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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Form 10-K

Commission file number 333-100717

S&C Holdco 3, Inc.

(970) 506-8000

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:

     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 þ     No o

      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.     þ

      Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).     Yes o     No þ

      There is no market for the Registrant’s common stock. As of August 24, 2004, 1,000 shares of the Registrant’s common stock were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

      None

ANNUAL REPORT ON FORM 10-K

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FORWARD-LOOKING INFORMATION

      Our disclosure and analysis in this report, including Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, contain forward-looking statements. Forward-looking statements give our current expectations or forecasts of future events. All statements other than statements of current or historical fact contained in this report, including statements regarding our future financial position, business strategy, budgets, projected costs and plans and objectives of management for future operations, are forward-looking statements. Wherever possible, we have identified these “forward-looking statements” (as defined in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934) by words and phrases such as “anticipate,” “believe,” “continue,” “estimate,” “expect,” “intend,”, “may,” “plan,” “will” and similar expressions.

      Although we believe that these forward-looking statements reasonably reflect our plans, intentions and expectations, we can give no assurance that we will achieve these plans, intentions and expectations. Any or all forward-looking statements in this report may turn out to be inaccurate. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we currently believe may affect our financial condition, results of operations, business strategy and financial needs. They can be affected by inaccurate assumptions we might make or by known or unknown risks, uncertainties and assumptions, including the risks, uncertainties and assumptions described under the headings in Item 1. Business including “Risk Factors” as well as the availability and prices of live hogs and cattle, raw materials and supplies, food safety, livestock disease, product pricing, the competitive environment and related market conditions, hedging risk, operating efficiencies, changes in interest rate and foreign currency exchange rates, access to capital, the cost of compliance with environmental and health standards, adverse results from on-going litigation, action of domestic and foreign governments and the ability to make effective acquisitions and successfully integrate newly acquired businesses into existing operations.

      Because we are subject to these risks and uncertainties, and for the other reasons described above, we caution readers not to place undue reliance on the forward-looking statements we make. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements and risk factors contained throughout this report. Other than as required by law, our forward-looking statements speak only as of the date made. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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PART I

General

      S&C Holdco 3, Inc. is referred to as “Swift Holdings” and, together with its subsidiaries including Swift & Company, which together with its subsidiaries is referred to as “Swift Operating”, is one of the leading beef and pork processing companies in the world. We process, prepare, package and deliver fresh, further processed and value-added beef and pork products for sale to customers in the United States and in international markets. Our fresh meat products include refrigerated beef and pork, processed to standard industry specifications and sold primarily in boxed form. Our further processed offerings include beef and pork products that are cut, ground and packaged in a customized manner for specific orders. Our value-added products include moisture enhanced, seasoned, marinated and consumer-ready products. We also provide services to our customers designed to help them develop more sophisticated and profitable sales programs. We sell our meat products to customers in the foodservice, international, further processor and retail distribution channels. We also produce and sell by-products that are derived from our meat processing operations such as hides and variety meats to customers in the clothing, pet food and automotive industries, among others.

      In the United States, we operate six beef processing facilities, three pork processing facilities, one lamb processing facility and one value-added facility. In Australia, we operate four beef processing facilities, including the largest and what we believe to be the most technologically advanced facility in that country, and four feedlots. Our facilities are strategically located to access raw materials in a cost effective manner and to service our global customer base. We have the ability to process 20,850 cattle and 44,400 hogs daily in the United States and 5,450 cattle daily in Australia based on our facilities’ existing configurations.

      Our business is divided into three segments: Swift Beef, through which we conduct our domestic beef processing business; Swift Pork, through which we conduct our domestic pork processing business; and Swift Australia, through which we conduct our Australian beef business. For the fiscal year ended May 30, 2004, these businesses represented approximately 61%, 20% and 19% of our net sales, respectively. Swift Beef includes a lamb business, which contributed less than 1% of total net sales for the fiscal year ended May 30, 2004.

      Swift Holdings was incorporated in May 2002 along with other subsidiaries and holding companies for the purpose of acquiring the United States beef, pork and lamb processing businesses and the Australian beef business of ConAgra Foods, Inc. On September 19, 2002, the limited partnership formed by our equity sponsors, Hicks, Muse, Tate & Furst Incorporated and Booth Creek Management Corporation, acquired a 54% interest in these businesses other than ConAgra’s domestic cattle feeding operations and other related assets and insignificant businesses (the “Transaction”). In a related transaction, the limited partnership formed by our equity sponsors also acquired a 54% interest in the domestic cattle feeding operations. The entities that were historically operated by ConAgra Foods as integrated businesses, which include the domestic cattle feeding operations and other related assets and insignificant businesses that we did not acquire and liabilities that we did not assume in the Transaction, are referred to as the “ConAgra Red Meat Business” or “Predecessor”. Those entities and operations within the ConAgra Red Meat Business that we actually acquired in the Transaction and which are being operated by Swift Operating are referred to as the “Acquired Business” or “Successor.”

      The aggregate initial consideration for the Acquired Business was $1,025.9 million. As a result of a post-closing purchase price adjustment, ConAgra paid $16.0 million to our ultimate parent, Swift Foods Company, in March 2003. We have reflected the impact of this payment as a reduction to additional paid-in capital in our consolidated financial statements. The total purchase price (including expenses and other consideration) has been allocated to the net assets acquired based on their estimated fair values at the date of acquisition. The Transaction was within the scope of Statement of Financial Accounting Standards (“SFAS”) No. 141, Business Combinations, which resulted in a new basis of accounting in accordance with the Financial Accounting Standards Board’s EITF 88-16, Basis in Leveraged Buyout Transactions. In accordance with that guidance, the retained minority interest of the predecessor owner (i.e., ConAgra’s approximate 45% interest)

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      Following the Transaction, our equity sponsors own approximately 54% of the equity of our ultimate parent, Swift Foods Company. ConAgra retained approximately 45% of the equity in Swift Foods Company, and the remaining 1% is held by our management. Swift Foods Company holds 100% of the equity in S&C Holdco 2, Inc., which in turn holds 100% of the equity of Swift Holdings, which in turn holds 100% of the equity in Swift Operating.

Business Strategy

      The key elements of our business strategy are to:

      We believe we can increase our profitability by offering higher margin, value-added products and services and, as a result, build strategic relationships with our customers and become their “preferred” supplier. In beef, we intend to continue to broaden our product offering to provide “mass-customized” products that support our customers’ need to differentiate their product offerings while at the same time providing the scale required to meet any customer’s growth requirements. In pork, we intend to continue to develop, improve and offer new products such as seasoned or marinated pork for our retail customers and boneless ham and specialized pork products for our processing customers. We have also reached an agreement to construct an approximately 32,000 square foot customer solutions and product development complex adjoining our headquarters building in Greeley, Colorado. This facility will include 16,000 square feet of customer interaction, culinary, and food processing areas for product testing and process improvement; and 16,000 square feet of office space and areas for future expansion. We are also developing innovative packaging solutions that will enable us to expand our distribution channels and consumer-ready product offerings.

      We continue to focus on increasing our sales to the international and foodservice channels, which we believe are the more profitable and faster growing channels. Historically the international and foodservice channels, on average, have paid premiums over USDA reported prices for customized production and packaging, consistent quality, timely delivery and other services. However, many international borders were closed to United States beef exports on December 23, 2003 as a result of the discovery in Washington State of a single dairy cow infected with Bovine Spongiform Encephalopathy (commonly referred to as “mad cow disease” or “BSE”). While beef exports to most of the world have been negatively affected, the USDA projects, and our pork business has experienced, continued growth of pork exports from the United States. We also believe that the foodservice sector will continue to grow as consumer trends continue to be favorable for the channel. Swift Beef’s sales volume to these two channels approximated 30% for the fiscal year ended May 30, 2004. We expect to continue to grow this percentage in our domestic beef operations and seek similar opportunities in Swift Pork.

