Risk.”

     Historically, live hog prices have experienced cyclical and seasonal supply and demand fluctuations. Revenue from the sale of market hogs is driven by the number of hogs sold (in excess of what our processing facilities require), the average weight, and the current market price (including any quality premiums). Our excess market hogs are sold to third party processors.

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Cost of Goods Sold

     Our cost of goods sold is driven primarily by several key factors. For our pork processing operations, the main costs (excluding market hogs) are labor, packaging, utilities, and facility expenses. Given the high fixed costs required to build, maintain and operate a processing plant, unit costs are impacted somewhat by processing volumes. For fiscal 2004, the costs associated with our North Carolina pork processing facility reflected the fact that approximately 27% of the hogs processed at that facility were purchased at market price from independent local farmers under supply contracts. For our hog production operations, the main costs are feed, labor, utilities, and facility expenses which include maintenance, depreciation and contract grower fees. The costs associated with feed generally represent 50% to 60% of the total cost to raise a market hog depending on the price of corn and soybean meal, which constantly fluctuates. Increases in the price of these commodities result in increases in our feed costs, while decreases reduce our feed costs. The relative impact of price changes in these commodities varies based on the percentage that each makes up in our feed composition. See “Market Risk.” We are proactive in recognizing opportunities to improve our cost structure and strive to be one of the lowest cost producers in the industry.

Selling, General and Administrative Expenses

     Sales and marketing expenses consist primarily of salaries for company-employed sales people as well as trade promotions, advertising, commissions and other marketing costs. General and administrative costs consist primarily of general management, accounting, information technology and legal expenses.

Seasonality

     Our quarterly operating results are influenced by seasonal fluctuations in the price of our primary feed components, corn and soybean meal, and by seasonal fluctuations in wholesale pork prices. The prices we pay for our feed components are generally lowest in August, September and October, which corresponds with the corn and soybean harvests. Generally, the prices for these commodities will increase over the following months leading up to the next harvest due to the increased storage costs. As a result, our costs in the production side of our business tend to increase during this period.

     Live hog and wholesale pork prices are similarly affected by seasonal factors. It generally takes approximately 11 months from conception for a hog to reach market weight, and because sows are generally less productive in summer months as a result of seasonal conditions, there are generally fewer hogs available in the months of April, May and June. This decrease in supply of live hogs generally causes live hog and wholesale pork prices to be higher on average during these months, and our revenues tend to increase accordingly. Conversely, there are generally more hogs available in the months of October, November and December, which generally causes live hog and wholesale pork prices to be lower on average during these months and adversely affects our revenues.

Results of Operations

     The following table presents selected historical financial information for our production and processing segments for the fiscal years ended March 27, 2004, March 29, 2003 and March 30, 2002. Net sales, gross profit and operating income by segment are also presented as a percentage of their respective totals. The columns under year-to-year change show the dollar and percentage change from the respective years ended. Intersegment sales are based on market prices.

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Fiscal year Ended March 27, 2004 Compared to the Fiscal Year Ended March 29, 2003

Consolidated

Net Sales. Net sales increased by $122.3 million, or 20.1%, to $730.7 million in fiscal year 2004 from $608.4 million in fiscal year 2003. The increase was attributed to an increase of prices of $105.3 million, which includes a $3.9 million increase in gains recorded for lean hog futures contracts, combined with an increase in volume of $17.0 million. Overall, live hog and wholesale pork prices increased compared to the prior period despite an increase in pork produced compared to the prior year. Demand for pork products has been very high due to a decrease in production of competing proteins, the discovery of the first case of BSE in a cow in the United States, the Avian Influenza virus affecting the poultry industry, and by trends in diet among Americans in general. See Segment Analysis below for comments on changes in sales by business segment.

Gross Profit. Gross profit increased by $57.5 million to $34.0 million in fiscal year 2004 from a loss of $23.5 million in fiscal year 2003. As a percentage of net sales, gross profit increased to 4.7% from (3.9)%. This increase was due to the increase in sales prices mentioned above offset with a 7.3% increase in costs to produce our products. See Segment Analysis below for comments on changes in gross profit by business segment.

Selling, General and Administrative Expenses. Selling, general and administrative expenses decreased as a percentage of net sales to 2.4% in fiscal year 2004 from 3.0% in fiscal year 2003. In dollar terms, selling, general and administrative expenses decreased by $0.9 million, or 4.9%, to $17.4 million in fiscal year 2004 from $18.3 million in fiscal year 2003.

Operating Income (Loss). Operating income increased by $56.6 million to $17.2 million in fiscal year 2004 from an operating loss of $(39.4) million in fiscal year 2003. The increase was attributable to the factors mentioned above.

Interest Expense, net. Interest expense, net, increased by $1.0 million, or 4.0%, to $24.7 million in fiscal year 2004 from $23.7 million in fiscal year 2003. The increase was attributed to an increase in total interest-bearing debt outstanding and increased amortization of deferred financing costs which are charged to interest expense related to recent bank credit amendments, offset slightly by lower interest rates on our variable rate debt. See Liquidity and Capital Resources below for more information.

Income Tax Expense. Our effective tax rate was 38.9% in the fiscal years 2004 and 2003.

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Segment Analysis

Hog Production. Net sales increased by $96.4 million, or 27.0%, to $453.6 million in fiscal year 2004 from $357.2 million in fiscal year 2003. The increase primarily resulted from a 22.9% increase in market hog sales prices, combined with a 2.4% increase in volume attributable primarily to the effects of increased contract production in North Carolina. As mentioned above, gains recorded for lean hog futures contracts had a $3.9 million positive impact on the change in net sales. Intersegment sales to our pork processing segment transferred at market prices are eliminated in the Consolidated Statements of Operations and Comprehensive (Loss) Income.

     Gross profit increased by $59.1 million to a loss of $4.2 million in fiscal year 2004 from a loss of $63.3 million in fiscal year 2003. The increase was primarily the result of a higher volume of hogs produced and higher market hog sales price mentioned above. Hog production costs per hundredweight were 6.1% higher during fiscal year 2004 compared to fiscal year 2003. The majority of the increase in hog production costs was due to higher feed input costs compared to the same period last year and, to a lesser extent, production deficiencies in Texas due to the impact of health issues.

     Operating income increased by $58.9 million to an operating loss of $4.2 million fiscal year 2004 from an operating loss of $63.1 million in fiscal year 2003. The increase is attributed to the factors mentioned above.

Pork Processing. Net sales increased $110.0 million, or 19.9%, to $663.5 million in fiscal year 2004 from $553.5 million in fiscal year 2003. The increase resulted from a 14.0% increase in pork product sales prices, combined with a 5.1% increase in volume processed compared to the same period last year. The increase in volume was primarily attributable to increased capacity utilization at the Clinton processing plant.

     Gross profit decreased by $1.6 million to $38.2 million in fiscal year 2004 from $39.8 million in fiscal year 2003. The decrease primarily resulted from lower margins on pork products resulting from 21.7% higher market hog costs from internal transfers and external purchases, offset with higher volume through the plants. Freight costs increased by $4.1 million, or 15.5%, as a result of higher volume shipped and higher charges incurred to transport the product. Processing costs on a per unit basis were comparable for fiscal years 2004 and 2003.

     Operating income increased by $0.3 million to $34.7 million in fiscal year 2004 from $34.4 million in fiscal year 2003. The increase was attributed to the factors mentioned above.

Fiscal year Ended March 29, 2003 Compared to the Fiscal Year Ended March 30, 2002

Consolidated

Net Sales. Net sales decreased by $66.6 million, or 9.9%, to $608.4 million in fiscal year 2003 from $675.0 million in fiscal year 2002. The decrease was attributed to a decrease of prices of $91.6 million, which includes a $9.7 million increase in gains recorded for lean hog futures contracts, which was offset by an increase in volume of $25.0 million. Wholesale pork prices were severely impacted by several factors, including, an increased supply of pork industry wide, compounded by an increased supply of all meat proteins. Much of the increase in meat proteins was attributed to the Russian ban on poultry imports from the United States, which was lifted in fiscal year 2003, but was subject to ongoing negotiations regarding import requirements. Although the ban has been lifted, the effects of it as well as the increase in pork production industry-wide for the year continued to have a negative impact on market hog and wholesale pork prices during fiscal year 2003. See Segment Analysis below for comments on changes in sales by business segment.

Gross Profit. Gross profit decreased by $109.3 million, or 127.4%, to a loss of $23.5 million in fiscal year 2003 from a profit of $85.8 million in fiscal year 2002. As a percentage of net sales, gross profit decreased to (3.9)% from 12.7%. This decrease was due to the decrease in sales prices mentioned above coupled with a 3.4% increase in costs to produce our products. See Segment Analysis below for comments on changes in gross profit by business segment.

Selling, General and Administrative Expenses. Selling, general and administrative expenses decreased as a percentage of net sales to 3.0% in fiscal year 2003 from 3.2% in fiscal year 2002. In dollar terms, selling, general

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and administrative expenses decreased by $3.2 million, or 14.9%, to $18.3 million in fiscal year 2003 from $21.5 million in fiscal year 2002. The majority of the decrease was attributable to decreased bonus and long-term incentive plan accruals for fiscal year 2003.

Operating (Loss) Income. Operating income decreased by $104.2 million, or 160.8%, to an operating loss of $39.4 million in fiscal year 2003 from an operating income of $64.8 million in fiscal year 2002. The decrease was attributable to the factors mentioned above.

Interest Expense, net. Interest expense, net, increased by $3.3 million, or 16.2%, to $23.7 million in fiscal year 2003 from $20.4 million in fiscal year 2002. The increase was attributed to an increase in total interest-bearing debt outstanding and increased amortization of deferred financing costs which are charged to interest expense related to recent bank credit amendments, offset slightly by lower interest rates on our variable rate debt. See Liquidity and Capital Resources below for more information.

Income Tax Expense. Our effective tax rate was 38.9% in the fiscal year 2003 compared to an effective rate of 39.9% in fiscal year 2002. The difference was primarily attributable to the utilization of state income tax credits.

Segment Analysis

Hog Production. Net sales decreased by $83.6 million, or 19.0%, to $357.2 million in fiscal year 2003 from $440.8 million in fiscal year 2002. The decrease primarily resulted from a 22.0% decrease in net market hog sales prices, partially offset by a 3.9% increase in volume attributable to the effects of our Texas sow herd expansion and additional contract production. As mentioned above, gains recorded for lean hog futures contracts had a $9.7 million positive impact on the change in net sales. Intersegment sales to our pork processing segment transferred at market prices are eliminated in the Consolidated Statements of Operations and Comprehensive (Loss) Income.

     Gross profit decreased by $123.1 million, or 205.9%, to a loss of $63.3 million in fiscal year 2003 from a gross profit of $59.8 million in fiscal year 2002. The decrease was a combination of the decrease in net market hog sales prices mentioned above, coupled with an increase in costs of $39.5 million, $14.7 million of which related to increased volume and $24.8 million of which related to increased costs. Overall, hog production costs were 6.2% higher on a per hundred weight basis in fiscal year 2003 compared to fiscal year 2002, with the majority of the increase caused by higher feed costs, lower values on culled animals and a lower weight per animal marketed.

     Operating income decreased by $122.6 million, or 206.1%, to an operating loss of $63.1 million fiscal year 2003 from an operating income of $59.5 million in fiscal year 2002. The decrease was attributed to the factors mentioned above.

Pork Processing. Net sales decreased $43.8 million, or 7.3%, to $553.5 million in fiscal year 2003 from $597.3 million in fiscal year 2002. The decrease resulted from a 16.2% decrease in pork product sales prices, partially offset by an 11.1% increase in volume processed compared to the same period last year. The increase in volume was primarily attributable to the expansion at the North Carolina plant completed in late fiscal year 2002, which increased capacity from 6,500 hogs per day to 10,000 hogs per day.

     Gross profit increased by $13.8 million, or 53.1%, to $39.8 million in fiscal year 2003 from $26.0 million in fiscal year 2002. The increase primarily resulted from higher margins on pork products due to lower market hog prices coupled with higher volume through the plants. Processing costs increased 1.2% during fiscal year 2003 compared to fiscal year 2002, primarily the result of increased depreciation expense related to the North Carolina processing plant expansion and added emphasis on higher cost value-added products.

     Operating income increased by $11.4 million, or 49.6%, to $34.4 million in fiscal year 2003 from $23.0 million in fiscal year 2002. The increase was attributed to the factors mentioned above.

Liquidity and Capital Resources

     Our primary source of financing has been cash flow from operations and bank borrowings. Our ongoing operations will require the availability of funds to service debt, fund working capital and make capital expenditures

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on our facilities. We expect to finance these activities through cash flow from operations and from amounts available under our revolving credit facility.

