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Sanderson Farms, Inc. Reports Results for Third Quarter of Fiscal 2008
LAUREL, Miss., Aug 26, 2008 (BUSINESS WIRE) -- Sanderson Farms, Inc. (NASDAQ: SAFM) today reported results forthe third fiscal quarter and nine months ended July 31, 2008.

Net sales for the third quarter of fiscal 2008 were $466.9 million compared with $394.8million for the same period a year ago. For the quarter, the Company reported a net loss of $3.6 million, or $0.18per diluted share, compared with net income of $30.7 million, or $1.51 per diluted share, for the third quarter of fiscal 2007. The net results for the third quarter of fiscal 2008 include $1.7 million, or $0.09 per share, paid for the settlement of the Company's donning and doffing litigation.

Net sales for the first nine months of fiscal 2008 were $1,263.4 million compared with $1,047.9millionfor the first nine months of fiscal 2007. Net income for the first nine months of fiscal 2008 totaled $8.8million, or $0.43 per diluted share, compared with $54.8 million, or $2.70 per diluted share, forthe firstnine months of last year.

"Our results for the third quarter of fiscal 2008 reflect difficult market conditions for our industry," said Joe F. Sanderson, Jr., chairman and chief executive officer of SandersonFarms, Inc. "While retail and export demand for chicken remained relatively strong during the quarter, casual dining and food service customers have been affected by a significant decline in restaurant traffic due to weak economic conditions and higher fuel prices. At the same time, the markets for both corn and soybean meal have remained high and volatile, resulting in significantly higher feed costs. The combination of much higher costs and the imbalance between domestic supply and demand in the food service markets resulted in much lower margins."

According to Sanderson, overall market prices for poultry products were mixed inthe thirdquarter of fiscal 2008 compared with prices a year ago. As measured by a simple average of the Georgia dock price for whole chickens, prices were higher by approximately 7.0 percent in the Company's third fiscal quarter compared with the same period in 2007, and were higher by 7.9percent for the first nine months of the fiscal year compared with the year-earlier period. Boneless breast meat prices during the quarter averaged 10.7 percent lower than the prior-year period, and averaged 5.7 percent lower for the first nine months of the year compared with the prior year. Jumbo wing prices averaged $0.95 per pound through the first nine months of the fiscal year, down 12.7 percent from the average of $1.09 per pound for the first nine months of fiscal 2007. As aresult of a strong export market, the average market price for bulk leg quarters increased approximately 3.1 percent for the quarter and 10.4 percent for the nine-month period in fiscal 2008 compared with the same periods last year. Cash market prices for corn and soybean meal deliveredto the Company increased 30.7 percent and 52.4 percent, respectively, compared with thethird quarter a year ago, and increased 25.0 percent and 47.3 percent, respectively, for the nine months ended July 31, 2008.

"In spite of challenging market conditions, we are pleased with the progress made toward moving to full production at our newest facility in Waco, Texas," added Sanderson. "While everything will be in place to move to full production at the new plant by October, the plant will operate at approximately 90 percent capacity until market conditions warrant moving to full production. For the remainder of fiscal 2008, we believe market prices will continue to reflect soft consumer demand trends and the uncertain economic outlook. However, having been through volatile cycles, we remain confident that the fundamental rules of supply and demand will work to maintain industry profitability over the long term."

Sanderson Farms will hold a conference call to discuss this press release today, August26, 2008, at 10:00 a.m. Central, 11:00 a.m. Eastern. Investors will have the opportunity to listen to a live Internet broadcast of the conference call through the Company's Web site at www.sandersonfarms.com or throughwww.earnings.com. To listen to the live call, please go to the Web site at least 15 minutes early toregister, download, and install any necessary audio software. For those who cannot listen to the live broadcast, an Internet replay will be available shortly after the call and continue through September2,2008. Those without internet access or who prefer to listen via telephone may call 877-718-5092, access code 2787472.

Sanderson Farms, Inc. is engaged in the production, processing, marketing and distribution of fresh and frozen chicken and other prepared food items. Its shares trade on the NASDAQ Global Select Market under the symbol SAFM.

This press release contains forward-looking statements based on management's current views and assumptions. Actual results and events may differ. For a discussion of these matters, please refer to the "Cautionary Statement Regarding Risks and Uncertainties That May Affect Future Performance" in Item 7 of the Company's 2007 Annual Report on Form 10-K and please refer to the cautionary statement found in Management's Discussion and Analysis of Financial Condition and Results of Operations under the heading "General" in Part I, Item 2 of the Quarterly Report on Form 10-Q for the Company's third quarter ended July 31, 2008.

Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
                                          Three Months Ended                        Nine Months Ended
                                          July 31,                                  July 31,
                                              2008                 2007                 2008                   2007
Net sales                                 $   466,915          $   394,753          $   1,263,357          $   1,047,935
Costs and expenses:
Cost of sales                                 454,678              329,315              1,201,067              916,752
Selling, general and administrative           12,979               18,058               40,930                 43,513
Donning and Doffing Settlement                2,693            0                        2,693              0
                                              470,350              347,373              1,244,690              960,265
Operating income (loss)                       (3,435   )           47,380               18,667                 87,670
Other income (expense):
Interest income                               48                   86                   143                    193
Interest expense                              (2,259   )           (1,139   )           (6,113     )           (3,625     )
Other                                         (34      )           13               7                          24
                                              (2,245   )           (1,040   )           (5,963     )           (3,408     )
Income (loss) before income taxes             (5,680   )           46,340               12,704                 84,262
Income tax expense (benefit)                  (2,035   )           15,660               3,910                  29,500
Net income (loss)                         $   (3,645   )       $   30,680           $   8,794              $   54,762
Basic earnings (loss) per share           $   (0.18    )       $   1.52             $   0.43               $   2.72
Diluted earnings (loss) per share         $   (0.18    )       $   1.51             $   0.43               $   2.70
Dividends per share                       $   0.14             $   0.12             $   0.42               $   0.36
Weighted average shares outstanding:
Basic                                         20,283               20,137               20,264                 20,120
Diluted                                       20,283               20,366               20,469                 20,271
Condensed Consolidated Balance Sheets
(In thousands)
                                         July 31,                    October 31,
                                               2008                        2007
Current assets:
Cash and cash equivalents                $     20,154                $     2,623
Accounts receivable, net                       58,331                      69,484
Refundable income taxes                        7,670                       1,102
Inventories                                    186,976                     119,258
Prepaid expenses                               17,921                      14,734
Total current assets                           291,052                     207,201
Property, plant and equipment                  721,056                     674,018
Less accumulated depreciation                  (305,326  )                 (283,328  )
                                               415,730                     390,690
Other assets                                   2,679                       2,482
Total assets                             $     709,461               $     600,373
Current liabilities:
Accounts payable and accrued expenses    $     105,594               $     78,697
Current maturities of long-term debt           1,114                       455
Total current liabilities                      106,708                     79,152
Long-term debt, less current maturities        175,996                     96,623
Claims payable                                 3,700                       3,700
Deferred income taxes                          15,700                      16,352
Stockholders' equity:
Common stock                                   20,285                      20,239
Paid-in capital                                27,417                      24,719
Retained earnings                              359,655                     359,588
Total stockholders' equity                     407,357                     404,546
                                         $     709,461               $     600,373

SOURCE: Sanderson Farms, Inc.

Sanderson Farms, Inc.
Mike Cockrell, 601-649-4030
Treasurer & Chief Financial Officer

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