      We will continue to focus on increasing our profit margins by improving operating efficiencies and raising our processing yields. Over the past three years, we have both increased daily volume throughput and improved product yields in our beef and pork operations. We will continue to seek similar opportunities in the future. We are currently implementing a product optimization program at Swift Beef that will enable us to more effectively coordinate planning, forecasting, scheduling, procurement and manufacturing disciplines that will result in improvements across our supply chain. We plan to apply these practices throughout other parts of our business where applicable.

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      By expanding our product lines, implementing customer-focused programs, employing new packaging technologies and ensuring continued food safety standards, we expect to drive growth and margin expansion. We believe that we will be able to execute our business strategy and grow our core business. However, growing demand may necessitate adding profitable capacity by adding work shifts or making further investments. We are nearing completion of an expansion of a slaughter facility in Australia, adding an approximate 20% increase to that plant’s daily slaughter capacity. We will continue to evaluate each meaningful investment using economic models, and such investment may include purchasing equipment or facilities, making acquisitions or entering into strategic alliances.

      Our domestic beef and pork operations are combined in one headquarters building and these operations are working together to become the provider of choice for both beef and pork products to customers in our target channels. We intend to capitalize on significant cross-selling opportunities between beef and pork by building on our existing customer relationships within both businesses. In addition, we are continuing the process of re-engineering corporate functions such as accounting, human resources and food safety in an effort to streamline our operations and eliminate duplicative administrative costs. We believe that conducting our business as a combined operation further enables us to build on our existing customer relationships and to capitalize on the Swift brand name to attract new business opportunities.

Description of Business Segments

      The contribution of Swift Beef, Swift Pork and Swift Australia to net sales and operating income, and the identifiable assets attributable to each business segment are set forth in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and Item 8. Financial Statements and Supplementary Data included herein.

      The majority of Swift Beef’s revenues are generated from the sale of fresh meat, which include chuck cuts, rib cuts, loin cuts, round cuts, thin meats, ground beef and other products. In addition, we also sell beef by-products to the variety meat, feed processing, fertilizer and pet food industries. Cattle hides are sold for both domestic and international use, primarily to the clothing and automotive industries. We market products under several brand names, including Swift Angus Select, Four Star Beef, Miller Blue Ribbon Beef and Monfort. Our lamb business is operated under Swift Beef, contributing less than 1% of total net sales for the fiscal year ended May 30, 2004.

      We market our beef products through several channels, including:

	•	national and regional retailers, including supermarket chains, independent grocers, club stores and wholesale distributors;
	•	further processors, including a supply agreement with a related party — see Note 8, “Related Party Transactions” to our consolidated financial statements included in Item 8 of this Form 10-K;
	•	international markets, which included Japan, Mexico, Korea, Canada and China among others prior to December 23, 2003 and which are limited to boxed beef products from cattle younger than 30 months to Mexico and other smaller foreign markets after that date; and
	•	the foodservice industry, including foodservice distributors, fast food, restaurant and hotel chains, and other institutional customers.

      Our largest distribution channel is retail. During the three-year period preceding December 23, 2003, we increased sales to the international channels by approximately 44%. Our three-year average sales to the

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      Our primary raw material for our processing facilities is live cattle. Our cattle procurement process is centralized at our headquarters in Greeley, Colorado. We require all of our cattle suppliers to document the quality of their feedlot operation, verify that use of antibiotics and agricultural chemicals follow the manufacturer’s intended standards, and confirm feed containing animal based protein products, which have been associated with outbreaks of BSE, has not been used. Currently, we have approximately 3,600 suppliers suppliers that provide us with cattle. Historically, we have secured 40% to 50% of our annual cattle needs under forward purchase arrangements, purchased 35% to 40% on the spot market and obtained 15% to 20% from the domestic cattle feeding operations of the ConAgra Red Meat Business. In connection with the Transaction, we entered into an agreement with the entity that acquired the domestic cattle feeding operations to continue this supply arrangement consistent with past practices. For information regarding this agreement, see Note 8, “Related Party Transactions” to our consolidated financial statements included in Item 8 of this Form 10-K.

      Our beef operations in the United States consist of four fed cattle facilities and two non-fed cattle facilities. We also operate a lamb processing facility. Steers and heifers raised on concentrated rations, such as grain with supplements, are typically referred to in the cattle industry as “fed cattle,” and cattle not fed such concentrated rations are usually referred to as “non-fed cattle.”

      Our facilities utilize modern, highly-automated equipment to process and package beef products, which are typically marketed in the form of boxed beef. We also customize production and packaging of beef products for several large domestic and international customers. The design of our facilities emphasizes worker safety to ensure compliance with all regulations and to reduce worker injuries. Our facilities are also designed to reduce waste products and emissions and dispose of waste in accordance with applicable environmental standards.

      Our food safety efforts incorporate a comprehensive network of leading technologies that minimize the risks involved in beef processing. We have also recently introduced “MultiCheck” as part of our food safety efforts. MultiCheck incorporates a comprehensive network of leading technologies that minimizes risks associated with beef processing. Two of the elements of MultiCheck are double pasteurization of carcasses prior to chilling and a chilled carcass treatment using organic acid immediately prior to fabrication disassembly. SwiftTrace^TM is another element we implemented as part of our on-going commitment to animal and human safety. SwiftTrace^TM is a process whereby live animals and finished beef products can be traced backward or forward in the supply chain. This process builds confidence from suppliers, customers and consumers in the food supply chain.

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      A significant portion of Swift Pork’s revenues are generated from the sale predominantly to retailers of fresh pork products, including trimmed cuts such as loins, roasts, chops, butts, picnics and ribs. Other pork products, including hams, bellies and trimmings are sold predominantly to further processors who, in turn, manufacture bacon, sausage and deli and luncheon meats. The remaining sales are derived from by-products. Due to the higher margins attributable to value-added products, we intend to place greater emphasis on the sale of moisture enhanced, seasoned, marinated and consumer-ready pork products to the retail channel and boneless ham and skinless bellies to the further processor channel.

      We market our pork products through several channels, including:

	•	national and regional retailers including supermarket chains, independent grocers, club stores and wholesale distributors;
	•	further processors;
	•	international markets, including Japan, Mexico and China; and
	•	the foodservice industry including foodservice distributors, fast food, restaurant and hotel chains, and other institutional customers.

      Pork products sold to the domestic retail and further processor channels comprised approximately 86% of total Swift Pork net sales for the fiscal year ended May 30, 2004. Pork exports contributed approximately 9% of net sales, and we consider the overseas markets an opportunity for future growth. Total net sales contribution by channel is:

      Our primary raw material for our processing facilities is live hogs. We employ a network of hog buyers at our processing plants and buying stations to secure our hog requirements. Approximately 51% of our hog purchases are made through various forms of supply contracts that provide us with a stable supply of high-quality hogs. These supply contracts are typically five to seven years in duration and stipulate minimum and maximum purchase commitments based in part on the market price of hogs with adjustments based on quality, weight, lean composition and meat quality. We purchase the remaining 49% of our hogs on the spot market at a daily market price with the same general quality and yield grade as we require under our contracts. We require an extensive supplier certification program and conduct comprehensive cutting tests of our potential suppliers’ animals to determine carcass composition and leanness.

      Our pork operations in the United States consist of three processing facilities located in close proximity to major hog growing regions of the country and a value-added facility that produces consumer-ready pork for certain customers.

      Our facilities utilize modern, highly-automated equipment to process and package pork products, which are typically marketed in the form of boxed pork. We have equipped our Santa Fe Springs facility to process

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      Our food safety task force is made up of experts in the field of meat processing, food microbiology and quality assurance, all working together to assure compliance at all stages of the production chain and distribution channels. Our internal programs, policies and standards are designed to exceed both regulatory requirements and customer specifications.

