Productivity Initiatives

3 Months Ended

Jul. 27, 2011


(3)	Productivity Initiatives

In order to accelerate growth and offset the impact of escalating commodity costs, 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 productivity on a global scale. These initiatives, as well as other initiatives currently being evaluated, include:


	•	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 the 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 anticipates investing at least $130 million of cash and $160 million of pre-tax income ($0.35 per share) on these initiatives during Fiscal 2012.

During the first quarter of Fiscal 2012, the Company recorded costs of $40.5 million pre-tax ($28.4 million after-tax or $0.09 per share), all of which were reported in the Non-operating segment, related to these productivity initiatives. These costs were comprised of the following:


	•	$16.8 million pre-tax relating to asset write-offs for the closure of four factories, including two in Europe, one in the U.S. and one in the Pacific,

	•	$14.9 million pre-tax for severance and employee benefit costs relating to the reduction of the global workforce by approximately 160 positions, and

	•	$8.8 million pre-tax costs associated with other implementation costs, primarily for professional fees and relocation costs for the establishment of the European supply chain hub.

Of the $40.5 million total pre-tax charges, $31.4 million was recorded in cost of products sold and $9.1 million in selling, general and administrative expenses (“SG&A”). Cash paid for productivity initiatives in the first quarter of Fiscal 2012 was $10.9 million. The amount included in other accrued liabilities related to these initiatives totaled $11.1 million at July 27, 2011, most of which is expected to be paid in the third 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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