16. SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION

On December 15, 2010, the Company closed on the sale of $500.0 million of 7⁷/8% Senior Notes due in 2018 (the “2018 Notes”). The 2018 Notes are unsecured obligations of the Company and are fully and unconditionally guaranteed on a senior unsecured basis by Pilgrim’s Pride Corporation of West Virginia, Inc., a wholly owned subsidiary of the Company (the “Guarantor”). In accordance with Rule 3-10 of Regulation S-X promulgated under the Securities Act of 1933, the following condensed consolidating financial statements present the financial position, results of operations and cash flows of the Company (referred to as “Parent” for the purpose of this note only) on a Parent-only basis, the Guarantor on a Guarantor-only basis, the combined non-Guarantor subsidiaries and elimination entries necessary to arrive at the information for the Parent, the Guarantor and non-Guarantor subsidiaries on a consolidated basis. Investments in subsidiaries are accounted for by the Company using the equity method for this presentation.

The tables below present the condensed consolidating balance sheets as of March 25, 2012 and December 25, 2011, the condensed consolidating statements of operations and cash flows for the thirteen weeks ended March 25, 2012 and March 27, 2011 based on the guarantor structure.

CONDENSED CONSOLIDATING BALANCE SHEETS

March 25, 2012



	Parent		Subsidiary Guarantor		Subsidiary Non-Guarantors		Eliminations/ Adjustments			Consolidation
	(In thousands)
Cash and cash equivalents	$	24,129	$	—	$	23,441	$	—		$	47,570
Restricted cash and cash equivalents	—		—		4,684		—			4,684
Investment in available-for-sale securities	—		—		156		—			156
Trade accounts and other receivables, less allowance for doubtful accounts	302,877		1,632		46,323		—			350,832
Account receivable from JBS USA, LLC	19,406		—		—		—			19,406
Inventories	788,755		22,635		99,040		—			910,430
Income taxes receivable	60,112		—		4,614		(842		)	63,884
Current deferred tax assets	—		4,003		1,492		(5,495		)	—
Prepaid expenses and other current assets	22,834		156		17,598		—			40,588
Assets held for sale	34,185		—		16,035		—			50,220
Total current assets	1,252,298		28,426		213,383		(6,337		)	1,487,770
Investment in available-for-sale securities	—		—		591		—			591
Intercompany receivable	31,583		35,006		—		(66,589		)	—
Investment in subsidiaries	328,905		—		—		(328,905		)	—
Deferred tax assets	75,392		—		7		(4,300		)	71,099
Other long-lived assets	50,965		—		180,480		(180,000		)	51,445
Identified intangible assets, net	30,403		—		12,253		—			42,656
Property, plant and equipment, net	1,075,544		48,251		104,973		(3,888		)	1,224,880
Total assets	$	2,845,090	$	111,683	$	511,687	$	(590,019	)	$	2,878,441
Accounts payable	$	244,676	$	9,041	$	39,414	$	—		$	293,131
Account payable to JBS USA, LLC	8,339		—		—		—			8,339
Accrued expenses and other current liabilities	233,407		17,143		40,087		—			290,637
Income taxes payable	—		—		842		(842		)	—
Current deferred tax liabilities	83,809		—		1,014		(5,495		)	79,328
Current maturities of long-term debt	15,614		—		—		—			15,614
Total current liabilities	585,845		26,184		81,357		(6,337		)	687,049
Long-term debt, less current maturities	1,274,510		—		—		(25,000		)	1,249,510
Intercompany payable	—		—		66,589		(66,589		)	—
Deferred tax liabilities	—		4,003		297		(4,300		)	—
Other long-term liabilities	287,039		—		12,867		(155,000		)	144,906
Total liabilities	2,147,394		30,187		161,110		(257,226		)	2,081,465
Total Pilgrim’s Pride Corporation stockholders’ equity	697,696		81,496		347,334		(332,793		)	793,733
Noncontrolling interest	—		—		3,243		—			3,243
Total stockholders’ equity	697,696		81,496		350,577		(332,793		)	796,976
Total liabilities and stockholders’ equity	$	2,845,090	$	111,683	$	511,687	$	(590,019	)	$	2,878,441

