INVESTMENTS

Investments consist of the following:



Equity Investment	% Owned	January 29, 2012		May 1, 2011
		(in millions)
Campofrío Food Group (CFG)	37%	$	375.2	$	445.1
Mexican joint ventures	50%	104.8		110.2
Other	Various	26.4		27.2
Total investments		$	506.4	$	582.5

Each quarter, we review the carrying value of our investments and consider whether indicators of impairment exist. Examples of impairment indicators include a history or expectation of future operating losses and declines in a quoted share price, among other factors. If an impairment indicator exists, we must evaluate the fair value of our investment to determine if a loss in value, which is other than temporary, has occurred. We are required to recognize a loss in value of our investment if that loss is considered to be other than temporary.

As of January 29, 2012, we held 37,811,302 shares of CFG common stock. Shares of CFG are publicly traded on the Bolsa de Madrid exchange (Madrid Exchange). However, we do not believe the quoted share price on the Madrid Exchange is, by itself, reflective of the fair value of our investment in CFG for the following reasons:


▪	the minority shares traded on the Madrid Exchange confer no special rights or privileges to buyers. In contrast, the shares comprising our 37% stake in CFG contractually entitle us to two seats on CFG's 9-person board of directors, giving us the ability to exert significant influence over the strategic and operational decisions of our investee.


▪	the stock is very thinly traded. CFG is a closely held company, with the three largest shareholders owning approximately 74% of the outstanding shares. We are CFG's largest shareholder, with a 37% stake.

The year to date average daily trading volume in 2012 represents just 0.007% of the total outstanding shares (average trading volume of 7,200 shares while the total number of shares outstanding is in excess of 102 million). The lack of an active market can cause significant fluctuations and volatility in the stock price that are not commensurate with fundamental changes in the underlying business and the fair value of our holding in CFG. Shares trading on the Madrid Exchange have ranged from a high of €9.91 ($14.70) to a low €5.28 ($7.35) per share during the last 12 months, with upward and downward fluctuations in between.

The table below shows CFG's intra-day high share price and Smithfield's carrying value, expressed in euro per share, on various dates relevant to our disclosures.



Date	Share Price	Carrying Value
October 30, 2011⁽¹⁾	€6.35	€7.83
January 29, 2012 ⁽¹⁾	€6.75	€7.55
February 17, 2012	€7.20	€7.54
March 5, 2012	€6.61	€7.51

——————————————


⁽¹⁾	Share prices on quarter end dates reflect the last trading day in the quarter.

As the table above shows, the carrying value of our investment in CFG was below the quoted market price on the Madrid Exchange at the end of the third quarter, indicating a possible impairment of our investment in CFG. However, as noted above, we do not consider the share price on the Madrid Exchange, by itself, to be determinative of fair value.

In assessing the fair value of our investment, we considered a variety of information, including an independent third party valuation report, which incorporates generally accepted valuation techniques, CFG's history of positive cash flows, expectations about the future cash flows of CFG, market multiples for comparable businesses, and an influence premium applied to the market price of CFG's shares on the Madrid Exchange to adjust for our contractual right to two board seats and our ability to exert significant influence over the operational and strategic decisions of the company.

Based on an evaluation of all these factors, we concluded the fair value of our investment in CFG as of January 29, 2012, exceeded its carrying amount.

Equity in loss (income) of affiliates consists of the following:



		Three Months Ended						Nine Months Ended
Equity Investment	Segment	January 29, 2012			January 30, 2011			January 29, 2012			January 30, 2011
		(in millions)						(in millions)
CFG ⁽¹⁾	International	$	28.2		$	(7.1	)	$	24.0		$	(18.0	)
Mexican joint ventures	International	(6.4		)	(7.8		)	(11.3		)	(23.6		)
All other equity method investments	Various	0.2			(0.3		)	(1.4		)	(2.7		)
Equity in loss (income) of affiliates		$	22.0		$	(15.2	)	$	11.3		$	(44.3	)

——————————————


⁽¹⁾	CFG prepares its financial statements in accordance with International Financial Reporting Standards. Our share of CFG’s results reflects U.S. GAAP adjustments and thus, there may be differences between the amounts we report for CFG and the amounts reported by CFG.

In December 2011 (fiscal 2012), the board of CFG approved a multi-year plan to consolidate and streamline its manufacturing operations to improve operating efficiencies and increase utilization (the CFG Consolidation Plan). The CFG Consolidation Plan includes the disposal of certain assets, employee redundancy costs and the contribution of CFG's French cooked ham business into a newly formed joint venture. As a result, we recorded our share of CFG's charges totaling $38.7 million in equity in loss (income) of affiliates within the International segment in the third quarter of fiscal 2012.