On December 1, 2008, Pilgrim’s and six of its subsidiaries (the “Debtors”) filed voluntary petitions in the United States Bankruptcy Court for the Northern District of Texas, Fort Worth Division (the “Bankruptcy Court”), seeking reorganization relief under the provisions of Chapter 11 of Title 11 of the United States Code (the “Bankruptcy Code”). We emerged from Chapter 11 bankruptcy proceedings on December 28, 2009 (the “Effective Date”). In connection with our emergence from bankruptcy, our common stock outstanding immediately prior to the emergence was canceled and converted into the right to receive newly-issued shares of common stock of the reorganized Company based on a one-for-one exchange ratio, which constituted 36.0% of the total number of shares of our newly-issued common stock on that date. The remaining shares of our newly-issued common stock, constituting 64.0% of our total issued and outstanding common stock on December 28, 2009, were purchased for $800.0 million by JBS USA Holdings, Inc. (“JBS USA”), a wholly-owned indirect subsidiary of JBS S.A., a Brazil-based meat producer. As the result of subsequent purchases, JBS USA owned 75.5% of our total issued and outstanding common stock as of December 30, 2012.

The Company’s emergence from bankruptcy did not qualify for fresh start accounting because the reorganization value determined for the Company upon emergence exceeded post-petition liabilities and allowed claims. The acquisition of a controlling interest in the Company by JBS USA did not qualify for push-down accounting as JBS USA only purchased 64.0% of the common stock of the reorganized Company on December 28, 2009.

We incurred no reorganization items in 2012 or 2011. We incurred the following reorganization costs in 2010 (in thousands):

Professional fees directly related to reorganization^(a)	$	2,785
Finance costs related to various credit facilities^(b)		13,654
Other costs^(c)		2,102
Reorganization items, net	$	18,541

(a)		Professional fees directly related to the reorganization included post-petition fees and fee reductions associated with advisors to the debtors, the statutory committee of unsecured creditors and certain secured creditors.
(b)		Finance costs related to various credit facilities included expenses related to the elimination of unamortized loan costs associated with credit facilities and notes payable extinguished on December 28, 2009 and the recognition in earnings of a previously unrealized gain on a derivative instrument designated as a cash flow hedge associated with a note payable extinguished on December 28, 2009.
(c)		Other expenses includes (i) severance, grower pay, live flock impairment, inventory disposal costs, equipment relocation costs and other shutdown costs related to the closed processing facilities in Douglas, Georgia; El Dorado, Arkansas; Farmerville, Louisiana; Franconia, Pennsylvania; Dalton, Georgia; Athens, Georgia; and Athens, Alabama, (ii) severance costs related to the closed distribution center in Houston, Texas, the February 2009 Operations management reduction-in-force (“RIF”) action, the April 2009 non-production employee RIF action, and reduced or consolidated production at various facilities throughout the U.S., (iii) asset impairment costs related to the closed processing facility in Dalton, Georgia and (iv) fees associated with the termination of a September 2008 receivables purchase agreement on December 3, 2008.

We did not receive cash from reorganization activities in 2012 or 2011. Net cash received from reorganization activities in 2010 totaled $0.3 million from the sale of maintenance inventory parts. These cash flows are included in the section Cash flows from investing activities on the Consolidated Statement of Cash Flows.

We did not pay cash for reorganization activities in 2012 or 2011. Net cash paid for reorganization items in 2010 totaled $30.7 million. This represented payment of incentive compensation totaling $13.0 million that was contingent upon confirmation by the Bankruptcy Court of a plan of reorganization that satisfied the requirements of the Bankruptcy Code, professional fees directly related to the reorganization totaling $15.7 million, severance payments of $1.5 million and payment of facility closure costs totaling $0.5 million.

The Company did not record activity through the accrued reorganization cost accounts during 2012 or 2011. The following table sets forth activity that was recorded through the Company’s accrued reorganization cost accounts during 2010:

	Accrued Other			Accrued
	Costs			Severance			Total
	(In thousands)
December 27, 2009	$	1,903		$	745		$	2,648
Accrual provisions^(a)		2,118			849			2,967
Payment /Disposal		(2,649	)		(1,538	)		(4,187	)
Adjustments^(a)		(1,372	)		(56	)		(1,428	)
December 26, 2010	$	—		$	—		$	—

(a)

Accrual provisions and adjustments recognized in 2010 were primarily classified as reorganization items.

The Company has resolved a substantial majority of the claims against it through settlement or by Bankruptcy Court order resulting in benefits of $8.8 million that were reflected in Miscellaneous, net in the Consolidated Statement of Operations for 2010. Unpaid amounts totaling $0.8 million related to unresolved claims were classified in Accrued expenses and other current liabilities on the Consolidated Balance Sheet at December 25, 2011. At December 30, 2012, there were no unpaid amounts related to unresolved claims recognized in the Consolidated Balance Sheet except for those related to several pre-petition lawsuits discussed below. During 2012 and 2011, the Company paid creditors approximately $0.7 million and $0.7 million, respectively, to settle allowed claim amounts and interest accrued on those claim amounts. During 2010, the Company paid creditors, excluding creditors under the credit facilities and notes payable extinguished on December 28, 2010, for allowed claim amounts with interest totaling approximately $101.1 million.

The Company is the named defendant in several pre-petition lawsuits that, as of December 30, 2012, have not been resolved. See “Note 17. Commitments and Contingencies” to the Consolidated Financial Statements for additional information.

See “Note 2. Chapter 11 Proceedings” to the Consolidated Financial Statements included in the Annual Report on Form 10-K for the year ended December 25, 2011 for additional information.