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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 11, 2003, 1,000 shares of the Registrant’s common stock were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

      None

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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 wrong. 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, live hog production costs, 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 20,150 cattle and 43,000 hogs daily in the United States and 5,320 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 249 days ended May 25, 2003, these businesses represented approximately 67%, 19% and 14% of our net sales, respectively. Swift Beef includes a lamb business, which contributed less than 1% of total net sales for the 249 days ended May 25, 2003.

      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 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 $1,080.7 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 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. The international and foodservice channels, on average, pay premiums over USDA standard prices for customized production and packaging, consistent quality, timely delivery and other services. The USDA projects continued growth of beef and 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 31% for the 249 days ended May 25, 2003. 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.

      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 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.

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      In September 2001, we combined our domestic beef and pork operations into 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 in 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 each 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 249 days ended May 25, 2003.

      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;
	•	international markets, including Japan, Mexico, Korea, Canada and China; and
	•	the foodservice industry, including foodservice distributors, fast food, restaurant and hotel chains and other institutional customers.

      Our largest distribution channel is retail. Over the last three years, we have increased sales to the foodservice and international channels to a combined 31% for the 249 days ended May 25, 2003. One of the key elements to our business strategy is to continue to shift our sales mix to the more profitable foodservice and international channels. Total net sales contribution by channel is:

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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 (Bovine Spongiform Encephalopathy), has not been used. Currently, we have approximately 3,600 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.

      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.”

      We processed 3.0 million fed cattle, 400,000 non-fed cattle and 500,000 lambs at our domestic facilities in the 249 days ended May 25, 2003. 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 a carcass pasteurization program that reduces the presence of pathogenic bacteria from live animal to chilled carcass.

      A significant portion of Swift Pork’s revenues are generated from the sale of fresh pork products predominantly to retailers including trimmed cuts such as loins, roasts, chops, butts, picnics and ribs. Other pork products, including hams, bellies and trimmings are predominantly sold 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 89% of total Swift Pork net sales for the 249 days ended May 25, 2003. Pork exports contributed approximately 7% of

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      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 50% 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 50% 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.

      We processed 7.5 million hogs at our facilities in the 249 days ended May 25, 2003. 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 value-added products and consumer-ready products. Our Louisville facility produces additional value-added products including seasoned and marinated pork items. 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 Worthington and Marshalltown plants are the only two pork processing facilities in the United States with an ISO 9002 certified quality management system, and Worthington is the only active European Union certified facility in the United States which gives us the unique ability to ship primal cuts from the United States to Europe.

      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 by the meat processing division, from the sale of fresh meat, which includes chuck cuts, rib cuts, loin cuts, round cuts, thin meats and other products. Approximately 85% of the beef product sold by Swift Australia is derived from grass-fed animals and the remainder are 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 249 days ended May 25, 2003. The foods division

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      Swift Australia currently generates approximately 60% of total net sales as exports to foreign countries, including Japan, our largest export market, and the United States. The remaining 40% is derived in Australia.

      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 producers. On average, cattle remain in our feedlots for approximately five months before they are transferred to our processing operations. Our feedlots produce approximately 180,000 cattle per year for processing.

      Swift Australia’s processing facilities are strategically located for efficient livestock acquisition, availability of labor and access to shipping and distribution. We processed 0.9 million cattle at our Australian facilities for the 249 days ended May 25, 2003. 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.

      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. All products can be tracked to provide customer protection. 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 2002, commercial beef production approximated 27.1 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

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      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 27.9 billions pounds in 2002.

      Pork products are the third largest source of meat protein in the United States (behind chicken and beef). In 2002, commercial pork production approximated 19.7 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 leader in food safety standards. The United States is the third largest producer worldwide, behind China and the European Union, and one of the largest exporters, along with the European Union and Canada. United States production accounts for about 10% of total world supply.

      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 relatively stable, with population growth and exports as the primary drivers for increased aggregate demand. According to the USDA, pork consumption approximated 19.1 billion pounds in 2002.

      Australia produced approximately 4.6 billion pounds of beef in 2002. 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 2.9 billion pounds for calendar year 2003. 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.

      The Australian beef processing industry has dealt with two main issues over the last twelve months. 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 the prior two years. Volumes for calendar year 2003 are forecast to remain 17% below calendar year 2000 levels despite the improvement. The second significant issue has been the widespread severe drought conditions, with calendar year 2002 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 continue to affect the outlook for the industry.

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

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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 Excel Corporation. Management believes that the principal competitive factors in the beef and pork processing industries are price, quality, food safety, product distribution and brand loyalty. Some of our competitors have greater financial and other resources and enjoy wider recognition for their branded products.

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, specifically as to proposed new EPA rules.

      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 & 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 suppliers. ConAgra Foods, Swift Beef and certain of their competitors are subject to current litigation alleging the use of captive cattle supplies in violation of this statute as described in Note 10, “Legal Proceedings” of our consolidated financial statements included in Item 8 of this Form 10-K.

