EXIT OR DISPOSAL ACTIVITIES

Beginning in January 2010, Company management implemented certain exit or disposal activities to integrate the administrative functions of the Company into those of JBS USA. In July 2011, additional exit and disposal activities were implemented by Company management to consolidate operations at our Dallas, Texas facility into other facilities in the surrounding area. The Company expects to incur ongoing costs of approximately $14.5 million related to the idling of the Dallas, Texas facility in future quarters.

Since February 2008, these exit or disposal activities eliminated a total of approximately 6,000 positions and resulted in net pre-tax charges totaling $153.2 million. Of these charges, we recognized $48.8 million of severance and other personnel costs, $54.1 million of impairment costs related to long-lived assets held for sale, $32.5 million in losses related to the sale of unneeded eggs and the depletion of unneeded flocks, $4.0 million of grower compensation, $2.0 million of lease continuation costs, $2.1 million in losses related to scrapped inventory and $9.7 million in other restructuring costs. All exit or disposal costs related to these activities, with the exception of costs or losses related to asset impairments, sales of unneeded eggs, depletion of unneeded flocks and scrapped inventory, resulted in cash expenditures or will result in cash expenditures within one year. The cash-related portion of these exit or disposal costs totaled $54.8 million.

Results of operations for 2011, 2010 and 2009 included accrued exit or disposal costs totaling $2.4 million, $41.0 million, and $6.0 million, respectively. There were no accrued exit or disposal costs during the Transition Period. All exit or disposal costs, with the exception of costs related to lease obligations and inventory reserves related to closed facilities, have resulted in cash expenditures or will result in cash expenditures within one year.

Results of operations for 2011, 2010, Transition Period and 2009 also included adjustments to exit or disposal costs totaling $1.3 million, $10.5 million, $0.4 million, and $6.7 million, respectively, which reduced the accrued costs. Adjustments recognized in 2011 included favorable adjustments of accrued severance.

The following table sets forth restructuring activity that occurred during 2011, 2010, the Transition Period and 2009:



	Accrued Lease Obligation			Accrued Severance			Accrued Other Exit or Disposal Costs			Inventory Reserves			Total
	(In thousands)
September 27, 2008	$	4,466		$	2,694		$	5,651		$	1,212		$	14,023
Accruals	—			3,897			2,059			—			5,956
Payment/Disposal	(622		)	(4,283		)	(2,753		)	(1,000		)	(8,658		)
Adjustments	(2,202		)	(1,792		)	(2,454		)	(212		)	(6,660		)
September 26, 2009	1,642			516			2,503			—			4,661
Accruals	—			—			—			—			—
Payment/Disposal	(86		)	—			—			—			(86		)
Adjustments	(1,536		)	—			1,111			—			(425		)
December 27, 2009	20			516			3,614			—			4,150
Accruals	—			31,116			9,869			—			40,985
Payment /Disposal	—			(27,086		)	(2,611		)	—			(29,697		)
Adjustments	(20		)	(396		)	(10,872		)	793			(10,495		)
December 26, 2010	—			4,150			—			793			4,943
Accruals	—			2,375			—			—			2,375
Payment/Disposal	—			(5,111		)	—			—			(5,111		)
Adjustments	—			(1,324		)	—			—			(1,324		)
December 25, 2011	$	—		$	90		$	—		$	793		$	883

The Company recognized impairment charges totaling $20.1 million and $26.5 million for the years ended 2011 and 2010, respectively, to reduce the carrying amounts of certain property, plant and equipment to their estimated fair values. These costs were classified as restructuring items in 2011 and 2010.

Exit or disposal costs totaling $4.3 million, $2.9 million, and $12.5 million were recognized during 2010, the Transition Period, and 2009, respectively, and were classified as Operational restructuring charges, net, a component of gross profit, because management believes these costs are directly related to the Company’s ongoing production activities. There were no exit or disposal costs classified as Operational restructuring charges, net in 2011. Exit or disposal costs totaling $26.1 million, $66.0 million, a credit of $1.4 million, and costs of $2.0 million were recognized during 2011, 2010, the Transition Period, and 2009, respectively, and were classified as Administrative restructuring charges, net, a component of operating income below gross profit, because management believes these costs were not directly related to the Company’s ongoing production.

In 2009, the Company recognized losses totaling $12.5 million related to sales of unneeded broiler eggs. These losses were recognized as a component of gross profit (loss).

Components of operational restructuring charges and administrative restructuring charges are summarized below:



	2011		2010		Transition Period			2009
	(In thousands)
Operational restructuring charges, net:
Relocation charges expensed as incurred	$	—	$	3,288	$	—		$	—
Asset impairments (See "Note 10—Property, Plant and Equipment")	—		1,030		—			—
Loss on egg sales and flock depletion expensed as incurred	—		—		2,877			12,464
Total	$	—	$	4,318	$	2,877		$	12,464
Administrative restructuring charges, net:
Accrued severance provisions (adjustments)	$	724	$	31,227	$	—		$	1,941
Relocation charges expensed as incurred	—		7,224		—			—
Asset impairments (See "Note 10—Property, Plant and Equipment")	20,088		25,453		—			—
Loss on inventory scrapped expensed as incurred	2,390		2,118		—			—
Lease continuation	—		—		(1,359		)	—
Other restructuring costs	2,859		—		—			46
Total	$	26,061	$	66,022	$	(1,359	)	$	1,987

We continue to review and evaluate various restructuring and other alternatives to streamline our operations, improve efficiencies and reduce costs. Such initiatives may include selling assets, consolidating operations and functions, employee relocation and voluntary and involuntary employee separation programs. Any such actions may require us to obtain the pre-approval of our lenders under our Exit Credit Facility. In addition, such actions will subject the Company to additional short-term costs, which may include asset impairment charges, lease commitment costs, employee retention and severance costs and other costs. Certain of these activities may have a disproportionate impact on our income relative to the cost savings in a particular period.