      The majority of Swift Australia’s revenues are generated from the sale of fresh meat by the meat processing division. Approximately 80% of the beef products sold by Swift Australia is derived from grass-fed animals and the remainder is derived from grain-fed animals that are sold primarily to Japan. Grain-fed animals provide higher quality meat, which commands a premium price. Beef products sold by the meat division accounted for approximately 64% of Swift Australia’s net sales for the fiscal year ended May 30, 2004. The foods division consists of two separate businesses. One manufactures meat patties and distributes consumables for McDonald’s in Australia. The other produces value-added meat products including toppings for pizzas. This division contributed 24% of Swift Australia’s net sales for the fiscal year ended May 30, 2004. The wholesale trading division trades in boxed meat products to brokers and retailers who resell those products to end customers, and provides the remaining contribution to net sales. Swift Australia’s net sales are viewed by division, rather than by channel as in our domestic segments. Total net sales contribution by division is:

      Swift Australia currently generates approximately 55% of total net sales as exports to foreign countries, including Japan, our largest export market, and the United States. The remaining 45% of our net sales is generated in Australia. Australia’s sales to export markets benefited from the December 23, 2003 North American BSE incident which closed most foreign borders to the export of US beef. These border closings increased the marketability of our Australian beef into those markets as Australia had no similar import restrictions on its production.

      The primary raw material for the Swift Australia processing facilities is live cattle. Our cattle procurement function is focused on efficiently sourcing both grass-fed cattle and feeder cattle for our grain-fed business. Grass-fed cattle are primarily sourced from third-party suppliers with specific weight and grade characteristics. This process helps ensure that the cattle we source meet our future order requirements. The majority of grain-fed cattle are sourced from company-owned feedlot operations.

      Swift Australia operates four feedlots that provide grain-fed cattle for our processing operations and also custom feeds for other producer clients on an opportunistic basis. We source feeder cattle from livestock

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      Swift Australia’s processing facilities are strategically located for efficient livestock acquisition, availability of labor and access to shipping and distribution. Our facilities utilize modern, highly-automated equipment to process and package beef products. The Dinmore facility, which is European Union certified, is the largest plant in Australia. In addition, we are nearing completion of a capacity increasing project at our Beef City slaughter facility which began full scale production six months ahead of schedule in July 2004, adding an approximate 20% increase to Beef City’s daily slaughter capacity.

      All products are subject to stringent animal husbandry and food safety procedures. Swift Australia’s processing facilities are operating under the strictest food safety and quality assurance regime to comply with international customer requirements. Our feedlots are managed with cattle friendly policies providing clean and scientific feeding regimen to ensure safe grain-fed product is delivered to our customers.

Industry Overview

      Beef products are the second largest source of meat protein in the United States (behind chicken). The United States has the largest fed cattle industry in the world, and is the world’s largest producer of beef, primarily high-quality grain-fed beef for domestic and export use. In 2003, commercial beef production approximated 26.2 billion pounds in the United States.

      The domestic beef industry is characterized by prices that change daily based on seasonal consumption patterns and overall supply and demand for beef and other proteins in the United States and abroad. In general, domestic and worldwide consumer demand for beef products determines beef processors’ long-term demand for cattle, which is filled by feedlot operators. In order to operate profitably, beef processors seek to acquire cattle at the lowest possible costs and to minimize processing costs by maximizing plant operating rates. Cattle prices vary over time and are impacted by inventory levels, the production cycle, weather, feed prices and other factors.

      In recent periods, demand for beef products in the United States has been relatively stable, with population growth the primary factor in determining increased aggregate demand. According to the USDA, beef consumption approximated 27.0 billion pounds in 2003. The domestic beef industry faced several unique challenges in the last year, notably 1) the closure of US borders to the importation of Canadian feeder and fattened (ready for slaughter) animals which occurred in May 2003 following the discovery of BSE in Alberta that same month, 2) the opening of the US border to Canadian produced boxed beef in September 2003 while the ban on importation of Canadian livestock was maintained, putting the entire US Beef industry at a continued price disadvantage, 3) continued closure of the US border to Canadian livestock resulting in higher overall feeder and fed cattle prices in the US, negatively impacting raw material prices, and 4) the closure of most foreign markets to US beef following the discovery of a single dairy cow in Washington state infected with the BSE disease on December 23, 2003. These challenges resulted in tremendous volatility in the US derivative markets and underlying cash livestock market prices which are largely the basis for the buy/sell economics of the industry. In addition, the international border closings and lack of alternative US markets for many products which previously were exported, negatively impacted the revenue per head enjoyed by the US packing industry by approximately 15% as many of these products could only be rendered for pennies on the dollar compared to their former export prices.

      Pork products are the third largest source of meat protein in the United States (behind chicken and beef). In 2003, commercial pork production approximated 19.9 billion pounds in the United States. Today, the United States is one of the world’s leading pork-producing countries and is widely regarded as a world

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      The domestic pork industry is characterized by prices that change daily based on seasonal consumption patterns and overall supply and demand for pork and other meats in the United States and abroad. In general, domestic and worldwide consumer demand for pork products drive pork processors’ long-term demand for hogs, which is filled by hog producers. In order to operate profitably, hog processors seek to acquire hogs at the lowest possible costs and to minimize processing costs by maximizing plant operating rates. Hog prices vary over time and are impacted by inventory levels, the production cycle, weather, feed prices and other factors.

      In recent periods, demand for pork products in the United States has been increasing, with population growth and exports as the primary drivers for increased aggregate demand. According to the USDA, pork consumption approximated 19.5 billion pounds in 2003. While pork has historically enjoyed its highest consumption patterns and, therefore its highest average price per pound, in the winter months (for hams and loins) and summer months (for ribs), winter 2003 through spring 2004 has been unusual in that demand has remained strong. Year round consumer interest and higher year over year prices were likely driven by a combination of the closure of international markets to US beef and US poultry during the year, coupled with US consumer interest in high protein diets.

      Australia produced approximately 4.3 billion pounds of beef in 2003. It has traditionally been a supplier of grass-fed beef. Grass is a much cheaper feed source than grain and given the vast amount of land in Australia that can be used for cattle raising and feeding, relative to the United States, it is the predominant method used in that country. Australia also has a grain-fed beef cattle segment which primarily supplies cattle processed for export to Japan. Grain-fed production currently represents 25% of Australia’s total beef output.

      Australia has been one of the leading beef export countries for more than a decade. Exports are forecast at 2.8 billion pounds for calendar year 2004. Approximately 70% or more of exports have historically been made to the United States and Japan, but Australian beef is also exported to Korea, Taiwan, Canada and Mexico, among other countries. Australian meat packers, including Swift Australia, have benefited from recent world events including the discovery of Avian flu in US poultry and BSE in a single US dairy cow. These incidents effectively closed the export markets to US beef and US chicken.

      The Australian beef processing industry has dealt with two main issues in the most recent and prior year. One is the slow (but steady) recovery in the level of consumer confidence in Japan in the aftermath of the BSE and labeling incidents in recent years. Volumes for calendar year 2004 are forecast to exceed calendar year 2000 levels for the first time, with volumes expected to be 8% higher than that year. The second significant issue has been the widespread severe drought conditions in 2002 and 2003, with calendar year 2003 being the hottest and one of the driest years on record. Some relieving rain in the early part of 2003 did not develop into a drought breaking weather pattern and the pressures on livestock supply and herd depletion continued to affect the outlook for the industry. Rains returned to more normal patterns during early 2004 and coupled with the closure of export markets to US proteins other than pork, have combined to extend Australia’s seasonal production pattern. Historically, Australian beef exports have competed against US poultry, US pork and US beef, especially into the northern Asian markets of Japan and Korea. However, during the first half of 2004 disruptions in the supplies of US beef and US chicken into those markets as a result of international border closings over concerns from livestock illnesses (Avian flu in poultry and BSE in beef) have allowed the export volumes for Australian meat packers to expand, both in volume and price, year over year.