     Net cash flow provided by and (used in) operating activities was $41.7 million, ($17.4) million and $80.5 million in fiscal years 2004, 2003 and 2002, respectively. The increase in fiscal year 2004 was attributed to a decrease in net loss over fiscal year 2003, the change in deferred taxes and a decrease in working capital requirements partially offset by an increase in non-cash gains on the sales of fixed assets.

     Net cash flow used in investing activities was $23.5 million, $25.9 million and $81.3 million in fiscal years 2004, 2003 and 2002, respectively. In fiscal year 2004, net cash used in investing activities was spent as follows:

•

Approximately $10 million was spent for continuing improvements of our pork processing facilities;

•

Approximately $5 million was spent for continuing improvements of our hog production facilities, and investments to develop and implement new technologies for improved waste handling; and

•

The remainder was spent for purchases of breedstock.

     In fiscal year 2004, 2003 and 2002, we received proceeds from disposal of property, plant, equipment and breeding stock of $18.4 million, $11.7 million and $14.9 million, respectively. During fiscal years 2004, 2003 and 2002, disposal of property, plant, equipment and breeding stock consisted primarily of culled breeding stock.

     Net cash flow (used in) and provided by financing activities was ($18.2) million, $36.1 million and ($0.6) million in fiscal years 2004, 2003 and 2002, respectively. During fiscal year 2004, excess cash generated was used to pay down outstanding debt. During fiscal year 2003, we borrowed money to fund working capital needs and capital expenditures. In the first quarter of fiscal year 2002, Premium Standard Farms issued $175 million of 9-1/4% senior unsecured notes due 2011 (“9-1/4% Notes”), which were used to retire $137.9 million of 11% senior secured payment-in-kind notes (“PIK Notes”) on July 7, 2001. An associated 1% prepayment penalty on these PIK Notes was also paid on July 7, 2001. With the remaining proceeds, we also prepaid $25 million of bank term debt, made a $6.3 million quarterly payment on bank term debt and paid down $4.0 million on our revolving credit facility. The 9-1/4% Notes contain customary covenants and are redeemable by Premium Standard Farms under certain circumstances.

     Borrowings for working capital needs were provided under a credit agreement that provided for up to $150 million of revolving credit (with actual credit limit determined monthly by reference to a borrowing base formula), including up to $15 million of letters of credit, and a term loan facility with $43.8 million outstanding at March 27, 2004.

     On April 9, 2004, we entered into an amended and restated loan and security agreement (Credit Agreement) with our bank group. The Credit Agreement is a $175 million revolving line of credit. The balance of the previous line of credit as well as the outstanding term debt at the date of closing, became the opening balance outstanding under the Credit Agreement. Obligations under the Credit Agreement are secured by liens on substantially all of our assets. In addition to customary financial covenants, the Credit Agreement contains restrictions on, among other things, encumbrance or disposal of assets, acquisitions, additional indebtedness, capital investment, payment of subordinated debt and payment of dividends. In addition to fees payable under credit facilities of this type, amounts borrowed under the Credit Agreement bear interest at fluctuating rates selected by us. These rates are based on the agent bank’s prime rate (the Federal Funds Rate plus one half of one percent) or LIBOR plus, in each case, an applicable margin, currently ranging from 1.5% and 2.875%, respectively, determined by our leverage ratio. All borrowings under the revolving credit facility mature on April 9, 2009. The entire amount of debt under the Credit Agreement has been classified as long-term on the consolidated balance sheets as of March 27, 2004.

     Total indebtedness at March 27, 2004 was $287.1 million, as compared to $305.2 million at March 29, 2003. At March 27, 2004, we had $65.0 million outstanding under our revolving credit facility, $11.2 million in letters of credit and $73.8 million available for borrowing under our revolving credit facility.

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     In fiscal 2005, we expect to spend approximately $28 million on net capital expenditures, as follows:

•

Approximately $6 million in upgrades and improvements in our processing operations;

•

Approximately $14 million in upgrades and improvements in our production operations, and investments to develop and implement new technologies for improved waste handling; and

•

Approximately $8 million in net breedstock purchases.

     We believe that available borrowings under our credit facility, available cash and internally generated funds will be sufficient to support our working capital, capital expenditures and debt service requirements for the foreseeable future. Our ability to generate cash, however, is subject to a certain extent to general economic, financial, competitive, legislative, regulatory and other factors beyond our control. We cannot assure you that our business will generate sufficient cash flow from operations or that future borrowings will be available under our revolving credit facility in an amount sufficient to enable us to pay our indebtedness, including the 9-1/4% Notes, or to fund our other liquidity needs. If we consummate any material acquisitions or expand our operations, we may need to seek additional sources of funding, which might potentially come from the issuance of additional equity, debt or the pursuit of joint ventures to the extent that such options are available.

     The following table represents a summary of our contractual cash obligations as of March 27, 2004.

     (1) Includes only forward grain purchase contracts

Amounts not included in above table

     Most of our hog production is raised in company-owned facilities. Some of the production, however, is raised under farrowing, nursery, or finishing contracts with individual farmers. In these relationships, we typically own the livestock and provide the necessary feed, genetics, and veterinary supplies, while the contract producer provides the land, facilities, labor, utilities, and other costs of production. These contracts vary from terms of less than one year to up to twelve years. Payments under these agreements are included in cost of goods sold. These payments represented approximately 11 percent of our hog production segment’s cost of goods sold for fiscal year 2004. All of these contracts are cancelable by us if the producer fails to perform to an acceptable level.

     At our North Carolina pork processing facility, we have contracts with producers to provide us with market hogs for the amount we don’t produce at our hog production facilities in order to meet our processing needs. These contracts vary in length but are all based on a market price and grade and yield formula. Over the next 5 years we are contracted to purchase approximately 1,730,000 market hogs under these contracts.

     Under the 2004 Missouri Consent Decree with the Attorney General and the amended 2002 Federal Consent Decree with the United States EPA we estimate we may spend approximately $31 million on additional

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investments in environmental research, development, and implementation, based on known technology, on or before July 31, 2010. We are committed to install improved wastewater, air and odor technology at all of our finisher farms in northern Missouri by 2010. Included in this commitment is the plan to build a fertilizer plant in northern Missouri that will convert solid waste into useable commercial grade fertilizer.