CONDENSED CONSOLIDATING BALANCE SHEETS

December 25, 2011



	Parent		Subsidiary Guarantor		Subsidiary Non-Guarantors		Eliminations/ Adjustments			Consolidation
	(In thousands)
Cash and cash equivalents	$	13,733	$	30	$	27,846	$	—		$	41,609
Restricted cash and cash equivalents	—		—		7,680		—			7,680
Investment in available-for-sale securities	—		—		157		—			157
Trade accounts and other receivables, less allowance for doubtful accounts	302,809		1,575		44,838		—			349,222
Account receivable from JBS USA, LLC	21,198		—		—		—			21,198
Inventories	766,227		21,144		91,723		—			879,094
Income taxes receivable	62,160		—		528		(3,621		)	59,067
Current deferred tax assets	—		4,003		1,478		(5,481		)	—
Prepaid expenses and other current assets	35,877		87		16,386		—			52,350
Assets held for sale	37,754		—		16,062		—			53,816
Total current assets	1,239,758		26,839		206,698		(9,102		)	1,464,193
Investment in available-for-sale securities	—		—		497		—			497
Intercompany receivable	50,064		33,978		—		(84,042		)	—
Investment in subsidiaries	304,395		—		—		(304,395		)	—
Deferred tax assets	75,392		—		7		(4,300		)	71,099
Other long-lived assets	57,460		—		180,461		(180,000		)	57,921
Identified intangible assets, net	31,384		—		12,699		—			44,083
Property, plant and equipment, net	1,090,376		49,336		105,928		(3,888		)	1,241,752
Total assets	$	2,848,829	$	110,153	$	506,290	$	(585,727	)	$	2,879,545
Accounts payable	$	270,538	$	13,033	$	45,293	$	—		$	328,864
Account payable to JBS USA, LLC	11,653		—		—		—			11,653
Accrued expenses and other current liabilities	226,016		17,193		38,588		—			281,797
Income taxes payable	—		—		3,621		(3,621		)	—
Current deferred tax liabilities	83,795		—		934		(5,481		)	79,248
Current maturities of long-term debt	15,611		—		—		—			15,611
Total current liabilities	607,613		30,226		88,436		(9,102		)	717,173
Long-term debt, less current maturities	1,433,001		—		—		(25,000		)	1,408,001
Note payable to JBS USA Holdings, Inc.	50,000		—		—		—			50,000
Intercompany payable	—		—		84,042		(84,042		)	—
Deferred tax liabilities	—		4,003		297		(4,300		)	—
Other long-term liabilities	289,697		—		11,675		(155,431		)	145,941
Total liabilities	2,380,311		34,229		184,450		(277,875		)	2,321,115
Total Pilgrim’s Pride Corporation stockholders’ equity	468,518		75,924		319,022		(307,852		)	555,612
Noncontrolling interest	—		—		2,818		—			2,818
Total stockholders’ equity	468,518		75,924		321,840		(307,852		)	558,430
Total liabilities and stockholders’ equity	$	2,848,829	$	110,153	$	506,290	$	(585,727	)	$	2,879,545

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

Thirteen Weeks Ended March 25, 2012



	Parent			Subsidiary Guarantor			Subsidiary Non-Guarantors			Eliminations/ Adjustments			Consolidation
	(In thousands)
Net sales	$	1,639,563		$	76,486		$	233,289		$	(60,565	)	$	1,888,773
Cost of sales	1,567,352			67,543			204,378			(60,565		)	1,778,708
Gross profit	72,211			8,943			28,911			—			110,065
Selling, general and administrative expense	40,218			—			5,038			—			45,256
Administrative restructuring charges	2,880			—			5			—			2,885
Operating income	29,113			8,943			23,868			—			61,924
Interest expense, net	28,076			—			169			—			28,245
Interest income	(9		)	—			(265		)	—			(274		)
Foreign currency transaction losses (gains)	23			—			(5,951		)	—			(5,928		)
Miscellaneous, net	(118		)	(9		)	(529		)	286			(370		)
Income (loss) before income taxes	1,141			8,952			30,444			(286		)	40,251
Income tax expense (benefit)	(4,677		)	3,379			1,951			—			653
Income (loss) before equity in earnings of consolidated subsidiaries	5,818			5,573			28,493			(286		)	39,598
Equity in earnings of consolidated subsidiaries	33,640			—			—			(33,640		)	—
Net income (loss)	39,458			5,573			28,493			(33,926		)	39,598
Less: Net income attributable to noncontrolling interest	—			—			425			—			425
Net income (loss) attributable to Pilgrim’s Pride Corporation	$	39,458		$	5,573		$	28,068		$	(33,926	)	$	39,173

Comprehensive income (loss)	$	39,873		$	5,573		$	28,498		$	(33,926	)	$	40,018
Comprehensive income attributable to noncontrolling interests	—			—			425			—			425
Comprehensive income (loss) attributable to Pilgrim's Pride Corporation	$	39,873		5,573			$	28,073		$	(33,926	)	$	39,593