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Intellectual Property

      We hold a number of trademarks, patents and domain names that we believe are material to our business and which are registered with the United States Patent and Trademark Office including “Swift” and “Monfort” derivative tradenames, and “Miller Blue Ribbon Beef”. We have also registered “Swift” and “Monfort” derivative trademarks in most of the foreign countries to which we sell our products. Currently, we have a number of patent applications and trademark registrations pending in the United States and in foreign countries. 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.

Competition

      The beef and pork processing industries are highly competitive. Competition exists both in the purchase of live cattle and hogs, as well as in the sale of beef and pork products. Our products compete with a large number of other protein sources, including chicken, turkey and seafood, but our principal competition comes from other beef and pork processors, including Tyson Foods, Inc., Smithfield Foods, Inc. and Cargill, Inc. Management believes that the principal competitive factors in the beef and pork processing industries are price, quality, food safety, product distribution and brand loyalty.

Regulation and Environmental Matters

      Our operations are subject to extensive regulation by the United States Food and Drug Administration (“FDA”), the United States Department of Agriculture (“USDA”), the United States Environmental Protection Agency (“EPA”) and other state, local and foreign authorities regarding the processing, packaging, storage, distribution, advertising and labeling of our products, including food safety standards. Recently, food safety practices and procedures in the meat processing industry have been subject to more intense scrutiny and oversight by the USDA. For example, in November 2002, the USDA issued a directive requiring all producers of raw beef products to reassess their HACCP system regulations to determine whether E. coli contamination is a food safety hazard reasonably likely to occur in the production process. We have historically and will continue to work closely with the USDA and any regulatory agencies to ensure that our operations comply with all applicable food safety laws and regulations.

      Wastewater, stormwater, and air discharges from our operations are subject to extensive regulation by the EPA and other state and local authorities. Our Australian operations also are subject to extensive regulation by the Australian Quarantine Inspection Service and other Australian state and local authorities. We believe that we currently are in substantial compliance with all governmental laws and regulations and maintain all material permits and licenses relating to our operations. We are not aware of any significant violations of such laws and regulations that are likely to result in material penalties or pending changes in such laws or regulations that are likely to result in material increases in operating costs. In addition, the EPA has adopted revisions to the effluent limitations guidelines and standards for the meat processing industry. These regulations revise technology-based effluent limitation guidelines and standards for wastewater discharges associated with the operation of new and existing meat processing and independent rendering facilities. We are in the process of evaluating the impact of these new rules, which could be significant. Recent regulatory changes affecting the red meat processing industry concerning water discharges are expected to require us to incur approximately $15 million in capital and operating expenses during the next 5 years.

      Our domestic operations are subject to the Packers and Stockyards Act of 1921. This statute generally prohibits meat packers in the livestock industry from engaging in certain anti-competitive practices. In addition, this statute requires us to make payment for our livestock purchases before the close of the next business day following the purchase and transfer of possession of the livestock we purchase, unless otherwise agreed to by our livestock suppliers. Any delay or attempt to delay payment will be deemed an unfair practice in violation of the statute. Under the Packers and Stockyards Act, we must hold our cash livestock purchases in trust for our livestock suppliers until they have received full payment of the cash purchase price. We maintain a bond in the amount of approximately $43 million to secure our payment obligations to our livestock

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      Between June 30, 2002 and July 19, 2002, we voluntarily recalled approximately 19 million pounds of beef trim and fresh and frozen ground beef products produced between April 12, 2002 and July 11, 2002 at our Greeley, Colorado facility, that may have been contaminated with E. coli. This is the first pathogen-related recall that we have experienced since 1996. The Centers for Disease Control and Prevention (“CDC”) has associated cases of E. coli illnesses with the consumption of these beef products. According to the USDA, since 1997 our industry has experienced 234 pathogen-related recalls and 91 E. coli related recalls. The total recall costs associated with the return, destruction and replacement of affected products and any advertising or announcements necessary to effect the recall were approximately $5.0 million. Through September 18, 2002, we expensed approximately $3.4 million of costs directly related to the product recall. Amounts related to the recall costs incurred prior to the Transaction, together with an accrual for estimated recall costs expected to be incurred after the Transaction, were reflected as expenses that reduced the adjusted net book value of the Acquired Business, thereby reducing the purchase price paid for the Acquired Business. ConAgra Foods agreed to reimburse us to the extent the recall costs incurred after the Transaction exceed the accrual. Our May 30, 2004 and May 25, 2003 balance sheet includes a $1.6 million receivable from ConAgra Foods for reimbursement of amounts in excess of the accrual which represent additional claims from customers seeking reimbursement for recall related costs. As our costs have not exceeded our deductible under our product recall insurance policy, we have not recorded any insurance receivable, and we expect no reimbursement under our policy. ConAgra Foods has further agreed to indemnify us for liabilities, costs and expenses that we may incur with respect to third parties in connection with product liability claims or personal injury causes of action arising from the consumption of the products subject to the recall.

      Immediately following the recall, we began working in coordination with our customers in order to quickly and efficiently effect the recall. In addition, we continue to work cooperatively with the USDA. Subsequent to the recall, order cancellations have been immaterial. Further, Swift Beef’s largest customers of grinds and muscle cuts have continued to order and, based on recent orders, we believe such customers will continue to order product from us at levels consistent with their historical patterns. As a proactive measure, Swift’s management team expanded its testing procedures in all of Swift Beef’s processing plants and, immediately following the recall, began 100% lot testing of all trimmings destined for raw products. Following our implementation of voluntary trimming testing, in November 2002, the USDA issued a directive requiring all producers of raw beef products to reassess their HACCP system regulations to determine whether E. coli contamination is a food safety hazard reasonably likely to occur in the production process.

      In December 2002, the EPA modified its regulations governing concentrated animal feeding operations (“CAFOs”). The new rule revises the federal permitting requirements for CAFOs and requires all CAFOs to apply for a discharge permit under the federal Clean Water Act. Each CAFO must also develop and implement a nutrient management plan that, at a minimum, includes best management practices and procedures necessary to implement applicable effluent limitations and standards. We have submitted our plans to the appropriate regulatory authorities and are awaiting approval.

      We occasionally receive notices from regulatory authorities and others asserting that we are not in compliance with some laws and regulations. In some instances, litigation ensues, including the matters discussed Note 10, “Legal Proceedings” of the consolidated financial statements included in Item 8 of this Form 10-K.

Employees

      As of May 30, 2004, we had approximately 21,100 employees, including 10,900 employees in Swift Beef, 5,200 in Swift Pork and 5,000 in Swift Australia. We consider relations with our employees to be good. Approximately 11,400 employees at our United States facilities are represented by labor organizations and collective bargaining agreements expiring between 2004 and 2007. Approximately 4,400 employees at our

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Risk Factors

      Our business operations and the implementation of our business strategy are subject to significant risks inherent in our business, including, without limitation, the risks and uncertainties described below. The occurrence of any one or more of the risks or uncertainties described below could have a material adverse effect on our financial condition, results of operations and cash flows.

      Our beef and pork products have in the past been, and may in the future be, subject to contamination by organisms producing foodborne illnesses. These organisms are generally found in the environment and, as a result, there is a risk that as a result of food processing they could be present in our products. For example, E. coli is one of many foodborne illnesses commonly associated with beef products. Once contaminated products have been shipped for distribution, illness or death may result if the pathogens are present, or increase due to handling or temperatures, or if the pathogens are not eliminated at the further processing, foodservice or consumer level. We may be subject to significant liability if the consumption of any of our products causes injury, illness or death and have in the past recalled, and may in the future recall products in the event of contamination or damage. For example, between June 30 and July 19, 2002, we voluntarily recalled approximately 19 million pounds of fresh and frozen ground beef products that may have been contaminated with E. coli. The Centers for Disease Control and Prevention has associated cases of E. coli illnesses with the consumption of these beef products. We may encounter the same risks if a third party tampers with our products. Contamination of our products also may create adverse publicity that could negatively affect our business, reputation, prospects, financial condition, results of operations and cash flows.

