PORK Premium Std Farms (MM)

2006 Year-to-Date Highlights: -- Net income the first nine months of fiscal 2006 was $41.4 million, or $1.32 per diluted share, which includes an after-tax charge of $0.43 per diluted share for the early extinguishment of debt. -- Export sales volume improved by 31% in the fiscal third quarter versus the comparable quarter last year. -- Announced the planned expansion of Milan, MO processing plant, which will increase total company processing capacity by 15%. KANSAS CITY, Mo., Feb. 7 /PRNewswire-FirstCall/ -- Premium Standard Farms, Inc. (NASDAQ:PORK) (PSF), a leading vertically integrated provider of pork products, today announced results for its fiscal year 2006 third quarter ended December 24, 2005. Fiscal Third Quarter Results Net sales for the quarter totaled $242.9 million, compared to $246.8 million during the third quarter of fiscal 2005. The decrease in net sales during the quarter can be primarily attributed to a 17% decline in hog prices, which was partially offset by a combination of increased volume of $16.2 million and favorable hog hedging. Net income for the fiscal third quarter was $13.8 million, or $0.44 per diluted share, compared to net income of $23.0 million, or $0.74 per diluted share, for the fiscal third quarter of 2005. "We are pleased with our third quarter results, which were in line with internal expectations," commented John Meyer, CEO of Premium Standard Farms. "During the quarter, our net income increased by 12.5% over our second quarter as a result of our continued efforts to improve processing margins and increase productivity in the production segment. Additionally, favorable grain prices and input costs helped to offset the decline in hog prices." Mr. Meyer continued, "Export demand from both our plants showed continued strength throughout the quarter. Similar to the third quarter, we feel that international business will continue to have a positive effect on our future results. As expected, we continued to experience reduced demand in our domestic markets when compared to the historically high levels seen last year." First Nine Months Fiscal 2006 Results Net sales for the first nine months of fiscal 2006 were $701.4 million compared to $677.7 million last year. Net income in the first nine months of fiscal 2006 was $41.4 million, or $1.32 per diluted share, compared to net income of $44.3 million, or $1.43 per diluted share, in the same period last year. The results for the first nine months of fiscal 2006 included a $21.7 million pre-tax charge from the early extinguishment of debt, representing an after-tax charge of $0.43 per diluted share. In the first quarter of fiscal 2006, the Company retired, through a tender offer, $173 million of 9.25% senior notes previously outstanding, with a combination of cash and $157 million of bank revolving loans. Subsequent to the tender offer, $125 million of revolving loans were converted into a 5.9% ten-year bank term loan. Outlook According to the recently released December USDA Hog & Pig report, favorable industry supply trends are likely to continue into fiscal 2007. Despite some recent significant declines in current cash hog prices and near term hog futures, longer term hog futures continue to remain at historical levels, as expected. Despite the recent issues surrounding US beef exports to Japan, PSF believes that regardless of the final outcome, these actions will have minimal impact on the pork industry and the Company. The Company also expects export sales to further contribute to the Company's organic growth and outpace the pork industry. Mr. Meyer noted, "Our focus remains on increasing our processing operations, and preparations are underway to expand the processing capacity of our Milan, MO plant from 7,400 to 10,000 head per day. We expect to see the impact of this increased processing in the spring of calendar 2007. In addition to our organic growth initiatives, we are actively pursuing strategic acquisition opportunities to add new further processing or value-added capabilities to our business." About PSF PSF is one of the largest vertically integrated providers of pork products in the United States, producing consistent, high quality pork products for the retail, wholesale, foodservice, export, and further processor markets. PSF is the nation's second largest pork producer and sixth largest pork processor, with approximately 4,100 employees working at farms and processing facilities in Missouri, North Carolina, and Texas. This news release contains "forward-looking statements" within the meaning of the federal securities laws. Naturally, all forward-looking statements involve risk and uncertainty and actual results or events could be materially different. Although we believe that our expectations are based on reasonable assumptions, we can give no assurance that our goals will be achieved. Important factors that could cause actual results to differ include: economic conditions generally and in our principal markets; competitive practices and consolidation in the pork production and processing industries; the impact of current and future laws, government regulations and fiscal policies affecting our industry and operations, including environmental laws and regulations, trade embargoes and tariffs; domestic and international transportation disruptions; food safety; the availability of additional capital to fund future commitments and expansion and the cost and terms of financing; outbreaks of disease in our herds; feed ingredient costs; fluctuations in live hog and wholesale pork prices; customer demands and preferences; and the occurrence of natural disasters and other occurrences beyond our control. In light of these risks, uncertainties and assumptions, the forward-looking events discussed might not occur. A copy of the Company's Form 10-Q for third quarter of fiscal 2006 will be available on the internet at http://www.psfarms.com/ . Premium Standard Farms, Inc. and Subsidiaries Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) 13 and 39 weeks ended December 24, 2005 and December 25, 2004 (in 000's except share and per share data) (Unaudited) 13 Weeks Ended 39 Weeks Ended December December December December 24 25 24 25 2005 2004 2005 2004 Net sales $242,899 $246,759 $701,437 $677,725 Cost of goods sold 212,306 198,159 586,897 574,869 Gross profit 30,593 48,600 114,540 102,856 Selling, general and administrative expenses 7,332 6,324 20,451 15,436 Loss on early extinguishment of debt - - 21,707 - Other income (197) (213) (553) (875) Operating income 23,458 42,489 72,935 88,295 Interest expense (income): Interest expense 2,089 4,889 7,379 15,908 Interest income (91) (36) (243) (80) Interest expense, net 1,998 4,853 7,136 15,828 Income before income taxes 21,460 37,636 65,799 72,467 Income tax expense 7,706 14,640 24,443 28,190 Net income $13,754 $22,996 $41,356 $44,277 Unrealized gain on interest rate swap, net of tax 1,202 - 1,413 54 Comprehensive income $14,956 $22,996 $42,769 $44,331 Earnings per share: Basic $0.44 $0.74 $1.34 $1.43 Diluted $0.44 $0.74 $1.32 $1.43 Weighted average number of common shares outstanding: Basic 31,067,575 30,928,593 30,974,874 30,928,593 Diluted 31,602,256 31,106,857 31,273,279 31,046,760 Dividends declared per share $0.06 $- $0.18 $- First Call Analyst: FCMN Contact: DATASOURCE: Premium Standard Farms, Inc. CONTACT: Investor, Steve Lightstone, CFO of Premium Standard Farms, Inc., +1-816-472-7675 Web site: http://www.psfarms.com/

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