      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. We estimate that the total recall costs associated with the return, destruction and replacement of affected products and any advertising or announcements necessary to effect the recall will be approximately $5.0 million. The

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      Immediately following the expanded 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. We estimate that additional costs to effect 100% testing, consisting of increased labor costs, testing materials, expanded storage expense and product yield loss, will approximate $4.0 million annually.

      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. In addition, the EPA has proposed revisions to the effluent limitations guidelines and standards for the meat processing industry. The proposed regulation would 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. The adopted rule and the proposed rule, when adopted, could have a significant impact on our operations.

      One of our subsidiaries, Swift Beef Company (formerly known as ConAgra Beef Company), has been identified as a potentially responsible party at the Bill Johns Waste Oil Site in Jacksonville, Duval County, Florida. The Bill Johns Waste Oil Site is not listed on the National Priorities List of Superfund sites, but it was the subject of an investigation by the EPA. The basis for Swift Beef Company’s alleged liability is a small amount of waste oil sent to the Bill Johns Waste Oil Site by a distributor affiliated with the company. On January 8, 2002, a Consent Decree was lodged in the Middle District of Florida in a case titled United States v. Phillips Petroleum Company, Case No. 3:00-CV-620-J-25c. Under this Consent Decree, which has not yet been entered, the settling defendants agreed to reimburse the United States for $1,450,000 in past response costs incurred at the site. Swift Beef Company is a party to the Consent Decree, but because it is considered a de minimis contributor of waste oil at the site, its share of the settlement is less than $5,000. The EPA does not propose to take any further remedial action at the site, although the State of Florida has initiated an inquiry into whether there is groundwater contamination at the site that should be addressed. Because Swift Beef Company was a de minimis contributor to the site, we do not consider our potential liability at the site to be material.

      On May 30, 2003, Swift Beef Company received an administrative order from the EPA under the authority of the federal Clean Water Act in connection with its tannery operations in Cactus, Texas. The order

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      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 25, 2003, we had approximately 21,300 employees, including 11,000 employees in Swift Beef, 5,400 in Swift Pork and 4,900 in Swift Australia. We consider relations with our employees to be good. Approximately 11,300 employees at our United States facilities are represented by labor organizations and collective bargaining agreements expiring between 2003 and 2006. Approximately 4,100 employees at our Australia plants are parties to Awards of Enterprise or Certified Agreements with various labor organizations and Swift Australia.

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 CDC 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 bovine spongiform encephalopathy (commonly referred to as “mad cow disease” or 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

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      We have a significant amount of debt. As of May 25, 2003, we had total outstanding debt of $624.3 million (inclusive of the debt discount applicable to the senior notes), including capital lease obligations of $21.1 million, $252.2 million of secured debt and $150.0 million of debt that is subordinated to the senior notes. In addition we had $37.3 million of outstanding letters of credit and $239.5 million of senior debt available for borrowing under our revolving credit facility. The indenture governing the 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.

      Our substantial debt could:

	•	make it difficult for us to satisfy our obligations, including making interest payments on the senior notes and on other 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 than us; 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 the senior notes and the 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;

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	•	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.

      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 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.

      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. 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.

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      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 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 state and local Australian authorities. Our failure to comply with applicable laws and regulations could subject us to administrative penalties and injunctive relief, civil remedies, including fines, injunctions, recalls of our products or seizures of our properties, as well as potential criminal sanctions. These penalties or changes in the applicable laws and regulations could adversely affect our business, financial condition, results of operations and cash flows.

      For the 249 days ended May 25, 2003, 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 January 7, 2003, the Mexican government initiated an anti-dumping investigation against imports of pork from the United States during the period from April 1, 2002 through September 30, 2002. The results of that investigation could affect the tariffs we are required to pay on our exports of pork products to Mexico.

      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.

      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.

      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

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      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. For example, one of our subsidiaries has been identified as a potentially responsible party at a site in Florida for the alleged disposal of a small amount of waste oil by a distributor affiliated with such subsidiary. Additional 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.

      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.

      We have approximately 21,300 employees worldwide. Approximately 11,300 employees at our United States facilities are represented by labor organizations and collective bargaining agreements. Approximately 4,100 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, employee turnover or otherwise, could have a material adverse effect on our business, financial condition, results of operations and cash flows.

      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, results of operations and financial condition. 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

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      In addition to our owned beef, pork and lamb processing facilities described below, we lease our corporate headquarters building in Greeley, Colorado, our six distribution facilities located in California, Nebraska, Arizona, Colorado, Texas and Illinois and our sales offices in the US and Australia. We also own our distribution facilities in Hawaii and Delaware and have sales liaison offices in Korea, Japan, Mexico and Taiwan. The processing facility locations and capacity (based on current operating configurations and USDA limitations) are shown in the tables below: