Restructuring and Relocation

RESTRUCTURING

In August 2012, the company announced a restructuring plan to transform the company into a high-volume, low-cost operator. The restructuring plan is designed to reduce costs and improve the company's competitive position by focusing its resources on its banana and salad businesses, reducing investment in non-core products, reducing overhead and manufacturing costs and limiting consumer marketing activities. In connection with this restructuring plan, the company has eliminated approximately 300 positions worldwide. A total of $16 million of restructuring costs have been recognized in the third quarter of 2012 in "Restructuring and relocation costs" in the Condensed Consolidated Statements of Income and the company expects to recognize approximately $4 million of additional expense before year end primarily related to severance. The company's Board of Directors also transitioned leadership, and, effective October 8, 2012, Edward F. Lonergan was appointed President and Chief Executive Officer of the company. Cash payments related to the restructuring plan are expected to continue through 2014, primarily related to severance payments to the former Chief Executive Officer.

A reconciliation of the accrual for the restructuring activities ($3 million included in "Accrued liabilities" and $4 million included in "Other liabilities" in the Condensed Consolidated Balance Sheet at September 30, 2012), is as follows:



(In thousands)	Severance
June 30, 2012	$	—
Severance expense	8,939
Amounts paid	(1,781		)
September 30, 2012	$	7,158

In addition to the severance expense, the company also recorded $7 million of impairment charges in the third quarter of 2012, including $2 million of goodwill impairment related to the European healthy snacking business. The remaining impairment charges were primarily related to the impairment of fixed assets associated with European healthy snacking businesses and certain promotional and packaging materials included in inventories.

HEADQUARTERS RELOCATION

Late in 2011, the company committed to relocate its corporate headquarters from Cincinnati, Ohio to Charlotte, North Carolina, affecting approximately 300 positions. Concurrent with the headquarters relocation, the company further consolidated approximately 100 additional positions previously spread across the U.S. to improve execution and accelerate decision-making. The relocation was substantially complete at September 30, 2012 and is expected to cost approximately $30 million (including net capital expenditures of approximately $5 million after allowances from the landlord), of which a significant portion is expected to be recaptured through state, local and other incentives through 2022. The company does not expect the restructuring activities described above to affect the realization of the relocation incentives. As of September 30, 2012, the company had incurred a total of $23 million of expense and $4 million of net capital expenditures, related to the relocation. The remaining $1 million of net capital expenditures related to the relocation will occur in the fourth quarter of 2012 and the company expects to incur approximately $2 million of additional expense through 2013, primarily related to relocation, recruiting and other costs, at which time related cash payments will also be substantially complete.

One-time termination costs for affected employees included severance under the company's severance plans and, in some cases, retention awards, both of which required employees to continue providing services until their termination dates in order to be eligible for payment. Estimated payouts under the company's severance plans were accrued at the time the relocation was announced and estimated payouts of retention awards were accrued over the remaining service period. Relocation, recruiting and other costs are being expensed as incurred. Relocation related costs are included in "Restructuring and relocation costs" in the Condensed Consolidated Statements of Income.

A reconciliation of the accrual for the relocation that is included in "Accrued liabilities" is as follows:



(In thousands)	One-Time Termination Costs			Relocation, Recruiting and Other Costs			Total Exit Costs			Other Relocation Costs			Total
December 31, 2011	$	5,303		$	244		$	5,547		$	108		$	5,655
Amounts expensed	1,131			2,384			3,515			348			3,863
Amounts paid	(535		)	(1,500		)	(2,035		)	(456		)	(2,491		)
March 31, 2012	$	5,899		$	1,128		$	7,027		$	—		$	7,027
Amounts expensed	1,026			3,681			4,707			2,063			6,770
Amounts paid	(1,225		)	(2,712		)	(3,937		)	(1,781		)	(5,718		)
June 30, 2012	$	5,700		$	2,097		$	7,797		$	282		$	8,079
Amounts expensed	748			4,182			4,930			1,536			6,466
Amounts paid	(2,831		)	(4,703		)	(7,534		)	(1,680		)	(9,214		)
September 30, 2012	$	3,617		$	1,576		$	5,193		$	138		$	5,331

OTHER SEVERANCE

In June 2011, the company realigned its value-added salads overhead cost structure and embedded its global innovation and marketing functions into its business units to better focus on speed, execution and scalability, and to deliver future operating cost savings, particularly in the Salads and Healthy Snacks segment. These actions resulted in $1 million and $3 million of severance costs during the quarter and nine months ended September 30, 2011, respectively, which were recorded in "Cost of sales" and "Selling, general and administrative" in the Condensed Consolidated Statements of Income.