6. BUSINESS REALIGNMENT AND IMPAIRMENT CHARGES

In June 2010, we announced Project Next Century (the “Next Century program”) as part of our ongoing efforts to create an advantaged supply chain and competitive cost structure. As part of the program, production will transition from the Company's century-old facility at 19 East Chocolate Avenue in Hershey, Pennsylvania, to an expanded West Hershey facility, which was built in 1992. Production from the 19 East Chocolate Avenue plant, as well as a portion of the workforce, will be fully transitioned to the West Hershey facility primarily during the second quarter of 2012.

We estimate that the Next Century program will incur pre-tax charges and non-recurring project implementation costs of $150 million to $160 million. This estimate includes $130 million to $140 million in pre-tax business realignment and impairment charges and approximately $20 million in project implementation and start-up costs. Total costs of $43.4 million were recorded in 2011 and $53.9 million were recorded in 2010.

Certain former manufacturing facilities with a carrying value of $7.0 million were being held for sale as of April 1, 2012. The fair value of these facilities was estimated based on expected sales proceeds.

Business realignment and impairment charges and credits recorded during the three-month periods ended April 1, 2012 and April 3, 2011 were as follows:



	For the Three Months Ended
	April 1, 2012		April 3, 2011
In thousands of dollars
Cost of sales – Next Century program	$	19,454	$	6,859
Selling, marketing and administrative – Next Century program	813		1,014
Business realignment and impairment charges, net
Next Century program
Plant closure expenses	2,490		881
Employee separation costs	814		957
Total business realignment and impairment charges, net	3,304		1,838
Total business realignment and impairment charges	$	23,571	$	9,711

Next Century Program

A charge of $19.5 million was recorded in cost of sales during the first quarter of 2012 related primarily to the accelerated depreciation of fixed assets over a reduced remaining useful life and start-up costs associated with the Next Century program. A charge of $0.8 million was recorded in selling, marketing and administrative expenses in the first quarter of 2012 related primarily to project administration for the Next Century program. Plant closure expenses of $2.5 million were recorded in the first quarter of 2012 primarily related to costs associated with the relocation of production lines. Employee separation costs were $0.8 million for the Next Century program in the first quarter of 2012, reflecting costs related to voluntary and involuntary terminations.

A charge of $6.9 million was recorded in cost of sales during the first quarter of 2011 related primarily to the accelerated depreciation of fixed assets over a reduced estimated remaining useful life and start-up costs associated with the Next Century program. A charge of $1.0 million was recorded in selling, marketing and administrative expenses in the first quarter of 2011 related primarily to project administration for the Next Century program. Plant closure expenses of $0.9 million were recorded in the first quarter of 2011 primarily related to costs associated with the relocation of production lines. Employee separation costs of $0.9 million for the Next Century program in the first quarter of 2011 were related to expected voluntary and involuntary terminations.

The April 1, 2012 liability balance relating to the Next Century program was $17.8 million for estimated employee separation costs which were recorded in 2010 and 2011 and will be paid in 2012 as production transitions to the expanded West Hershey facility. During the first three months of 2012, we made payments against the liabilities of $2.4 million related to employee separation costs.