Productivity Initiatives

9 Months Ended

Jan. 25, 2012

Restructuring and Related Activities [Abstract]

The Company announced on May 26, 2011 that it will invest in productivity initiatives during Fiscal 2012 designed to increase manufacturing effectiveness and efficiency as well as accelerate overall productivity on a global scale. The Company originally anticipated investing at least $130 million of cash and $160 million of pre-tax income ($0.35 per share) on these initiatives during Fiscal 2012. These initiatives included:

•The establishment of a European supply chain hub in the Netherlands in order to consolidate and centrally lead procurement, manufacturing, logistics and inventory control,

•The exit of at least five factories, including two in Europe, two in the U.S., and one in Asia/Pacific in order to enhance manufacturing effectiveness and efficiency, and

•A reduction of the global workforce by approximately 800 to 1,000 positions.

The Company continues to look for opportunities to drive shareholder value in this difficult economic environment, and on November 9, 2011, the Company's Board of Directors gave its approval for the Company to invest an incremental $20 million cash and $55 million of pre-tax income ($0.15 per share) on additional productivity initiatives during Fiscal 2012. These projects are expected to result in the potential closure of another three factories worldwide and a further reduction of the global workforce of up to 1,000 employees. Certain projects included in the plan are subject to consultation and any necessary agreements being reached with appropriate employee representative bodies, trade unions, and works councils.

The Company recorded costs related to these productivity initiatives of $33.8 million pre-tax ($22.8 million after-tax or $0.07 per share) during the third quarter ended January 25, 2012 and $111.6 million pre-tax ($76.8 million after-tax or $0.24 per share) during the nine months ended January 25, 2012, all of which were reported in the Non-Operating segment. These pre-tax costs were comprised of the following:

•$11.0 million and $39.6 million for the third quarter and nine months ended January 25, 2012, respectively, relating to asset write-offs and accelerated depreciation for the closure of six factories, including two in Europe, three in the U.S. and one in Asia/Pacific,

•$9.4 million and $38.4 million for the third quarter and nine months ended January 25, 2012, respectively, for severance and employee benefit costs relating to the reduction of the global workforce by approximately 830 positions through the nine months ended January 25, 2012, and

•$13.4 million and $33.6 million for the third quarter and nine months ended January 25, 2012, respectively, associated with other implementation costs, primarily for professional fees, contract termination and relocation costs for the establishment of the European supply chain hub and to improve manufacturing efficiencies in the Asia/Pacific segment.

Of the $33.8 million total pre-tax charges for the third quarter ended January 25, 2012, $22.2 million was recorded in cost of products sold and $11.5 million in selling, general and administrative expenses (“SG&A”). Of the $111.6 million total pre-tax charges for the nine months ended January 25, 2012, $81.1 million was recorded in cost of products sold and $30.5 million in SG&A.

The Company does not include restructuring charges in the results of its reportable segments. The pre-tax impact of allocating such charges to segment results would have been as follows:



	Fiscal 2012
	Third Quarter Ended January 25, 2012		Nine Months Ended January 25, 2012
	(Millions of Dollars)
North American Consumer Products	$	3.8	$	7.2
Europe	9.0		23.4
Asia/Pacific	11.8		43.7
U.S. Foodservice	8.7		34.8
Rest of World	0.1		2.1
Non-Operating	0.3		0.3
Total restructuring charges	$	33.8	$	111.6

(Totals may not add due to rounding)

Activity in other accrued liability balances for restructuring charges were as follows:



(Millions of Dollars)

Reserve balance at April 27, 2011	$	—
Cash payments	(62.6		)
Restructuring charges	72.0
Reserve balance at January 25, 2012	$	9.5

(Totals may not add due to rounding)

The majority of the amount included in other accrued liabilities at January 25, 2012 related to these initiatives is expected to be paid in the fourth quarter of Fiscal 2012.

- Definition

The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled.

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