      An outbreak of disease affecting livestock, such as BSE or foot-and-mouth, could result in restrictions on sales of products to our customers or purchases of livestock from our suppliers. Also, outbreaks of these diseases or concerns of such disease, whether or not resulting in regulatory action, can lead to cancellation of orders by our customers and create adverse publicity that may have a material adverse effect on consumer demand and, as a result, on our results of operations. On December 23, 2003 the USDA reported the first apparent case of bovine spongiform encephalopathy (commonly referred to as “mad cow disease” or “BSE”) in the United States after performing preliminary tests on a dairy cow slaughtered in Washington state. These findings were confirmed on December 25, 2003. Following the announcement, substantially all international export markets have temporarily banned the import of US beef. Mexico reopened its borders to US beef in April 2004. Substantially all other borders remain closed to the import of US beef. We recorded a charge to earnings totaling $43 million in the third quarter of fiscal year 2004 due to the direct and indirect market impacts of the closure of the international borders as a result of the single BSE incident.

      We have a significant amount of debt. As of May 30, 2004, we had total outstanding debt of $636.5 million (inclusive of the debt discount applicable to our senior notes), including capital lease obligations of $22.0 million, $197.0 million of secured debt and $150.0 million of debt that is subordinated to our senior notes. In addition we had $27.4 million of outstanding letters of credit and $266.9 million of senior debt available for borrowing under our revolving credit facility. The indenture governing our senior notes restricts, but does not prohibit, us from refinancing the $150.0 million of senior subordinated notes with debt that is pari passu with the senior notes.

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      Our substantial debt could:

	•	make it difficult for us to satisfy our obligations, including making interest payments on our debt obligations;
	•	limit our ability to obtain additional financing to operate our business;
	•	require us to dedicate a substantial portion of our cash flow to payments on our debt, reducing our ability to use our cash flow to fund working capital, capital expenditures and other general corporate requirements;
	•	limit our flexibility to plan for and react to changes in our business and the industry in which we operate;
	•	place us at a competitive disadvantage relative to some of our competitors that have less debt; and
	•	increase our vulnerability to general adverse economic and industry conditions, including changes in interest rates, lower cattle and hog prices or a downturn in our business or the economy.

      The senior credit facilities and the indentures governing our senior notes and senior subordinated notes contain, among other things, covenants that may restrict our and our subsidiaries’ ability to finance future operations or capital needs or to engage in other business activities. The indentures and the senior credit facilities restrict, among other things, our ability and the ability of our subsidiaries to:

	•	incur additional indebtedness or issue guarantees;
	•	create liens on our assets;
	•	pay dividends on or redeem capital stock;
	•	make certain investments;
	•	make restricted payments;
	•	create or permit restrictions on the ability of our restricted subsidiaries to pay dividends or make other distributions to us;
	•	issue or distribute capital stock of our subsidiaries;
	•	enter into transactions with affiliates;
	•	enter into sale and leaseback transactions;
	•	engage in certain business activities; and
	•	engage in mergers, consolidations and certain dispositions of assets.

      In addition, our senior credit facilities require us to maintain specified financial ratios and tests which may require that we take action to reduce our debt or to act in a manner contrary to our business objectives. Events beyond our control, including changes in general business and economic conditions, may affect our ability to meet those financial ratios and tests. We may not meet those ratios and tests and our lenders may not waive any failure to meet those ratios and tests. A breach of any of these covenants or failure to maintain such ratios would result in a default under our senior credit facilities and any resulting acceleration under the senior credit facilities may result in a default under our indentures. If an event of default under our senior credit facilities occurs, the lenders could elect to declare all amounts outstanding thereunder, together with accrued interest, to be immediately due and payable.

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      We are a holding company with no operations of our own. Consequently, our ability to service our debt and pay dividends is dependent upon the earnings from the businesses conducted by our subsidiaries. Our subsidiaries are separate and distinct legal entities and have no legal obligation to pay any amounts to us, whether by dividends, loans, advances or other payments. The ability of our subsidiaries to pay dividends and make other payments to us depends on their earnings, capital requirements and general financial conditions and is restricted by, among other things, applicable corporate and other laws and regulations, the provisions of the senior credit facilities, and, in the future, other agreements to which our subsidiaries may be a party.

      Our margins are dependent on the price at which our beef and pork products can be sold and the price we pay for our raw materials among other factors. These prices can vary significantly over a relatively short period of time as a result of a number of factors, including the relative supply and demand for beef and pork and the market for other protein products, such as poultry and fish. For example, beginning in March 2002, a month-long Russian trade embargo on chicken imported from the United States had the effect of increasing chicken supplies in the United States, which put downward pressure on demand and prices for red meat products, led to lower selling and raw material prices and had a negative impact on our results. In addition, following the discovery of Avian Flu in the Asian poultry production regions and the US poultry flocks during the last year, and the resultant closure of markets to US beef exports as a result of the December 23, 2003 BSE discovery, we have experienced improved selling prices and margins for our Australian beef and US pork production into these export markets. Also, this disruption of historical competition has resulted in tremendous volatility in the US livestock cash and related futures commodity markets.

      The supply and market price of the livestock that constitute our principal raw material and represent the substantial majority of our cost of goods sold are dependent upon a variety of factors over which we have little or no control, including fluctuations in the size of herds maintained by producers, the relative cost of feed, weather and livestock diseases.

      We generally do not have long-term sales arrangements with our customers and, as a result, the prices at which we sell products to them are determined in large part by market forces. A significant decrease in beef or pork product prices for a sustained period of time could have a material adverse effect on our revenues and, unless our input costs and other costs correspondingly decrease, on our operating margins.

      Severe price swings in raw materials, and the resultant impact on the prices we charge for our products, have at times had, and may in the future have, material adverse effects on our financial condition, results of operations and cash flows. If we experience increased costs, we may not be able to pass them along to our customers. We employ a number of strategies to attempt to reduce this risk, including forward purchase and sale agreements, futures and options, but these strategies cannot and do not eliminate these risks. US beef margins were negatively affected by the loss of export markets as approximately 15% of the historical revenue derived from the animal were generated from sales of beef byproducts, many of which have no domestic market. US livestock raw material prices have not declined sufficiently to absorb this revenue loss. For further discussion of the risks associated with commodity prices and hedging, see Item 7A. Quantitative and Qualitative Disclosures About Market Risk — Market Risk Disclosures.

      Our operations are subject to extensive regulation and oversight by the FDA, the USDA, the EPA and other state, local and foreign authorities regarding the processing, packaging, storage, distribution, advertising and labeling of our products, including food safety standards. Recently, the food safety practices and procedures in the meat processing industry have been subject to more intense scrutiny and oversight by the USDA. Wastewater, stormwater and air discharges from our operations are subject to extensive regulation by

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      For the fiscal year ended May 30, 2004, exports, primarily to Japan, China, Canada, Mexico and Korea, accounted for approximately 26% of our total net sales. Our international activities expose us to risks not faced by companies that limit themselves to United States and Australian markets. One significant risk is that the international operations may be affected by tariffs, other trade protection measures and import or export licensing requirements. For example, on May 31, 2004, the Mexican government initiated an industry-wide anti-dumping investigation against imports of certain pork products from the United States during the period from January 1, 2003 through December 31, 2003. The results of that investigation could affect the tariffs we are required to pay on our exports of pork products to Mexico in the future.

