The litigation was brought in various federal district courts in Louisiana and Mississippi by various current and former employees of the Company's subsidiary corporations. These employees, who spent uncompensated time walking to and from their workstations and donning and doffing protective gear, had brought litigation on behalf of themselves and all others similarly situated.

The plaintiffs claimed in this litigation, styled Annie Collins v. Sanderson Farms, Inc. (Production Division) and Sanderson Farms, Inc. (Processing Division), that they were entitled to compensation for this time. The Company will pay approximately $2.6 million to settle the claims of 8,337 current and former employees, and will obtain dismissal of all pending litigation. Commenting on the settlement, Mike Cockrell, treasurer and chief financial officer of Sanderson Farms, Inc., stated, "We are pleased to settle this litigation and put it behind us.

"While we are confident our pay practices are and have been legal and appropriate, a United States Supreme Court decision involving other companies created uncertainty regarding whether time spent donning and doffing protective gear, hair nets and smocks is compensable.

"We have always had excellent relationships with our employees, and look forward to continuing that relationship. Because of the uncertainty regarding this settlement prior to its approval by the court, the Company has established no reserves for this case. The amount of the charge will be recognized during the current fiscal quarter."