Critical Accounting Policies

     In preparing the consolidated financial statements in accordance with generally accepted accounting principles, we are required to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosures at the date of the consolidated financial statements and during the reporting period. Actual results may differ from those estimates due to the complexity and subjectivity of those estimates. Management has identified the accounting policies it believes to be the most important as inventory valuation of livestock, estimated liabilities, accounting for derivative instruments, estimated useful lives of property, plant, equipment and breeding stock, and impairment of long-lived assets.

     Inventory valuation of livestock is calculated based on a standard cost model for each geographic hog production region. This model is based on the current year’s budgeted costs and inventory projections at each age and phase of the production cycle, adjusted to actual costs and reduced to the lower of actual cost or market when required. Management believes this method for valuing livestock most accurately represents actual inventory costs.

     Estimated liabilities, such as self-insured workers’ compensation and health insurance, bonuses, and legal obligations are based on information received from third parties and management estimates. These obligations are provided for when the loss is probable and the amount is reasonably estimable. Actual costs may vary from estimates we made. Management believes the estimates are reasonable based on current information.

     Derivative instruments are accounted for in accordance with Financial Standards Board Statement No. 133 (SFAS 133), “Accounting for Derivative Instruments and Hedging Activities.” Because of the complexity involved in qualifying for hedge treatment for our commodity contracts, we mark these exchange-traded contracts to market with the resulting gain or loss recorded in sales for lean hog contracts or cost of sales for all other commodity contracts. This may result in large fluctuations in our earnings depending on the volume of commodity contracts and their corresponding volatility.

     Property, plant, equipment and breeding stock are depreciated on a straight-line basis over the estimated useful lives of the assets. The useful lives of the assets are based upon management’s expectations. We periodically review the assets for changes in circumstances which may impact their useful lives.

     Impairment of long-lived assets is periodically reviewed using historical cash flows as well as current estimates of future cash flows and/or appraisals. This assessment process requires the use of estimates and assumptions which are subject to a significant degree of judgment. In addition, we periodically assess the recoverability of goodwill and other intangible assets, which requires us to make assumptions regarding the future cash flows and other factors to determine the fair value of the assets. If these assumptions change in the future, we may be required to record impairment charges for these assets.

Market Risk

     Our operating results are influenced by fluctuations in the price of our primary feed components, corn and soybean meal, and by fluctuations in market hog and wholesale pork sales prices. The cost and supply of feed components and market hog and wholesale pork sales prices are determined by constantly changing market forces of supply and demand, which are driven by matters over which we have no control, including weather, current and projected worldwide grain stocks and prices, grain export prices and supports, hog production and governmental agricultural policies. In our hog production segment we use forward contracts, as well as futures and options contracts, to establish adequate supplies of future grain requirements, to secure margins and to reduce the risk of market fluctuations. To secure margins and minimize earnings volatility in our pork processing segment, we utilize lean hog futures to hedge future pork product sales. While this may tend to limit our ability to participate in gains from favorable commodity price fluctuation, it also tends to minimize earnings volatility and secure future margins.

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For the fiscal years ended March 27, 2004, and March 29, 2003 we recognized income under SFAS 133 of $5.3 million and $1.4 million, respectively, in net sales for gains related to lean hog futures and gains of $6.1 million and losses of $0.9 million, respectively, in costs of goods sold relating to the hedging of feed components. For open futures contracts, we use a sensitivity analysis technique to evaluate the effect that changes in the market value of commodities will have on these commodity derivative instruments. As of March 27, 2004, the potential change in fair value of exchange-traded contracts, assuming a 10% change in the underlying commodity price, was $4.2 million.

     We are exposed to changes in interest rates. Our revolving credit facility has variable interest rates. Interest rate changes therefore generally do not affect the market value of such debt but do impact the amount of our interest payments and, therefore, our future earnings and cash flows. Assuming other factors are held constant, a 1% change in interest rates would have an approximately $0.9 million impact on interest expense. Conversely, for fixed rate debt, interest rate changes do not impact future cash flows and earnings, but do impact the fair market value of such debt, assuming other factors are held constant. During the fiscal year ended March 30, 2002, we entered into an interest rate swap agreement to convert a portion of the variable base interest rate of our bank debt to a fixed rate of 3.0125% plus the agent bank’s applicable margin (currently 2.875% at March 27, 2004). The swap is accounted for as a cash flow hedge under SFAS 133. During fiscal 2004, we recognized a $0.3 million gain, net of tax, into Accumulated Other Comprehensive Loss for the change in the market value of the swap.

     The 9-¼% Notes had a fair value of approximately $176.8 million as of March 27, 2004 based on inter-dealer prices, as compared to the book value of $175.0 million as of March 27, 2004.

Forward-Looking Statements

     This report on Form 10-K contains “forward-looking statements” within the meaning of Section 17A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. When used in this report, the words “anticipates,” “believes,” “expects,” “intends,” “may,” “will” and similar expressions identify such forward-looking statements. Although we believe that such statements are based on reasonable assumptions, these forward-looking statements are subject to numerous factors, risks and uncertainties that could cause actual outcomes and results to be materially different from those projected. These factors, risks and uncertainties include, among others, the following:

•

economic conditions generally and in our principal markets;

•

competitive practices in the pork production and processing industries;

•

the impact of consolidation in the pork production and processing industries;

•

the impact of current and future laws, governmental regulations and fiscal policies affecting our industry and operations, including environmental laws and regulations, food safety, trade embargoes and tariffs;

•

domestic and international transportation disruptions;

•

food safety;

•

the availability of additional capital to fund future commitments and expansion and the cost and terms of financing;

•

outbreaks of disease in our herds;

•

feed ingredient costs;

•

fluctuations in live hog prices and the price of pork products;

•

customer demands and preferences; and

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•

the occurrence of natural disasters and other occurrences beyond our control.

     Our actual results, performance or achievements could differ materially from those expressed in, or implied by, the forward-looking statements. We can give no assurances that any of the events anticipated by the forward-looking statements will occur or, if any of them do, what impact they will have on our results of operations and financial condition. Please review our Registration Statement on Form S-4 filed on August 10, 2001 for other important factors that could cause results to differ materially from those in any such forward-looking statements. Information in these archived materials may not be current and may be superceded by more recent information published by us.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

     The information required by this item is incorporated by reference to the section entitled “Market Risk” in Item 7 to this Annual Report on Form 10-K.

Item 8. Financial Statements and Supplementary Data

     Our consolidated financial statements are filed under this Item, beginning on page F-1 of this Report. Our financial statement schedule is filed under “Exhibits, Financial Statements Schedules and Reports on Form 8-K.”