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

Thirteen Weeks Ended March 27, 2011



	Parent			Subsidiary Guarantor		Subsidiary Non-Guarantors			Eliminations/ Adjustments			Consolidation
	(In thousands)
Net sales	$	1,542,670		$	110,010	$	323,623		$	(83,827	)	$	1,892,476
Cost of sales	1,588,107			102,071		337,887			(83,827		)	1,944,238
Operational restructuring charges	1,348			—		—			—			1,348
Gross profit (loss)	(46,785		)	7,939		(14,264		)	—			(53,110		)
Selling, general and administrative expense	45,161			—		8,087			—			53,248
Administrative restructuring charges	418			—		—			—			418
Operating income (loss)	(92,364		)	7,939		(22,351		)	—			(106,776		)
Interest expense, net	27,187			—		320			—			27,507
Interest income	(301		)	—		(409		)	—			(710		)
Foreign currency transaction gains	(201		)	—		(2,534		)	—			(2,735		)
Miscellaneous, net	25,178			1,127		(27,898		)	522			(1,071		)
Income (loss) before income taxes	(144,227		)	6,812		8,170			(522		)	(129,767		)
Income tax expense (benefit)	(14,750		)	2,571		2,307			—			(9,872		)
Income (loss) before equity in earnings of consolidated subsidiaries	(129,477		)	4,241		5,863			(522		)	(119,895		)
Equity in earnings of consolidated subsidiaries	9,236			—		—			(9,236		)	—
Net income (loss)	(120,241		)	4,241		5,863			(9,758		)	(119,895		)
Less: Net income attributable to noncontrolling interests	—			—		865			—			865
Net income (loss) attributable to Pilgrim’s Pride Corporation	$	(120,241	)	$	4,241	$	4,998		$	(9,758	)	$	(120,760	)

Comprehensive income (loss)	$	(120,279	)	$	4,241	$	5,386		$	(9,758	)	$	(120,410	)
Comprehensive income attributable to noncontrolling interests	—			—		865			—			865
Comprehensive income (loss) attributable to Pilgrim's Pride Corporation	$	(120,279	)	$	4,241	$	4,521		$	(9,758	)	$	(121,275	)

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

Thirteen Weeks Ended March 25, 2012



	Parent			Subsidiary Guarantor			Subsidiary Non-Guarantors			Eliminations/ Adjustments			Consolidation
	(In thousands)
Cash flows provided (used in) by operating activities	$	31,926		$	291		$	(2,980	)	$	145		$	29,382
Cash flows from investing activities:
Acquisitions of property, plant and equipment	(13,758		)	(321		)	(2,591		)	—			(16,670		)
Purchases of investment securities	—			—			(88		)	—			(88		)
Proceeds from property sales and disposals	2,451			—			615			—			3,066
Cash used in investing activities	(11,307		)	(321		)	(2,064		)	—			(13,692		)
Cash flows from financing activities:
Payments on note payable to JBS USA Holdings, Inc.	(50,000		)	—			—			—			(50,000		)
Proceeds from long-term debt	183,200			—			—			—			183,200
Payments on long-term debt	(341,802		)	—			—			—			(341,802		)
Proceeds from sale of common stock	198,379			—			—			—			198,379
Other financing activities	—			—			145			(145		)	—
Cash provided by (used in) financing activities	(10,223		)	—			145			(145		)	(10,223		)
Effect of exchange rate changes on cash and cash equivalents	—			—			494			—			494
Increase (decrease) in cash and cash equivalents	10,396			(30		)	(4,405		)	—			5,961
Cash and cash equivalents, beginning of period	13,733			30			27,846			—			41,609
Cash and cash equivalents, end of period	$	24,129		$	—		$	23,441		$	—		$	47,570

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

Thirteen Weeks Ended March 27, 2011



	Parent			Subsidiary Guarantor			Subsidiary Non-Guarantors			Eliminations/ Adjustments			Consolidation
	(In thousands)
Cash flows provided by (used in) operating activities	$	(116,077	)	$	4,260		$	9,936		$	(522	)	$	(102,403	)
Cash flows from investing activities:
Acquisitions of property, plant and equipment	(57,547		)	(4,261		)	(2,152		)	—			(63,960		)
Purchases of investment securities	—			—			(1,353		)	—			(1,353		)
Proceeds from sale or maturity of investment securities	—			—			831			—			831
Proceeds from property sales and disposals	3,416			1			985			—			4,402
Cash used in investing activities	(54,131		)	(4,260		)	(1,689		)	—			(60,080		)
Cash flows from financing activities:
Proceeds from long-term debt	255,300			—			—			—			255,300
Payments on long-term debt	(135,625		)	—			—			—			(135,625		)
Payment of capitalized loan costs	(689		)	—			—			—			(689		)
Other financing activities	—			—			(522		)	522			—
Cash provided by (used in) financing activities	118,986			—			(522		)	522			118,986
Effect of exchange rate changes on cash and cash equivalents	—			—			433			—			433
Decrease in cash and cash equivalents	(51,222		)	—			8,158			—			(43,064		)
Cash and cash equivalents, beginning of period	67,685			—			38,392			—			106,077
Cash and cash equivalents, end of period	$	16,463		$	—		$	46,550		$	—		$	63,013