      Other risks associated with our international activities include:

	•	changes in foreign currency exchange rates and hyperinflation in the foreign countries in which we operate;
	•	exchange controls;
	•	changes in a specific country’s or region’s political or economic conditions, particularly in emerging markets; and
	•	potentially negative consequences from changes in regulatory requirements.

      For example, on December 23, 2003 the USDA reported the first apparent case of BSE in the United States after performing preliminary tests on a dairy cow slaughtered in Washington state. These findings were confirmed on December 25, 2003. Following the announcement, substantially all international export markets banned the import of US beef. Mexico reopened its borders on a limited basis to US beef from cattle younger than 30 months of age in April 2004. Substantially all other borders remain closed to the import of US beef. We recorded a charge to earnings totaling $43 million in the third quarter of fiscal year 2004 due to the direct and indirect market impacts of the closure of international borders as a result of the single BSE incident. It is not known whether foreign borders may reopen to the import of US beef, when this may occur, or what conditions may be imposed.

      Our revenues, margins and cash flows will not increase as planned if we fail to implement the key elements of our strategy, and our ability to successfully implement this strategy is dependent at least in part on factors beyond our control. For example, the willingness of consumers to purchase value-added products depends in part on economic conditions. In periods of economic uncertainty, consumers tend to purchase more private label or less-expensive products. Thus, if we encounter periods of economic uncertainty, the sales volume for our value-added products could suffer. Also, we may not be successful in identifying favorable international expansion opportunities or in further expanding into the foodservice markets.

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      Our operations are subject to extensive and increasingly stringent regulations pertaining to the discharge of materials into the environment and the handling and disposition of wastes. Failure to comply with these regulations can have serious consequences for us, including criminal as well as civil and administrative penalties and negative publicity. We have incurred and will continue to incur significant capital and operating expenditures to avoid violations of these laws and regulations. Additional environmental requirements imposed in the future could require currently unanticipated investigations, assessments or expenditures, and may require us to incur significant additional costs. As the nature of these potential future charges is unknown, management is not able to estimate the magnitude of any future costs and the Company has not accrued any reserve for any potential future costs.

      Some of our facilities have been in operation for many years. During that time, we and previous owners of these facilities have generated and disposed of wastes that are or may be considered hazardous or may have polluted the soil or groundwater at our facilities, including adjacent properties. Discovery of previously unknown contamination of property underlying or in the vicinity of our present or former properties or manufacturing facilities and/or waste disposal sites could require us to incur material unforeseen expenses. Occurrences of any of these events may have a material adverse affect on our business, financial condition, results of operations and cash flows.

      The food industry in general is subject to changing consumer trends, demands and preferences. Our products compete with other protein sources, such as chicken, and other foods. Trends within the food industry change often and our failure to anticipate, identify or react to changes in these trends could lead to, among other things, reduced demand and price reductions for our products, and could have a material adverse effect on our business, financial condition, results of operations and cash flows. For example, the closure of international borders to the import of US beef and US poultry during the last year has resulted in increased demand and higher prices for US pork and our Australian business’ exported meats. In addition, US consumers’ interest in pork remained consistently strong throughout the year, driven by the international border closures and an increase in US consumers’ interest in high protein diets. We are not able to assess whether or when US borders may reopen, nor whether or when US consumers’ buying patterns may return to historical patterns.

      Both the beef and pork industries are characterized by prices that change based on seasonal consumption patterns. The highest periods of demand for our products are usually the summer barbecue season for beef and the winter months for pork. As a result of these seasonal fluctuations, our operating results may vary substantially between fiscal quarters. During the most recent year however, the disruption of US beef exports and US consumers’ interest in high protein diets has contributed to an increase in the demand for US pork to a more “year-round”, rather than seasonal, pattern. We are not able to determine with certainty the drivers of this level of consumption, nor determine whether or when it may return to historical seasonal buying patterns.

      We have approximately 21,100 employees worldwide. Approximately 11,400 employees at our United States facilities are represented by labor organizations and collective bargaining agreements. Approximately 4,400 employees at our Australian facilities are parties to Awards of Enterprise or Certified Agreements with various labor organizations and Swift Australia. Any significant increase in labor costs, deterioration of employee relations, slowdowns or work stoppages at any of our locations, whether due to union activities,

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      Acts of war or acts of terrorism may cause damage or disruption to our employees, facilities, customers, partners, suppliers and distributors, which could have a material adverse effect on our business, financial condition, results of operations and cash flows. Such acts may also cause damage or disruption to transportation and communication systems and our ability to manage logistics effectively.

      We maintain an internet web site at www.swiftbrands.com. The information on this site does not form a part of this Form 10-K. Our Form 10-K may be inspected, without charge, at the offices of the Securities and Exchange Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of such materials may also be obtained by mail at prescribed rates from the Public Reference Room of the Securities and Exchange Commission at that address. You may obtain information on the operation of the Public Reference Room by calling the Securities and Exchange Commission at 1-800-SEC-0330. Copies of such materials may also be obtained from the web site that the Securities and Exchange Commission maintains at www.sec.gov.

      In addition to our owned beef, pork and lamb processing facilities described below, we lease our corporate headquarters building in Greeley, Colorado, our four distribution facilities located in Nebraska, Arizona, Colorado and Texas and our sales offices in the US and distribution centers and warehouses in Australia. We have also reached an agreement to construct an approximately 32,000 square foot customer solutions and product development complex adjoining our headquarters building in Greeley, Colorado that will be leased from our current landlord on our existing headquarters building. We also own our distribution facilities in Hawaii and Delaware and have sales liaison offices in Korea, Japan, Mexico, Hong Kong and Taiwan. The processing facility locations and capacity (based on current operating configurations and USDA limitations) are shown in the tables below:

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      For information regarding legal proceedings, see Note 10, “Legal Proceedings” to our consolidated financial statements included in Item 8 of this Form 10-K.

      None.

PART II

      There is no established public trading market for any class of common equity of Swift Holdings or Swift Operating. Neither Swift Holdings nor Swift Operating issues any of its equity securities in conjunction with an equity compensation plan. As of May 30, 2004, S&C Holdco 2, Inc. was the only stockholder of Swift Holdings, and Swift Holdings was the only stockholder of Swift Operating.

      We have not paid any dividends or other distributions with respect to our common stock since our formation in May 2002. Any payment of future dividends and the amounts thereof will be dependent upon our earnings, fiscal requirements and other factors deemed relevant by our board of directors. We currently do not intend to pay any cash dividends in the foreseeable future; rather, we intend to retain earnings to provide for the operation and expansion of our business.

      Accounting principles generally accepted in the United States of America require our operating results prior to the Transaction (the periods prior to September 19, 2002) to be reported as the results of the ConAgra Red Meat Business (the “Predecessor”) in the selected financial data. Our operating results subsequent to the Transaction are presented as the “Successor’s” results in the selected financial data and include the 249 days from September 19, 2002 through May 25, 2003 and the fiscal year ended May 30, 2004.

      The following table sets forth selected financial data of the ConAgra Red Meat Business on a combined basis at the dates and for the periods indicated. The combined statement of earnings data for the fiscal year ended May 26, 2002 and the 115 days ended September 18, 2002 were derived from the ConAgra Red Meat Business audited combined financial statements included in this Form 10-K. The combined statement of earnings data for the fiscal years ended May 28, 2000 and May 27, 2001 and the combined balance sheet data as of May 27, 2001 and May 26, 2002 were derived from the ConAgra Red Meat Business audited combined financial statements, which are not included in this Form 10-K. The combined balance sheet data as of May 28, 2000 was derived from the ConAgra Red Meat Business unaudited combined financial statements

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      The financial statements of the ConAgra Red Meat Business include the results of ConAgra Foods’ domestic beef and pork businesses, Australia Meat Holding Pty. Ltd. and other entities that were historically operated by ConAgra Foods as an integrated business, which included a domestic cattle feeding operation and other assets and insignificant businesses that we did not acquire and liabilities that we did not assume in the Transaction. The financial data for the Successor set forth below represents the results of only those entities and operations within the ConAgra Red Meat Business that we actually acquired in the Transaction.