     Selected quarterly financial data required under this Item is included in Note 12 to the consolidated financial statements.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

     On May 31, 2002, our Board of Directors appointed Deloitte & Touche LLP as our independent public accountants. For additional information, refer to our current report on Form 8-K, filed on June 3, 2002.

Item 9A. Controls & Procedures

     As of the end of the period covered by this report, we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures under the supervision and with the participation of the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”). Based on this evaluation, our management, including the CEO and CFO, concluded that our disclosure controls and procedures were effective. There have been no significant changes in our internal controls or in other factors that could significantly affect internal controls subsequent to the date of their evaluation.

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PART III

Item 10. Directors and Executive Officers of Registrant

     The following table sets forth certain information concerning the directors and executive officers of PSF Group Holdings and Premium Standard Farms:

     John M. Meyer has been a Director and the Chief Executive Officer of PSF Group Holdings and Premium Standard Farms since May 1998. Prior to May 1998, he spent 15 years with ContiGroup Companies, most recently as Vice President and General Manager of ContiGroup’s pork division. While with ContiGroup, Mr. Meyer served in the sales, credit and financial services functions.

     Robert W. Manly has been President of Premium Standard Farms since October 1996. He has been President of PSF Group Holdings since May 1998. From April 1986 to October 1996, Mr. Manly served as Executive Vice President of Smithfield Foods, Inc. He also served as President and Chief Operating Officer of the Smithfield Packing Company subsidiary from June 1994 to June 1995. Mr. Manly held the position of Assistant to the President of IBP, Inc. from January 1981 to April 1986.

     Stephen A. Lightstone has been Executive Vice President, Chief Financial Officer and Treasurer of PSF Group Holdings and Premium Standard Farms since August 1998. From 1983 to 1998, Mr. Lightstone was with Payless Cashways, Inc., a building materials retailer, most recently serving as Senior Vice President, Chief Financial Officer and Treasurer.

     Gerard J. Schulte has been General Counsel and Secretary of PSF Group Holdings and Premium Standard Farms since July 1998. Mr. Schulte has been Vice President and Assistant General Counsel of ContiGroup Companies since February 2001 and previously served as Vice President and General Counsel of ContiIndustries, an operating group of ContiGroup Companies, since 1990.

     Dennis D. Rippe has been Vice President, Controller and Assistant Secretary of Premium Standard Farms since January 1999. Prior to that date, Mr. Rippe had been Vice President Finance and Administration-Operations (Missouri) of Premium Standard Farms since February 1997.

     Michael J. Zimmerman has been Chairman of the Board of Directors of PSF Group Holdings and Premium Standard Farms since May 1998. Mr. Zimmerman has been Executive Vice President and Chief Financial Officer of ContiGroup Companies since 1999. From 1996 to 1999, he served as Senior Vice President — Investments and Strategy of ContiGroup Companies and President of its ContiInvestments subsidiary. Prior to joining ContiGroup in 1996, he was a Managing Director of Salomon Brothers.

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     Ronald E. Justice has been a Director of Premium Standard Farms since September 1996. He has been a Director of PSF Group Holdings since May 1998. Mr. Justice has been an Adjunct Professor in Business Studies at Brookhaven College since April 2001. He served as Executive Vice President of Operations of Consolidated Container Company from September 1998 to April 2000. Mr. Justice was the Senior Vice President of Operations of Scotts Co. from July 1995 to September 1998.

     Dean Mefford has been a Director of Premium Standard Farms since September 1996. He has been a Director of PSF Group Holdings since May 1998. From January 1999 to February 2001, he served as Chairman of the Board of Doubletime Corporation and from October 1999 to May 2000 he served as the Interim President of Ocean Spray Corp. Mr. Mefford served as President and Chief Executive Officer of Viskase Corporation, a manufacturer of flexible packaging and meat casings, from 1994 to 1998.

     Maurice L. McGill has been a Director of Premium Standard Farms since September 1996. He has been a Director of PSF Group Holdings since May 1998. Mr. McGill has served as the President of Wirmac Corp. since 1986 and as a general partner of McGill Partners since 1989.

     Michael A. Petrick has been a Director of PSF Group Holdings and Premium Standard Farms since May 1998. He is a Managing Director of Morgan Stanley & Co. Incorporated, and has been with Morgan Stanley since 1989. Mr. Petrick also serves as a Director of Sunbeam Corporation, DigitalGlobe Inc, V2 Music and TVN Entertainment Corporation.

     Paul J. Fribourg has been a Director of PSF Group Holdings and Premium Standard Farms since May 1998. He has served as Chairman, President and Chief Executive Officer of ContiGroup Companies since 1999. From 1997 to 1999, he served as Chairman, President and Chief Executive Officer of Continental Grain and, from 1996 to 1997, he served as Chief Operating Officer of Continental Grain.

     Vart K. Adjemian has been a Director of PSF Group Holdings and Premium Standard Farms since September 1999. Mr. Adjemian has been Executive Vice President and Chief Operating Officer of ContiGroup Companies since February 2001. From 1999 to February 2001 he served as Executive Vice President of ContiGroup and as Chief Executive Officer of the ContiIndustries, an operating group of ContiGroup Companies. From 1998 to 1999, he was Senior Vice President of ContiGroup Companies, and from 1996 to 1998, he was President of the Commodity Marketing Group of ContiGroup Companies.

Committees of the Board of Directors

     The Board of Directors of PSF Group Holdings has not established any committees. The Board of Directors of Premium Standard Farms has established two committees: a Compensation Committee and an Audit Committee. Each such committee has three or more members, who serve at the pleasure of the Board of Directors.

     The Compensation Committee is responsible for reviewing and making recommendations to the Board of Directors with respect to compensation of executive officers, other compensation matters and awards under the Equity Incentive Plan. Currently, Messrs. Zimmerman, Fribourg and Mefford serve on the Compensation Committee. Mr. Zimmerman is chairman of the committee.

     The Audit Committee is responsible for reviewing our financial statements, audit reports, internal financial controls and the services performed by Premium Standard Farms’ independent public accountants, and for making recommendations with respect to those matters to the Board of Directors. Currently, Messrs. McGill, Adjemian and Justice serve on the Audit Committee. The board has determined that Mr. McGill, the current chairman of the committee, qualifies as an “audit committee financial expert” within the meaning of the regulations of the SEC.

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Terms of Directors and Officers

     Directors of Premium Standard Farms are elected annually by PSF Group Holdings, as sole stockholder, to hold office for one-year terms and until their successors are duly elected and qualified.

