Restructuring and Impairment Activities

6 Months Ended

Jun. 30, 2012

Restructuring and Related Activities [Abstract]

The Company incurred restructuring and impairment expenses of $5.3 million and $0.7 million in the three months ended June 30, 2012 and 2011, respectively, and $24.0 million and $1.7 million in the six months ended June 30, 2012 and 2011, respectively.

The Paper segment restructuring and impairment expenses were $2.1 million and $0.3 million for the three months ended June 30, 2012 and 2011, respectively, and $20.0 million and $0.5 million during the six months ended June 30, 2012 and 2011, respectively. During the three months ended March 31, 2012, the Company amended a supply agreement with Philip Morris-USA, a subsidiary of Altria Group Inc. The amended agreement eliminated the Company's contractual commitment to stand ready to produce commercial quantities of banded cigarette paper even in the absence of firm orders. The Company considered these new terms to be a triggering event requiring evaluation of the recoverability of our Spotswood mill's banded cigarette paper production assets. Based on this analysis, which reflected management's assessment of the most likely future utilization of the mill, the Company recorded a $16.9 million impairment charge to reduce the carrying value of these assets to their fair value.

Fair value was determined by using management's estimates of market participants' discounted future cash flows and independent appraisals of certain assets, both which are considered significant unobservable inputs, or Level 3 inputs. Management used significant judgment to develop assumptions, including forecasted sales volumes, allocation of corporate overhead attributable to the Spotswood mill and weighted average cost of capital, based on historical and projected operational performance.

Other Paper segment restructuring expenses of $2.1 million and $0.3 million for the three months ended June 30, 2012 and 2011, respectively, and $3.1 million and $0.5 million for the six months ended June 30, 2012 and 2011, respectively, were related to costs to terminate a third-party printing agreement in the U.S. and prior restructuring plans' severances that were recorded over the remaining service periods of the affected employees. The Company is evaluating the impact of a change in French retirement laws, expected to be effective during the third quarter 2012, which may reduce certain early retirement costs to the Company.

The Reconstituted Tobacco segment restructuring expenses were $3.2 million and $0.4 million for the three months ended June 30, 2012 and 2011, respectively, and $3.9 million and $1.2 million for the six months ended June 30, 2012 and 2011, respectively, which were primarily expenses incurred in connection with suspending construction of the RTL facility in the Philippines and related mothballing activities. In the three and six month periods ended June 30, 2012, $3.1 million was due to an additional non-cash impairment charge for the expected costs to ship and transfer certain equipment from the RTL Philippines site to our Chinese RTL joint venture CTS.

Restructuring liabilities were classified within accrued expenses in each of the consolidated balance sheets as of June 30, 2012 and December 31, 2011. Changes in the restructuring liabilities, substantially all of which are employee-related, during the six months ended June 30, 2012 and the year ended December 31, 2011 are summarized as follows ($ in millions):



	Six Months Ended			Year Ended
	June 30, 2012			December 31, 2011
Balance at beginning of year	$	7.3		$	10.0
Accruals for announced programs	3.9			7.1
Cash payments	(2.0		)	(9.5		)
Exchange rate impacts	(0.1		)	(0.3		)
Balance at end of period	$	9.1		$	7.3

- 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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