RESTRUCTURING

Fiscal 2013 Restructuring Plans

Brazil Consolidation Plan

In the second quarter of fiscal 2013, the Company initiated restructuring activities to consolidate its two existing leased manufacturing facilities in the State of Sao Paulo, Brazil into a single new leased manufacturing facility in Brazil. Manufacturing activities at the existing two facilities will be relocated by the end of the first quarter of fiscal 2014 to the new facility. The Company expects to offer eligible associates the ability to transfer from the two existing manufacturing facilities to the new facility. As a result of this consolidation, the Company will reduce headcount in Brazil by approximately 65 in the third quarter of fiscal 2013. Offsetting this reduction of headcount will be the addition of approximately 45 associates at the Company's new Brazil manufacturing facility including associate transfers and new hires. In the second quarter of fiscal 2013, the Company recorded $0.3 million of pre-tax employee-related restructuring costs, which remain accrued as of February 28, 2013, and $0.3 million of accelerated depreciation included in cost of sales. The Company expects to recognize additional pretax employee-related and other cash charges of approximately $1.2 million, as well as additional accelerated depreciation of approximately $0.3 million, during the remainder of fiscal 2013. Cash payments associated with this plan are expected to occur through fiscal 2014 as the plan is completed.

EMEA Continued Reorganization Plan

During the first six months of fiscal 2013, the Company executed restructuring activities to better reflect its current business footprint and needs in the challenging economic environment in Europe and the continued reorganization of the Company's Custom Performance Colors and Masterbatch Solutions product families. As part of this restructuring, the EMEA regional team plans to reduce headcount by approximately 20 with half of the reductions occurring in the first quarter of fiscal 2013. The Company recorded $1.0 million and $2.4 million of pretax employee-related restructuring costs during the three and six months ended February 28, 2013, respectively. As of February 28, 2013, the Company has a balance of $1.4 million accrued for employee-related costs related to this plan. The Company expects to recognize additional pretax employee-related cash charges of approximately $0.3 million during the remainder of fiscal 2013. Cash payments associated with this plan are expected to occur through the third quarter of fiscal 2014 as the plan is completed.

Bellevue, Ohio Facility Plan

Additionally in the first quarter of fiscal 2013, the Company sold its Bellevue, Ohio facility to continue its focus on higher-value technical products. As part of this sale, the Company recorded $0.1 million and $0.3 million of pretax employee-related costs and other restructuring expenses during the three and six months ended February 28, 2013, respectively, and $0.1 million and $0.4 million of accelerated depreciation during the three and six months ended February 28, 2013, respectively. As of February 28, 2013, the Company has a balance of $0.1 million accrued for employee-related costs related to this plan. The Company anticipates recognizing approximately $1.0 million of other pretax restructuring expenses during the remainder of fiscal 2013 and into fiscal 2014. Cash payments associated with this plan are expected to occur through fiscal 2014 as the plan is completed.

Fiscal 2012 Restructuring Plans

Masterbatch Reorganization Plan

In August 2012, the Company conducted an extensive evaluation of its three regional segments and specifically focused on each region's masterbatch product family. As a result of this evaluation, the Company realigned its regional masterbatch product family to put greater focus on its growth opportunities. Therefore, within each regional segment, effective September 1, 2012 the masterbatch product family was split into two separate product families, Custom Performance Colors and Masterbatch Solutions. As part of this plan, the Company reduced headcount in the EMEA and APAC regions in the fourth quarter of fiscal 2012. The Company recorded minimal charges related to this plan during the first half of fiscal 2013. As of February 28, 2013, the Company has a balance of $2.0 million accrued primarily related to the EMEA segment for employee-related costs and expects minimal charges related to this plan to be recognized in fiscal 2013. Cash payments associated with this plan are expected to occur through fiscal 2016 as the plan is completed.

EMEA Operations and Back-Office Plan

In November 2011, the Company initiated a restructuring plan of EMEA’s operations and back-office functions to better leverage savings from its Shared Service Center located in Belgium. As part of this plan, the Company reduced headcount in EMEA by approximately 50, and the majority of the reductions occurred in the first and second quarters of fiscal 2012. The Company recorded no charges related to this plan during the three months ended February 28, 2013 and $0.3 million of pretax employee-related restructuring costs during the six months ended February 28, 2013. The Company recorded $1.2 million and $3.9 million of pretax employee-related restructuring costs during the three and six months ended February 29, 2012, respectively. As of February 28, 2013, the Company has a balance of $0.3 million accrued for employee-related costs related to this plan. The Company expects minimal employee-related charges related to this plan during the remainder of fiscal 2013. Cash payments associated with this plan are expected to occur through fiscal 2014 as the plan is completed.

Fiscal 2011 Restructuring Plan

Americas Engineered Plastics Plan

On August 25, 2011, the Company announced that it would close the Nashville, Tennessee facility and move production to existing facilities in order to optimize the use of capacity and capitalize on growth opportunities. As of the end of February 2012, the Nashville facility ceased production and the Company reduced headcount by approximately 70, with the majority of the reductions occurring in the second quarter of fiscal 2012. The Company recorded minimal charges during the first half of fiscal 2013, and $0.3 million and $0.5 million of pretax employee-related restructuring expense during the three and six months ended February 29, 2012, respectively. As of February 28, 2013, the Company has a balance of $0.2 million accrued for employee-related costs related to this plan. The Company expects minimal charges related to this plan to be recognized during the remainder of fiscal 2013. Cash payments associated with this plan are expected to occur through fiscal 2013 as the plan is completed.

Consolidated Restructuring Summary

The following table summarizes the activity during fiscal 2013 related to the Company’s restructuring plans:



	Accrual Balance August 31, 2012			Fiscal 2013 Charges		Fiscal 2013 Paid			Accrual Balance February 28, 2013
	(In thousands)
Employee-related costs	$	3,524		$	3,194	$	(2,164	)	4,554
Other costs	381			412		(350		)	443
Translation effect	(539		)	—		—			(500		)
Total	$	3,366		$	3,606	$	(2,514	)	$	4,497

Restructuring expenses are excluded from segment operating income but are attributable to the reportable segments as follows:



	Three months ended				Six months ended
	February 28, 2013		February 29, 2012		February 28, 2013		February 29, 2012
	(In thousands)
EMEA	$	1,138	$	1,285	$	2,695	$	4,346
Americas	517		312		731		495
APAC	14		—		180		—
Total restructuring expense	$	1,669	$	1,597	$	3,606	$	4,841