     The officers of PSF Group Holdings and Premium Standard Farms are appointed by the respective Boards of Directors and serve at the pleasure of such Boards.

     Directors of PSF Group Holdings are nominated and placed for election at the annual meeting of stockholders to hold office for a one-year term and until their successors are duly elected and qualified. There are two classes of Directors. Four Class A Directors are elected by holders of Class A Common Stock voting as a separate class. Messrs. Justice, McGill, Mefford and Petrick are the current Class A Directors. Five Class B Directors are elected by holders of Class B Common Stock voting as a separate class. Messrs. Fribourg, Meyer, Adjemian and Zimmerman are the current Class B Directors, with one vacancy currently unfilled among the Class B Directors.

Code of Ethics

     PSF Group Holdings and Premium Standard Farms each have adopted a code of professional ethics for it Chief Executive Officer, Chief Financial Officer, Controller, Director of Corporate Accounting and Finance, and other employees of the finance organization. A copy of this code of professional ethics is attached as Exhibit 14.1 to this Report on Form 10-K.

Item 11. Executive Compensation

Compensation of Directors

     Premium Standard Farms has agreed to pay each person who is a member of its Board of Directors $1,000 per meeting, plus reimbursement of reasonable out-of-pocket expenses incurred in connection with the performance of duties as a Director. In addition, each director who is not affiliated with ContiGroup Companies or Morgan Stanley receives $20,000 per year in exchange for his or her services. Members of the Audit and Compensation Committees of Premium Standard Farms receive an additional $1,000 per meeting.

     Directors of PSF Group Holdings receive no separate compensation for service on the Board of Directors.

     PSF Group Holdings has adopted an Equity Incentive Plan that permits options, stock appreciation rights, restricted stock, performance units and performance shares to be granted to the employees, non-employee directors and consultants of PSF Group Holdings and its affiliates (including Premium Standard Farms). As of the date of this report, there have been no grants to non-employee directors of Premium Standard Farms or its affiliates under the Equity Incentive Plan.

Executive Compensation

     The following summary compensation table summarizes compensation information with respect to our Chief Executive Officer and our four other most highly compensated executive officers for our three most recent fiscal years.

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Summary Compensation Table

     No options or stock appreciation rights were granted to, or exercised by, the named executive officers during fiscal year 2004. The following table sets forth information regarding exercisable and unexercisable options held as of March 27, 2004, by each of the named executive officers:

Aggregated Option Exercises in Last Fiscal Year and Year-End Option Values

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     PSF Group Holdings adopted its 1999 Equity Incentive Plan in April 2000. The plan was established to attract, motivate and retain employees of that company and its affiliates, including Premium Standard Farms, and to further the growth and financial success of that company and its affiliates by aligning the interests of participants with the interests of the company’s stockholders.

     The plan is administered by a committee of non-employee directors appointed by the Board. The plan provides for awards in the form of stock options, stock appreciation rights, restricted stock, performance units and performance shares, as determined by the committee. All employees and non-employee directors, as well as certain non-employee advisors and consultants, are eligible to receive awards under the plan. A total of 15,000 shares of PSF Group Holdings Class A or Class B Common Stock may be issued pursuant to the plan. Awards vest upon a change in control of PSF Group Holdings, as defined in the plan.

     Options granted under the 1999 Equity Incentive Plan may be either incentive stock options or nonqualified stock options, as determined by the committee. No participant can be granted options with respect to more than 3,000 shares in any fiscal year. The terms of any option will be determined by the committee, but no stock option may be exercised later than 10 years after the date of grant. The award agreement may provide that PSF Group Holdings has the right to repurchase the stock if the grantee terminates employment.

     The committee may also grant stock appreciation rights, restricted stock, performance units, or performance shares to eligible individuals, from time to time, in amounts as it may determine. Each stock appreciation right or performance share relates to one share of PSF Group Holdings Class A or Class B Common Stock. No participant can be granted stock appreciation rights covering more than 3,000 shares in any fiscal year, and no participant can be awarded more than 3,000 performance shares or restricted shares, or performance units with an initial value of more than $500,000 in any fiscal year. The value of a performance unit will be at the discretion of the committee.

Long-Term Incentive Plan

     For the three year period commencing April 1, 2003, we have established a long-term incentive plan. The plan is a rolling three year plan based on three years of performance. Those generally eligible for the plan are senior managers with responsibility for leadership and accountability for long-term growth and earnings as determined by the Compensation Committee. The plan establishes both a formula-based incentive pool and a discretionary awards pool. Incentive pool awards, constituting two-thirds of the plan awards, were determined at the plan’s inception, and discretionary pool awards, constituting one-third of the plan awards, will be determined at the end of the performance period. At the beginning of each three-year period, each participant is assigned a percentage of such participant’s base salary payable during the applicable three year period. Each participant’s awards under the plan are calculated based upon this assigned percentage of the participant’s three years’ base salary. Awards will be payable in cash. Participants will have the option to defer awards into the Deferred Compensation Plan discussed below. The plan will be administered by the Compensation Committee.

     The following table sets forth information regarding long term incentive plan awards made during the last fiscal year to each of the named executive officers:

Long-Term Incentive Plans — Awards in Last Fiscal Year

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(1)

The amount of the pool is determined by our Return On Net Assets (“RONA”). At the minimum threshold RONA, the pool for those eligible is $1,300,000. At the target RONA, the pool for those eligible is $5,200,000. Two-thirds of the pool is nondiscretionary and up to one-third of the pool is discretionary. The table reflects awards assuming the executive receives the maximum discretionary payment.

(2)

The formula based incentive pool, which is nondiscretionary, vests one-third on March 31, 2004, one-third on March 31, 2005 and one-third on March 31, 2006. There is no vesting schedule associated with the discretionary portion of the incentive pool and payments to participants from this pool are conditioned under the continued employment of the participant with the company other than termination due to death, disability, normal retirement or transfer to certain affiliates of the company.

(3)

Calculation based on fiscal year 2004 salary levels.

(4)

There is no maximum amount.

Deferred Compensation Plan

     The Deferred Compensation Plan for executives was adopted by our Board of Directors in January 2001. Participation in the plan is restricted to a select group of management employees. Under this plan, participating executives are allowed to defer payment of compensation awarded as long-term incentive plan compensation until a date elected by the executive in accordance with the plan. The plan generally allows payment in the form of a single lump sum or ten substantially equal annual installments following the date of payment. A.G. Edwards Trust Company acts as trustee for the plan, which is administered by the Compensation Committee.