      The selected statement of earnings data for the 115 days ended September 18, 2002 was derived from the audited financial statements of the Predecessor included in this Form 10-K. The selected statements of earnings data for the 249 days ended May 25, 2003 and fiscal year ended May 30, 2004, and the balance sheet data at May 25, 2003 and May 30, 2004 were derived from our audited consolidated financial statements and accompanying notes included elsewhere in this Form 10-K. The results of operations for any partial fiscal year period or for the periods presented for the Predecessor or Successor are not necessarily indicative of the results of operations to be expected for other periods or for the full fiscal year.

      You should read the selected financial data set forth below in conjunction with, and the data is qualified by reference to, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and the consolidated financial statements and accompanying notes included elsewhere in this Form 10-K.

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	(i)	Includes amortization of deferred financing costs and accretion of bond discount of $4,072 and $1,703, respectively, for the 249 days ended May 25, 2003 and $6,594 and $2,537, respectively, for the fiscal year ended May 30, 2004.

      The following discussion and analysis of our financial condition and results of operations should be read in conjunction with Item 6. Selected Financial Data and the financial statements and accompanying notes

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Overview

      The ConAgra Red Meat Business was developed through a series of acquisitions made by ConAgra Foods in the late 1980’s and early 1990’s. E.A. Miller Enterprises Inc. and Monfort Inc. were both acquired in 1987 to form the foundation of the current domestic beef company. ConAgra Foods acquired Swift Independent Packing Co. during the late 1980’s in two separate transactions that formed the foundation of the current domestic pork business. Finally, the Australian operations were acquired in three separate transactions during the 1990’s. Since the time of the first acquisition, the ConAgra Red Meat Business was operated as a division of ConAgra Foods until September 18, 2002.

      Historically, the domestic cattle feeding operations were wholly owned by ConAgra Beef Company. Substantially all of the sales from those operations were made to our domestic beef processing facilities. For the fiscal year ended May 30, 2004, the domestic cattle feeding operations provided approximately 16% of the cattle processed by our domestic beef processing operations. The domestic cattle feeding operations consist of four feedlots that feed over 700,000 cattle annually. In connection with the Transaction, a subsidiary of Swift Foods Company acquired the domestic cattle feeding operations that were historically included in the domestic beef business. As part of the Transaction, we entered into an agreement with the entity that acquired the domestic cattle feeding operations under which it will continue to supply cattle to Swift Beef consistent with past practices. In June 2004, that entity disposed of a feedlot located in Friona, Texas which is immaterial to our needs for sources of supply.

Summary Unaudited Pro Forma Financial and Other Data

      We provide the following supplemental financial data to assist in understanding our operating results. EBITDA represents income before interest, income taxes, depreciation and amortization. EBITDA is not intended to represent cash from operations as defined by generally accepted accounting principles (GAAP) and should not be considered as an alternative to cash flow or operating income as measured by GAAP. We believe EBITDA provides investors and analysts in the meat processing industry useful information with which to analyze and compare our results on a comparable basis with other companies on the basis of operating performance, leverage and liquidity. However, since EBITDA is not defined by GAAP it may not be calculated on the same basis as other similarly titled measures of other companies within the meat processing industry. Further, EBITDA is the starting point in the calculation of “Adjusted EBITDA” which is a financial measure defined in our senior credit facilities and is the numerator in our existing financial covenants under those credit agreements. As such, we believe providing EBITDA information will assist our current lenders and our investors with a better understanding of the calculation of those covenant ratios periodically.

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      The summary unaudited pro forma financial and other data of Swift Holdings give effect to the Transaction as if it occurred as of the beginning of fiscal 2003 in the case of the unaudited pro forma statement of earnings data. A pro forma balance sheet has not been prepared because the balance sheet as of May 25, 2003 included elsewhere in this Form 10-K reflects the impacts of the Transaction. The unaudited pro forma

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		of operating lease expense which management believes is representative of the interest component of rent expense.

Results of Operations

      Accounting principles generally accepted in the United States of America require our operating results prior to the Transaction to be reported as the results of the Predecessor for periods prior to September 19, 2002 in the financial statements. Our operating results subsequent to the Transaction are presented as the Successor’s results in the financial statements and include the 249 days ended May 25, 2003 and the fiscal year ended May 30, 2004.

      The financial results for periods prior to September 19, 2002 reflect the results of all of the historical operations of the ConAgra Red Meat Business, including the results of ConAgra Foods’ domestic beef and pork businesses, the domestic cattle feeding operations, Australia Meat Holding Pty. Ltd., Weld Insurance Company and other related entities which have historically been operated as an integrated business. We did not acquire the domestic cattle feeding operations, the capital stock of Weld Insurance Company, other assets and insignificant businesses and liabilities that were historically included in the ConAgra Red Meat Business. We refer to these businesses collectively as the “Businesses Not Acquired.” In the Transaction, we acquired ConAgra Foods’ domestic beef, pork and lamb processing businesses and its Australian beef business. We refer to these businesses collectively as the “Acquired Business.” The financial results for periods on or after September 19, 2002 reflect only the operations of the Acquired Business.

      Our fiscal year is the 52 or 53 week period ending on the last Sunday in May. Our financial statements include activity from the fiscal year ended May 30, 2004 (53 weeks), the fiscal year ended May 25, 2003 (pro forma) (52 weeks) and the fiscal year ended May 26, 2002 (Predecessor basis) (52 weeks).

      The information presented below for the fiscal year ended May 30, 2004 compared to the fiscal year ended May 25, 2003 (Pro forma) is derived from comparing (1) the results of the Acquired Business for the fiscal year ended May 30, 2004 to (2) the sum of the historical financial statements of the Predecessor ConAgra Red Meat Business after deducting the results of the Businesses Not Acquired for the 115 day period from May 26, 2002 through September 18, 2002 and including pro forma adjustments related to the Transaction, plus the results of the Acquired Business for the 249 day period from September 19, 2002 through May 25, 2003.

      Net Sales. Net sales for the fiscal year ended May 30, 2004 increased $1,499.4 million, or 18%, as compared to the net sales for the Acquired Business for the fiscal year ended May 25, 2003 (Pro forma), due to higher selling prices coupled with a 3% increase in sales volumes. In addition, Australia’s results benefited from a 26% increase in average Australian dollar to US dollar currency translation rates as compared to the prior fiscal year.

      Cost of Goods Sold. Cost of goods sold increased $1,489.0 million, or 18%, for the fiscal year ended May 30, 2004 as compared to the fiscal year ended May 25, 2003 (Pro forma). The increase resulted from higher livestock costs, a 3% increase in volumes between the two periods, and a 26% increase in average Australian dollar to US dollar currency translation rates as compared to the prior fiscal year. In addition, following the December 23, 2003 identification of the first-ever US case of BSE in a single dairy cow and resultant closure of foreign borders to US beef exports, we recorded a $43.0 million charge related to the direct and indirect costs incurred.

      Gross margin percentages (gross profit as a percent of net sales) declined 0.4% to 2.8% for the current fiscal year. The decline in gross margin as a percentage of sales is primarily due to the recording of the BSE-related charge discussed in “Cost of Goods Sold” above.

      Selling, General and Administrative. Selling, general and administrative expenses were $134.1 million for the fiscal year ended May 30, 2004 as compared to $127.2 million for the fiscal year ended May 25, 2003 (Pro forma). These expenses increased by $6.9 million, or 5%, due to increases in labor, facilities, professional

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      Corporate Allocations/ Interest Expense. Corporate allocations for the fiscal year ended May 25, 2003 were $3.6 million. No corporate allocations were recorded subsequent to the Transaction date of September 19, 2002, although payments to our prior owner in accordance with the Transition Services Agreement during the 249 days ended May 25, 2003 totaled $4.5 million which is reflected in selling, general and administrative expenses. Interest expense for the fiscal year ended May 30, 2004 was $73.6 million as compared to $69.9 million for the fiscal year ended May 25, 2003 (Pro forma). For more information on interest expense see Note 6, “Long-term Debt and Loan Agreements” to our consolidated financial statements included in Item 8 of this Form 10-K.