401(k) Plan

     We have established a 401(k) plan covering substantially all employees meeting certain minimum service requirements. The plan allows all qualifying employees to contribute up to 60% of employee compensation limited to the tax deferred contribution allowable by the Internal Revenue Code. We match 100% of the employee’s contribution up to 3% of employee compensation and 50% of the employee’s next 2% of employee compensation, for a maximum company match of 4% of employee compensation. Effective January 1, 2000, the 401(k) plan was amended from a three-year cliff-vesting period to a 100% immediate vesting.

Severance Plan

     We have established an Executive Level Severance Pay Plan covering our executive employees, which can be terminated by our Board at any time. The purpose of the Plan is to provide eligible employees with base severance pay, supplemental severance pay and supplemental severance benefits for a specified period of time in the event that their employment is involuntarily terminated other than for good reason. Under the Plan dated December 1, 1999, those persons serving as Chief Executive Officer, President and Chief Financial Officer are entitled to receive the following benefits upon termination of the employment:

•

Base severance pay equal to two weeks pay

•

Supplemental severance pay equal to fifty weeks of pay

•

Continuation of health benefits coverage for fifty-two weeks following termination.

     Severance pay under the Plan is generally payable in a lump sum following the date of termination. Supplemental severance pay and continuation of health benefits, however, are conditioned upon the employee’s execution of a general waiver and release agreement, and supplemental severance pay will be paid only after execution of that agreement.

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Special Executive Retirement Plan

     We have adopted a nonqualified, unfunded special executive retirement plan, which was amended in March 2004. The following table shows the approximate annual retirement benefits that participating executive officers are expected to receive under the plan based on their pay and years of credited service. The March 2004 amendment to the plan reduced the annual participation percentage for all executive officers to 1.5%, from 4.0% for Messrs. Meyer, Manly and Lightstone and 2.0% for all other executive officers. The amendment provided that an executive officer’s accumulated participation percentage will not be reduced as a result of the amendment, but also will not increase annually until after such time as the executive officer’s accumulated participation percentage determined utilizing the 1.5% level and the executive officer’s number of years of credited service equals the accumulated participation percentage immediately prior to the effectiveness of the amendment.

Special Executive Retirement Plan Table

     The benefits in the above table are annual amounts payable in monthly installments as single life annuities starting at age 62, the plan’s normal retirement age. Benefits are payable as an annuity or a lump sum. Benefits are based on the executive’s final three calendar years’ base salary, including amounts deferred to the 401(k) plan or cafeteria plan. An executive must complete five years of service after January 1, 2000, to be entitled to a benefit. Benefits shown above are offset by one-half of the Social Security benefits paid or payable at age 62 attributable to years of service with us and by any retirement benefits paid or payable under any ContiGroup qualified defined benefit pension plan.

     Credited service for benefit determination purposes as of March 27, 2004, is shown below for each of the executive officers named in the summary compensation table above:

(1)

Messrs. James and Null each resigned prior to satisfying the requirement to complete five years of service after January 1, 2000, and therefore are not entitled to receive benefits under the plan.

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Item 12. Security Ownership of Certain Beneficial Owners and Management

     All of the issued and outstanding capital stock of Premium Standard Farms is owned by PSF Group Holdings.

     The following table sets forth certain information regarding ownership of the common stock of PSF Group Holdings as of April 30, 2004 by (i) each person who is known by us to own beneficially more than 5% of the outstanding shares of each class of stock, (ii) each of our directors, (iii) each of the executive officers set forth in the Summary Compensation table above and (iv) all of our directors and named executive officers as a group.

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     For information concerning securities authorized for issuance under our equity compensation plans, see “Market for Registrant’s Common Equity and Related Stockholder Matters” and “Executive Compensation.”

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Item 13. Certain Relationships and Related Transactions

     In connection with our acquisition of The Lundy Packing Company, we lease farm land and hog production buildings from Goshen Ridge Farms, LLC, a company owned by Annabelle Lundy Fetterman, who was one of our directors until she resigned in September 2003, and members of her family, under a capital lease agreement. The capital lease obligation as of March 27, 2004 was $1.7 million.

     We have entered into a contract grower agreement with ContiGroup related to approximately 7,200 acres of farms used in our Missouri operations. Under that agreement, ContiGroup owns the real property at the farms. ContiGroup serves as an independent contractor in breeding and growing our hogs to market weight. In exchange, we pay to ContiGroup a fee for labor and services incurred by ContiGroup in performing its obligations under the agreement. During the fiscal year ended March 27, 2004, the amount paid for obligations under this agreement was approximately $4.4 million. The agreement will generally continue in effect so long as ContiGroup continues to own an equity interest in our company. Upon termination of the agreement, we have an option to acquire the real property at the farms from ContiGroup, which can be assigned to third parties.

     We receive the services of Mr. Schulte and other personnel through an agreement with ContiGroup. Mr. Schulte, as well as other personnel, are employees of ContiGroup but provide services to us as well as other affiliates of ContiGroup. Other services from ContiGroup include the assistance of purchasing and risk management staff, environmental consulting, treasury and strategic planning. We pay ContiGroup a monthly fee for these services. We negotiate the fee annually. In addition, we reimburse ContiGroup for a portion of Mr. Schulte’s annual bonus and long-term incentive payment. For the fiscal year ended March 27, 2004, the amount paid for all services was $1.0 million. We also provide Mr. Schulte with the use of a rental car, and since July 2000, we provide him with an annual allowance of approximately $15,000 for travel and housing.

Item 14. Principal Accounting Firm Fees

     Aggregate fees billed to the Company for the fiscal years ended March 27, 2004, and March 29, 2003 by the Company’s principal accounting firm, Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu, and their respective affiliates (collectively, “Deloitte & Touche”) were as follows:

(a)		Includes fees for annual audit of the Company’s 401(k) plan
(b)		Audit committee approved all fees and engagements associated with the principal accounting firm

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PART IV

Item 15. Exhibits, Financial Statements Schedules, and Reports on Form 8-K.

(a)

Financial Statements and Schedules

	(1)		The following financial statements are filed as a part of this Report on Form 10-K:
			Reports of Independent Public Accountants
			Consolidated Balance Sheets as of March 27, 2004 and March 29, 2003
			Consolidated Statements of Operations and Comprehensive (Loss) Income for the three years ended March 27, 2004, March 29, 2003 and March 30, 2002
			Consolidated Statements of Shareholders’ Equity for the three years ended March 27, 2004, March 29, 2003 and March 30, 2002
			Consolidated Statements of Cash Flows for the three years ended March 27, 2004, March 29, 2003 and March 30, 2002
			Notes to the Consolidated Financial Statements
	(2)		The following financial statement schedule is filed as a part of this Report on Form 10-K:

Schedule II
Valuation and Qualifying Accounts
(Dollars in thousands)

(b)		Reports on Form 8-K
		A Current Report on Form 8-K was filed with the SEC on February 13, 2004, to report, under Item 7, our third quarter earnings. The earnings release, including the registrant’s Unaudited Condensed Consolidated Statements of Operations for the 13 and 39 weeks ended December 27, 2003 and December 28, 2002, was filed as Exhibit 99.1 to the Current Report on Form 8-K.
(c)		Exhibits
		The following exhibits are filed as a part of this Report on Form 10-K or incorporated herein by reference as indicated below:

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38

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SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

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     Each individual whose signature appears below hereby designates and appoints John M. Meyer, Stephen A. Lightstone and Gerard J. Schulte, and each of them, for him or her and in his or her name, place and stead, in any and all capacities, to file on behalf of PSF Group Holdings, Inc., a Delaware corporation (the “Company”), the Company’s Annual Report on Form 10-K for the fiscal year ended March 27, 2004 (the “Annual Report”), with the Securities and Exchange Commission (the “Commission”), to sign any and all subsequent amendments to the Annual Report (the “Amendments”), to file any and all such Amendments with the Commission, with all exhibits to the Annual Report and such Amendments, together with any and all other documents in connection therewith, and to appear before the Commission in connection with any matter relating to such Annual Report and such Amendments, hereby granting to the attorneys-in-fact and agents, and each of them, full power and authority to do and perform any and all acts and things requisite and necessary to be done in and about the premises as fully and to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that such attorneys-in-fact and agents, or any of them, may lawfully do or cause to be done by virtue hereof.

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

F-1

Report of independent public accountants

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of
PSF Group Holdings, Inc.
Kansas City, Missouri

We have audited the accompanying consolidated balance sheets of PSF Group Holdings, Inc. and subsidiaries (the “Company”) as of March 27, 2004 and March 29, 2003, and the related statements of operations and comprehensive (loss) income, shareholders’ equity, and cash flows for the years then ended. Our audits also included the financial statement schedule, as of and for the years ended March 27, 2004 and March 29, 2003, listed at Item 15. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. The consolidated financial statements and the financial statement schedule of the Company for the year ended March 30, 2002 before the inclusion of the reclassifications discussed in Note 1 to the consolidated financial statements, were audited by other auditors who have ceased operations. Those auditors expressed an unqualified opinion on those financial statements and stated that such March 30, 2002 financial statement schedule, when considered in relation to the March 30, 2002 basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein, in their report dated May 3, 2002 which included an explanatory paragraph for the change in method of accounting for derivative financial instruments and goodwill.

We conducted our audits in accordance with the 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 consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated 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, such consolidated financial statements present fairly, in all material respects, the financial position of the Company as of March 27, 2004 and March 29, 2003, and the results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the March 27, 2004 and March 29, 2003 financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

As discussed above, the consolidated financial statements of the Company for the year ended March 30, 2002 were audited by other auditors who have ceased operations. As described in Note 1, the financial statements for the year ended March 30, 2002 have been reclassified to give effect to Statement of Financial Accounting Standards No. 145, “Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections” (“SFAS 145”), which was adopted by the Company on March 29, 2003. We audited the adjustments described in Note 1 that were applied to conform the March 30, 2002 financial statements to the presentation required by SFAS 145. Our audit procedures with respect to the March 30, 2002 disclosures in Note 1 included (1) comparing the amounts shown as loss on early extinguishment of debt, net of tax in the Company’s consolidated statements of operations to the Company’s underlying accounting analysis obtained from management, (2) comparing the amounts comprising the loss on early extinguishment of debt and related income tax benefit to independent supporting documentation obtained from management, and (3) testing the mathematical accuracy of the underlying analysis. In our opinion, such reclassifications have been properly applied. However, we were not engaged to audit, review, or apply any procedures to the March 30, 2002 financial statements of the Company other than with respect to such reclassifications and, accordingly, we do not express an opinion or any form of assurance on the March 30, 2002 financial statements taken as a whole.

DELOITTE & TOUCHE LLP
Kansas City, Missouri
May 26, 2004

F-2

Report of independent public accountants

To the Shareholders of
PSF Group Holdings, Inc.:

We have audited the accompanying consolidated balance sheets of PSF Group Holdings, Inc. (a Delaware corporation) and Subsidiaries (the Company), as of March 30, 2002 and March 31, 2001, and the related consolidated statements of operations and comprehensive income, shareholders’ equity and cash flows for each of the three years in the period ended March 30, 2002. These financial statements and schedule referred to below are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the 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 financial position of PSF Group Holdings, Inc. and Subsidiaries, as of March 30, 2002, and March 31, 2001, and the results of their operations and their cash flows for each of the three years in the period ended March 30, 2002, in conformity with accounting principles generally accepted in the United States.

As explained in Note 13 to the financial statements, effective April 1, 2001, the Company changed its methods of accounting for derivatives and goodwill.

Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The schedule of valuation and qualifying accounts included in Item 14 is presented for purposes of complying with the Securities and Exchange Commission’s rules and is not part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, fairly states in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole.

ARTHUR ANDERSEN LLP(1)

Kansas City, Missouri,
May 3, 2002

(1) This report is a copy of the previously issued report covering fiscal years 2002, 2001 and 2000. The predecessor auditors have not reissued their report.

F-3

PSF Group Holdings, Inc. and Subsidiaries

Consolidated balance sheets
March 27, 2004, and March 29, 2003
(in thousands, except share information)

(continued)

F-4

PSF Group Holdings, Inc. and Subsidiaries

Consolidated balance sheets
March 27, 2004, and March 29, 2003
(in thousands, except share information)
(continued)

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

F-5

PSF Group Holdings, Inc. and Subsidiaries

Consolidated statements of operations and comprehensive (loss) income
For the fiscal years ended
March 27, 2004, March 29, 2003 and March 30, 2002
(in thousands)

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

F-6

PSF Group Holdings, Inc. and Subsidiaries

Consolidated statements of shareholders’ equity
For the fiscal years ended
March 27, 2004, March 29, 2003 and March 30, 2002
(in thousands)