      Other Items. Our operating results for the fiscal year ended May 25, 2003 (Pro forma) were impacted by a gain on business interruption insurance recovery of $21.2 million related to a December 2000 fire at a beef processing facility operated by the Predecessor (see Note 13 “Business Interruption Recovery” to our consolidated financial statements included in Item 8 of this Form 10-K). Our results were also impacted by a translation loss of $0.8 million and a gain of $9.0 million during the fiscal years ended May 30, 2004 and May 25, 2003 (Pro forma), respectively. The gain related to gains on US Dollar denominated intercompany borrowings by Swift Australia. During the second quarter ended November 23, 2003, we began a policy of entering into forward contracts to hedge our exposure on intercompany borrowings with our Australian subsidiary. Changes in fair value of these contracts have been recorded in the statement of earnings as an offset to translation gains or losses on intercompany borrowings.

      Income Taxes. For the fiscal year ended May 30, 2004 and the 249 day period ended May 25, 2003, our effective tax rate for the Acquired Business was approximately 34.5% as compared to 36% for prior periods on a Predecessor basis. The decrease in our effective rate was primarily due to the extraterritorial income exclusion that allows certain foreign sales to be non-taxable. As we are no longer a division of our previous parent company, we must file separate consolidated tax returns for the Acquired Business and the parent entities on a stand-alone basis.

      The information presented below for the fiscal year ended May 25, 2003 (Pro forma) compared to the fiscal year ended May 26, 2002 (Predecessor basis) is derived from comparing (1) the historical financial statements of the Predecessor ConAgra Red Meat Business for the fiscal year ended May 26, 2002 to (2) the sum of the historical financial statements of the Predecessor ConAgra Red Meat Business after deducting the results of the Businesses Not Acquired for the 115 day period from May 26, 2002 through September 18, 2002 and including pro forma adjustments related to the Transaction, plus the results of the Acquired Business for the 249 day period from September 19, 2002 through May 25, 2003.

      Net Sales. Pro forma net sales for the Acquired Business for the fiscal year ended May 25, 2003 decreased $96.1 million, or 1%, as compared to the fiscal year ended May 26, 2002 for the Predecessor, due to lower selling prices, which were offset by increased sales volumes.

      Cost of Goods Sold. Pro forma cost of goods sold was relatively flat year over year with $8,114.0 million for the fiscal year ended May 25, 2003 as compared to $8,174.5 million for the fiscal year ended May 26, 2002 for the Predecessor. The fiscal 2003 results were impacted by higher insurance costs due to general market conditions as a result of world events, and becoming a stand-alone company.

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      Gross margin percentages (gross profit as a percent of net sales) remained relatively flat at 3% for both periods.

      Selling, General and Administrative. Pro forma selling, general and administrative expenses were $127.2 million for the fiscal year ended May 25, 2003 as compared to $108.3 million for the fiscal year ended May 26, 2002 for the Predecessor. These expenses increased by $18.8 million due to increases in labor, facilities, professional services and costs associated with becoming a stand-alone company, offset by the adoption, effective May 27, 2002, of SFAS No. 142, which reduced intangible amortization expense recorded for the fiscal year ended May 25, 2003 by $2.4 million. During the quarter ended May 25, 2003, one of our customers filed for bankruptcy protection under Chapter 11 of the Bankruptcy Code. We increased our reserve for bad debts by $3.8 million (including $2.9 million related to Swift Beef and $0.9 million related to Swift Pork) for amounts estimated to be unrecoverable from this customer.

      Corporate Allocations/ Interest Expense. Corporate allocations for the fiscal year ended May 26, 2002 were $75.5 million. No corporate allocations were recorded subsequent to the Transaction date of September 19, 2002, although payments to our prior owner in accordance with the Transition Services Agreement during the 249 days ended May 25, 2003 totaled $4.5 million. For more information on interest expense, see Note 6, “Long-term Debt and Loan Agreements” to our consolidated financial statements included in Item 8 of this Form 10-K.

      Other Items. Our operating results for the fiscal year ended May 25, 2003 were impacted by a gain on business interruption insurance recovery of $21.2 million related to a December 2000 fire at a beef processing facility operated by the Predecessor (see Note 13 “Business Interruption Recovery” to our consolidated financial statements included in Item 8 of this Form 10-K). Our results were also impacted by a translation gain of $9.0 million related to gains on US Dollar denominated intercompany borrowings.

      Income Taxes. For the 249 days ended May 25, 2003, our effective tax rate for the Acquired Business was approximately 34.5% as compared to 36% for prior periods on a Predecessor basis. The decrease in our effective rate was primarily due to the extraterritorial income exclusion that allows certain foreign sales to be non-taxable. As we are no longer a division of our previous parent company, we must file separate consolidated tax returns for the Acquired Business and the parent entities on a stand-alone basis.

Segment Information

      In connection with the Transaction, we executed a management reporting reorganization resulting in three primary segments: Swift Beef, Swift Pork and Swift Australia. Prior to the Transaction, the Predecessor (including each of its four divisions: US Beef, US Pork, Cattle Feeding and Australia) was a component of the Meat Processing Segment of ConAgra Foods, Inc. The segment disclosures of the Predecessor have been restated to provide comparable financial information for each of our three primary segments that resulted from the Transaction and the management reorganization.

      Certain reclassifications have been made to the prior periods’ reporting segment presentation to conform to the way in which our chief operating decision maker as defined in SFAS 131 currently views and evaluates the financial performance of our operating segments.

      Swift Beef. The majority of Swift Beef’s revenues are generated from the sale of fresh meat, which includes chuck cuts, rib cuts, loin cuts, round cuts, thin meats, ground beef and other products. In addition, Swift Beef also sells beef by-products to the variety meat, feed processing, fertilizer and pet food industries. Cattle hides are sold for both domestic and international use, primarily to the clothing and automotive industries. US beef margins were negatively affected by the loss of export markets on December 23, 2003 as a result of the discovery of BSE in a single dairy cow in Washington state and resultant border closures as approximately 15% of the historical revenue derived from the animal were generated from export sales of beef and beef by-products, many of which have no domestic market. US livestock raw material prices have not declined sufficiently to absorb this revenue loss.

      Swift Pork. A significant portion of Swift Pork’s revenues are generated from the sale predominantly to retailers of fresh pork products including trimmed cuts such as loins, roasts, chops, butts, picnics and ribs.

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      Swift Australia. The majority of Swift Australia’s revenues are generated from the sale of fresh meat, which includes chuck cuts, rib cuts, loin cuts, round cuts, thin meats, ground beef and other products. Approximately 80% of the beef product sold by Swift Australia is derived from grass-fed animals. The remainder of Swift Australia’s beef products is derived from grain-fed animals that are sold primarily to Japan. Other sales are derived from our foods division, which manufactures meat patties and distributes products for McDonald’s in Australia and produces value-added meat products including toppings for pizzas. The remaining sales are derived from our wholesale business which sells and distributes boxed meat products to brokers who in turn resell those products to end customers. Swift Australia’s margins and volumes for exports have increased as a result of the Avian flu and BSE issues affecting US poultry and beef exports in the last year as Australian beef has become a replacement source of protein for those consumers.

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      Corporate, Other and Eliminations. This line item includes certain revenues and expenses not directly attributable to the primary segments, as well as eliminations resulting from the consolidation process. In the Predecessor Entity periods, this line also includes the cattle feeding division which we did not acquire in the Transaction.